How to make an offer on a house

So, you’ve seen the house of your dreams and now you want to make an offer. How do you go about it? What should you bear in mind? And what pitfalls do you need to watch out for?

So, you’ve seen the house of your dreams and now you want to make an offer. How do you go about it? What should you bear in mind? And what pitfalls do you need to watch out for?

Mark Gordon
From the Mortgages team
4
minute read
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Posted 22 FEBRUARY 2021

Making an offer: what does the process involve?

Fallen in love with a property? Our first tip is to keep your cards to your chest. Don’t tell the estate agent how much you love the house (and definitely don’t tell the seller!) If they know your heart’s set on it, they could try to make you part with more money than you’d hoped.

How do I put in an offer?

Here’s how to go about making a bid on a property you like:  
 
1) Tell the estate agent 
Estate agents must pass your offer on to the seller, however ridiculous – that’s the law. The exception is if the seller has instructed the estate agent not to pass on certain offers – if they’re under a certain amount, for instance. At the initial offer stage many buyers go in with the lowest offer they can.  
 
2)  Put your offer in writing 
Follow up your offer with an email so you have proof in writing, should you ever need it.   
 
3)  Start negotiating 
If the seller’s interested, this is when the haggling starts. This is all done through the estate agent.  

How can I make sure my offer’s accepted?

When it’s time to clinch the deal, you’ll be in with a better chance if you have a mortgage Agreement in Principle. This isn’t the same as a firm mortgage offer, but it tells the seller that you’re in a position to get a mortgage, which means they’ll take your offer more seriously. Getting an Agreement in Principle before you begin your property search will also give you a firm idea of what you can afford – so you won’t waste time looking at properties that are out of your reach.

But better still…

  • Be a cash buyer
    Easier said than done! But the process is more likely to go off hitch-free if you don’t need a mortgage. That’s why sellers love cash buyers.
  • Don’t be in a chain
    Again, there’s not much you can do about this one, but sellers generally prefer a first-time buyer, or someone who’s already sold their property, because it means they can move quickly.
  • Be flexible
    It might be that the seller needs to move quickly – or wants to wait. Either way, if you can fit in with their plans, they may be more likely to cut a deal with you.

How much should I offer on a house?

How much you can offer will depend on a few factors. You’ll need to ask yourself some tough questions:

  • How much can you afford?
    Clearly this is the most important factor to consider. You should have set a budget at the start of your property search, so when you’ve found something you want to buy, always think about all the costs involved – not just the asking price. You’ll also need to factor in any building work and redecoration, moving costs, bills, council tax and new furniture. If you’re moving to a big house, consider how much it’ll cost to heat and clean too.
  • What’s the market doing?
    You’ll need to pay close attention to what the property market’s doing. If it’s hotter than Bermuda, competition from other buyers may mean you have to dig deeper. But if the market’s flat and houses aren’t selling, you’re in a much better position to make a cheeky offer. It’s always useful to know the ceiling price – the maximum anyone is likely to pay – for the best-quality property of that type in the street and the area. Ideally you won’t want to go above this price.

    If you’ve no idea which way the property market is  moving, websites like Rightmove or Zoopla will give you the lowdown. The Times also has a property section in Friday’s paper.
  • What does your estate agent think?
    While you mustn’t forget that the estate agent is working for the seller, not you, they should still be able to give you all sorts of useful info.

    For instance, maybe it’s a family home the seller is emotionally attached to, and for them, it’s about more than just the money. They might want to sell to someone they like and trust.
  • How keen is the owner to sell?
    If the owner is keen to move quickly – let’s say they’re starting a new job in a new city – they may be more willing to budge on price.
  • How much do similar properties sell for?
    Property websites like nethouseprices.com tell you how much houses in your area have actually sold for – not just the asking price. This is great intel you can use to decide how much to offer.
  • How long has the property been on the market?
    If a house has been languishing for months on every property portal, you can probably afford to make a lowball offer. You should also try to find out from the estate agent how many viewings it’s had.
  • How desirable is the property?
    A beautiful house in an amazing area with fantastic schools will always have buyers flocking. But if the property has obvious flaws – it needs a lot of work, for example – you should be in a better position to negotiate.

How much less than the asking price can you offer on a house?

This will very much depend on all the things above. But the general rule is to go in at 5%-10% less than the asking price.

What’s the best way to haggle?

When it comes to house prices, it’s always worth negotiating. After all, this is probably the biggest purchase you’ll ever make.

Start with a low offer and see what response you get. If you’re turned down, hopefully you’ll have the opportunity to make further bids up to the top of your budget.

If it’s obvious that work needs doing on the property, you can try to negotiate around that, stating how much you think it would cost and trying to get that amount off the asking price. Try to keep cool, as you don’t want to appear too keen. As long as you’re polite and show you’re open to negotiation, you may find that sellers are willing to meet you halfway.

What happens when an offer goes to sealed bids?

If more than one person makes an offer on the property, the estate agent may decide to go to sealed bids. This is when you put your offer in writing and give it to the estate agent without knowing what the other person is offering. You now need to decide exactly how much you’re willing to pay. It’s a tough call, as you need to offer more than the other bidders, without overpaying. Sometimes it helps to add a relatively small amount to your final figure – say £2,000 – so your offer has the edge.

What does ‘best and final offer’ mean?

Your best and final offer is exactly that – the highest price you’re prepared to stretch to.

What happens if the seller gets another offer?

There’s always the possibility you could be gazumped. That’s when the seller agrees to a higher offer after they’ve accepted yours. It’s bad form but perfectly legal, unfortunately. Nothing is legally binding until you’ve exchanged contracts (the rules are different in Scotland, though).  

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

You don’t need to have sold your own home before making an offer, but it may put you on the back foot. You might find the seller only provisionally accepts your offer, and keeps the house on the market until you find a buyer. Or the seller might accept another, lower offer from someone who’s ready to move.

It shouldn’t make a difference, but in reality, it does help if you can find a buyer for your own home before you put in an offer somewhere else.

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