Whether you’re a first time buyer or moving home again, putting in an offer for a house you’ve fallen in love with can be a really exciting, but often nerve-racking time.
When making an offer on a house, chances are that you won’t be the only hopeful buyers, so you need to act fast – but how do you put in an offer, and how much should you offer for the best chance of being accepted?
If you’re searching for your very first home, you may not be familiar with the house buying process, including how to put in an offer for a property you’d like to buy. The good news is that this is a relatively simple thing to do.
Before you start, however, you will need to obtain a mortgage in principle, also known as a Decision in Principle (DIP) from a lender first. This will help you understand how much you can borrow and give you confidence that you are able to afford your new home if your offer is accepted.
Of course, before you can make an offer on any property, you need to decide an amount. The ‘asking price’ of a property is based on how much it has been valued at by an estate agent, but it’s not necessarily the minimum amount that the sellers will be willing to take for it.
Deciding how much to offer is tricky though. If you make an offer that’s too low, you could risk losing out to another buyer, but on the other hand, you want to make an offer that is attractive without going too far over the asking price or going over your budget.
As estate agents are legally required to pass on every offer they receive to the seller, you could technically offer any amount you like, but it’s worth doing your research first to put yourself in the best possible position. Here are our tips to help you settle on an amount to offer, that has a high chance of being accepted:
- Start with your Decision in Principle: Your DIP will tell you how much mortgage a lender is willing to lend you.
- Research similar house prices: Use websites such as Zoopla and Rightmove to see how much similar properties in the immediate area that you’re looking at have sold for and use these as a guide.
- Find out how long the property has been on the market: If the house has been on sale for a long time or already been reduced in price, you may be more likely to be successful with a lower offer.
- Start your offers low: If the property is being sold through an ‘open negotiations’ process (as opposed to sealed bid), it may be wise to make your first offer below the asking price. You can then increase your offer further if you’re told that the seller has received another offer that is higher than yours, or rejects your offer.
- Only offer what you really want to pay: Any offer has the potential to be accepted, so don’t get over-excited and offer an amount you wouldn’t realistically want (or can afford) to pay.
With an offer figure in mind, the process for making the offer is relatively straightforward.
- Telephone the estate agent selling the property and let them know that you want to put in an offer and the amount you’ve decided on.
- Await a response from the seller through the estate agent. Unless the property is being sold through a ‘sealed bid’ process, you’ll be told whether any other offers have been made that are higher than yours. If this is the case, you’ll be given the opportunity to increase your offer.
- Get your offer in writing – the estate agent will usually send you confirmation, but if you do not receive this shortly after your submission, follow this up.
So the seller didn’t accept your first offer? Don’t worry. This doesn’t mean that you’ve lost out. You should be informed by the estate agent whether any other offers have been made that are higher than yours, or whether the seller is open to negotiation on the price. You may even be told the amount that they’re really looking for.
If you have an opportunity to make a higher offer, can afford to do so and are still interested in buying the property, then now is your chance. Here’s what to do next:
- Let the estate agent know that you’ll consider a further offer and get back to them with an amount – you don’t need to make another offer right away.
- Consider whether you can really afford to increase your offer and be honest as to whether you feel comfortable doing so.
- If you do wish to make a higher offer, it’s common to increase your original offer by a small increment, such as 5%. Until a property is taken off the market, you can continue to make further offers – but bear in mind that this means other interested buyers can too.
- Once you’ve settled on an amount, make your new offer in the same way as your initial offer.
You finally receive the news that you’ve had an offer accepted. Congrats! Once you’re done celebrating, here are your immediate next steps to get the sale moving quickly:
- Request that the seller takes the property off the market, to prevent other potential buyers from ‘gazumping’ you with a higher offer – which can happen at any point before the sale is complete.
- Appoint a solicitor or conveyancer to handle the legal side of your purchase.
- Make your full mortgage application, and await your official mortgage offer from the lender.
Our guide on what to do when you have your mortgage approved will help you with the next stage of your home buying journey. If you haven’t already, get in touch with one of our mortgage advisers to begin your mortgage application process.
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