How to make an offer

How to make an offer on a house?

The simple act of making an offer on a house should be the easiest part of the process, but even the easiest of jobs are prone to error – and this one, if done incorrectly, could cost you your dream home.

Should your offer be made in writing or will email do? Can your offer be made over the phone? Who should field your offer – the estate agent or seller? Well, it all depends on how the property is being sold. Take our advice and find out before your viewing so you’re primed and ready to act as soon as you decide that this one’s for you.

In the UK, you’ll likely be faced with one of the following home buying processes:

Private Treaty

In England and Wales, this is by far the most typical way to sell your home. Your property is advertised with a fixed asking price which buyers are invited to match – or at the very least, make an offer in the region of.

How to submit your offer? Offers can be made over the phone or in person to the estate agent. There’s no fixed date for offers to be submitted by.

Anything else? It’s not unusual for this standard way of selling to evolve into something else entirely. If there’s a lot of interest, estate agents may decide to request best and final offers from buyers instead.

Best and final offer

When there is a lot of interest in a property, buyers are normally asked to submit their best and final offer – i.e., the maximum they’d be willing to pay. The seller will then compare all of the bids and their buyers' positions and settle on one.

How to submit your offer? Your bid can be made over the phone or in person to the estate agent.

Anything else? Bear in mind, in the case of a bidding war, the seller may want to negotiate the house price even after you’ve submitted your best and final offer. They may also add conditions to their acceptance too – for instance, you must be prepared to exchange quickly.

Sealed bids

This is effectively a more formal version of best and final offer, whereby prospective buyers are invited to view a property and submit their offers at or around a guide price before a certain date.

How to submit your offer? Unlike the best and final offer system, sealed bids need to be submitted in writing, in a sealed envelope to the estate agent.

Anything else? In spite of the formal process, sealed bids aren’t legally binding – in England and Wales at least. Your offer can be withdrawn at anytime before the exchange of contracts.

What is gazumping?

In a seller’s market, gazumping is all too familiar. Demand for homes in desirable locations can result in multiple offers being made – even after the property is under offer.

In a nutshell, gazumping is when another buyer’s offer is accepted even after yours is agreed. It can happen at any point up until the exchange of contracts. So, even after you’ve paid for searches, surveys and valuations, a seller is legally allowed to accept an offer from a different buyer without having to reimburse you.

How to avoid being gazumped?

• Make a conditional offer: When you submit your offer, make it subject to the property being taken off the market – completely. Make sure the estate agent understands that absolutely no more viewings should take place if your offer is accepted.
• Be proactive: Give the seller every assurance that you’re a serious buyer. Submit bank statements, your mortgage agreement in principal and other documents as soon as they’re requested. Open a file with your conveyancer even before you submit an offer.

Negotiating house price

Ah… the eternal question. Should you negotiate on a house price? Like all things with buying a new home, the answer is never simple.

Deciding what to offer on a house or flat will depend on many things. The current market, neighbouring property prices and the building’s condition all play a part. However, you should also think carefully about what you can realistically afford. Will the asking price cripple you financially? If you’re intending on taking out a mortgage for your new home, it might be worth talking to a mortgage adviser who will take you through all of your options. Wards will usually have one in-branch, so pop in for a chat next time you walk by.

If you do decide to negotiate on the house price with the seller, there are some things you should bear in mind:

Be reasonable

Trust us – don’t make the mistake of low-balling your initial bid. That ‘cheeky offer’ will, in all likelihood, be refused outright and forever colour you in the eyes of the seller. Remember, it’s up to the seller who they choose to sell to and if you get off on the wrong foot, they may choose to exclude you from the running entirely.

Be organised

To a seller, the financial position of a buyer is probably just as important as their offer – after all, they need to be certain that you’ll see your offer through to completion.

Whether you’re in a chain or a cash buyer, it’s important to get your affairs in order ahead of putting in an offer. Be organised. If you’re in a chain, ideally you’ll already have a buyer lined up for your current home – if not, consider taking out a bridging loan to give you the cash you need while your sale goes through.

In the eyes of a seller, an organised buyer is a serious buyer – one who will be motivated to do everything that’s needed to push the sale through to the end.

Be prepared to lose out

When it comes to buying your next home, you will never know who you’re up against. If you bid below asking price while another buyer offers more, you will almost certainly be pipped to the post.

Take it from us: unless you’re fully prepared to lose your new home, don’t make an offer that’s below asking price.

Renegotiating a house's price after survey

Depending on the outcome of your survey, you may want – or need – to renegotiate your house price. If your surveyor finds any problems with the property, this may affect its valuation and, in turn, the sum that your mortgage provider is willing to lend you.

Whatever your situation, you won’t want to pay over the odds for your new home. If the property in question requires £10,000 worth of structural work, surely the seller should reduce the asking price accordingly?

Unfortunately, it’s not as clear cut as this.

Your seller is under no legal obligation whatsoever to reduce their asking price following the survey. However, you are absolutely within your rights to renegotiate with them – indeed, you’d probably be remiss if you didn’t at least try.

So, how should you negotiate a house price after your survey? There are a number of different ways you could go. You could ask for the seller to reduce their price to cover the entirety of the work. This is a risky gambit however and if the seller has had other interest in their property, they’ll most likely refuse – or worst, pull out of the sale, leaving you out of pocket for the survey.

You could offer to meet them halfway instead – ask them to drop their asking price slightly which would help you to afford the work that’s needed. But again, your seller is under no legal obligation to do this.

Whatever you decide to do, be sure to consult your estate agent first and they’ll be able to advise you on which course to take.