Making an offer on a house 101

Making an offer on a house 101

Once you’ve found the property you want to buy, it’s time to make an offer.

Offering on property can be nerve-racking, though, and it’s often difficult to know where to start the negotiations.

This guide explains the offer process in more detail and is packed full of great tips, so you’ll be able to get your dream property for the right price.

What should you do before making an offer on a house?

Once you’ve found your dream property, things can move extremely quickly.

So, it’s important to be prepared, get key information, and have certain things in place before you make an offer, including:

  • Have your finances in order, including a mortgage agreement in principle
  • Have a solicitor and surveyor engaged and on standby
  • Know what your maximum offer is and what you can really afford to pay
  • Be aware of the national and local market and what similar properties in the area are selling for
  • Know the seller’s situation and how long the property has been on the market
  • Find out how much interest there’s been in the property and whether any offers have already been made and declined by the seller

How to make an offer on a house

Once you’re certain you want to make an offer on a property, it’s time to set the wheels in motion.

Here’s what you’ll need to do:

1. Set your upper limit

Based on your borrowing potential and deposit amount, set yourself a maximum amount that you’d be comfortable paying for the property.

2. Assess all information

There’s a huge amount of information to consider when assessing what you think a property is worth.

You’ll need to factor in:

  • Your own situation and buying power. If you’re chain free, or a cash buyer, the seller may be willing to accept a lower offer in return for a more straightforward transaction
  • The seller’s situation. How long has the property been on the market? How desperate is the seller to move quickly?
  • Market knowledge. How much have similar properties in the area been selling for recently? Is it a buyer’s or seller’s market and how much demand is there for properties like the one you’re looking to buy?
  • The property’s condition. How much would you need to spend to make it the right home for you?

3. Make your offer verbally and in writing

Once you’ve come up with a figure for your starting offer, let the seller’s estate agent know either in person or over the phone.

You should then follow up your verbal offer with an email to the agent, so they have it in writing, and add that your offer is conditional on the property being taken off the market and future viewings ceasing.

This limits the potential for any confusion further down the line, for example if the agent mis-hears you on the phone.

4. If your offer is declined, weigh up your options

It’s at this stage that emotion can take over but try to remain calm and measured and think through your options if your offer is declined.

If there’s limited interest in the property from other buyers, take your time before making a higher offer.

If interest from others is high, think about the potential for offers going in above the property’s asking price and whether these kinds of figures are affordable for you.

5. Agree a timescale if your offer is accepted

If the seller accepts your offer, reiterate that it’s on condition of the property being removed from the market and no more viewings taking place.

You should then agree a provisional timescale for the transaction with the seller and start making arrangements with your solicitor, mortgage lender, and surveyor.

What is the rule of thumb for making an offer on a house?

A good rule of thumb is to start your offer 5% or 10% lower than the asking price.

However, you should always weigh up the market and interest in the property before deciding on your opening offer.

If interest in the property is high, you may have no choice but to offer the asking price to secure it.

But if the property has been on the market for some time and has little interest, you could opt for a much lower opening offer to test the water with the seller.

How do you make a strong offer on a house?

Making a strong offer on a house isn’t so much about the money you’re offer, but more about your own situation.

If you’re in a good situation to proceed quickly, this will be hugely appealing to the seller – particularly if they have found a new property themselves.

Tell the estate agent if you are:

  • Chain free with no property to sell
  • A cash buyer with no mortgage requirements
  • A buyer with a mortgage agreement already in place

Can you withdraw an offer on a house?

You can withdraw from purchasing a property at any stage up until contracts have been exchanged.

By pulling out after exchange of contracts, you could face a heavy financial penalty as the sale is legally binding at this stage.

If you do need to withdraw your offer, try to let the seller know, through their agent, as soon as possible and explain your reasons for doing so.

Can I make an offer on a house before selling mine?

You can make an offer on a property before selling your own.

However, that would class you as ‘non-proceedable’ in the eyes of the seller and their estate agent.

While this doesn’t mean your offer will be rejected, the seller is far more likely to accept an offer from a buyer who can proceed quickly.

If the market is busy, with lots of potential buyers, you may not even get to view the property if you are non-proceedable, so it’s always best to hold off on making offers until you have a buyer for your current home.

Holding deposits when buying a home

Although rare, at times in an uncertain property market a seller may request a holding deposit from you as a buyer.

While this is a rare request and one often discouraged by estate agents, if a vendor has experienced timewasters before your offer they may insist that you show you are serious about the property and completing the sale.

Try to judge a request such as this with an open mind. Insist that any holding deposit is refundable should the vendor pull out of the deal.

More importantly, make sure any deposit like this is held with the seller's solicitor.

If you are certain the property is for you and have insisted on the above, lodging a holding deposit shouldn't be a problem.

Tips for making an offer on a house

1. Research the area

Before offering on a property, make sure you’ve done your research on the local area.

Look online and speak to a local agent to find out what properties are selling for and how much buyer interest there is in the area.

Think about other factors that can affect property prices, too, including:

  • School catchment areas
  • Transport links
  • Plans for new infrastructure or homes
  • Flooding risks
  • Crime levels

2. Research the current market

As well as the local property market, do some research into property prices across the country.

You may find another area that fits your needs where prices are more affordable or buyer interest is lower.

3. Research the property’s history

Find out as much as you can about the property before making an offer.

You can find out a huge amount of information online, but also get to know the seller’s estate agent and find out what you can about the seller’s situation.

Try to find out:

  • How many times the property has been sold since it was constructed
  • What work has been done to the property
  • Whether the asking price has dropped since the property went on the market
  • How long the current owner has lived there
  • Why the owner is selling

4. Don’t be too honest about your financial position or too keen

Selling yourself as a buyer is a key part of the negotiation process, but don’t be too up front about your own finances.

Downplay the amount you’re looking to spend in the first instance and don’t be too keen if you find a property that’s your dream home.

If the agent and seller know you’re emotionally attached, they’ll be more likely to push harder in negotiations.

5. Don’t be blinded by ‘deals’

Sellers will often offer to include items with the property to secure a higher offer, such as white goods like a fridge-freezer or washing machine.

Second hand items like this are often worth very little.

6. Keep your emotions in check

Negotiations when making offers can be stressful and frustrating – but always keep your emotions in check.

Be polite and professional when making offers or responding to declined offers.

Remember, the seller is trying to secure the best deal for them in the same way you are.

7. Respond quickly

Lay the groundwork for a potential offer when liaising with the seller’s estate agent and attending viewings.

Always show up on time for viewings, answer the phone when the agent calls, respond to emails, and supply any information they require in good time.

This will show you’re serious about buying and give the seller a great indication that you’ll move quickly if they accept an offer from you.

Further reading…