Logo

How to make an offer, a first time buyer’s guide

PUBLISHED: 17:10 20 January 2017 | UPDATED: 17:10 20 January 2017

The London property market can seem like the Wild West but Henry Pryor's advice will help you get your offer accepted

The London property market can seem like the Wild West but Henry Pryor's advice will help you get your offer accepted

JohnPitcher

If you’re buying a property in London for the first time, welcome to the British outpost of the Wild West. Luckily, we’ve enlisted buying agent Henry Pryor, one of the most experienced sheriffs in town, to help guide you through the process of putting an offer on a property and, more importantly, getting it accepted.

How to make an offer, and get it accepted How to make an offer, and get it accepted

Before you offer

1. We’re now in a buyers’ market

First for the good news. The balance of power in the London property market is now in the buyer’s favour. Rightmove lists 1,925 properties for sale in Camden this month. But Land Registry figures show an average of 166 homes per month sold in the borough last year – less than a tenth of the properties for sale. Gone are the days where agents offered viewings for one hour on a Saturday and you went round with 30 people. You have the ability to debate terms.

2. Mind the price gap

In November 2016, the most recent month with all data available, the average asking price for a home in Camden was £1,174,095, while the average sold price was £872,390. That’s just over £300,000, or 29 per cent difference between what sellers wanted and what buyers actually paid. This shows that a home is worth what a buyer is prepared to pay for it, not what the seller wants to get. The asking price is a combination of the owner’s greed and/or the estate agent’s enthusiasm to get the business, it is not a benchmark of what a house is worth.

3. Be prepared to haggle

Brits find it very embarrassing to haggle but estate agents do it all day long. Man up, otherwise you’re going to pay for the privilege of being embarrassed to negotiate. The National Association of Estate Agents said that 84 per cent of homes sold in December 2016 sold for less than the guide price. If you’re paying the guide price or more in 2017 you’re almost certainly paying more than you should.

4. Have evidence to back up your bid

There’s a lot of information out there. If you’re buying in Camden, Haringey or Barnet you’re lucky to have a reliable local property resource in the Ham & High. The Land Registry is also a good place to check how much comparable properties in the same area have sold for recently. You can use the information to say either “I’m offering more than the people this time last year,” or “I’m offering less because the market’s fallen by 10 per cent since then, or because this house needs money spending on it and the other one didn’t.”

Researching the local property market will help you back up your negotiations Researching the local property market will help you back up your negotiations

How much to offer

5. Look at the yield

One way to make an objective calculation of what any property is worth is to work out what the rental yield (the return on your investment) would be. This works regardless of whether or not you ever intend to let the property out. Find out how much rent for the property would be from the agent then work out the annual figure (multiply by 52 if they offer a weekly figure, 12 if monthly). Divide the annual rent by the asking price and multiply by 100 to get a percentage. Investors want a yield of at least six per cent. If the yield is closer to three or four per cent, which is a typical figure for central London, then you’re offering too much. What yield doesn’t do is work out how much subjective things that you can’t value are – the view from the kitchen window, or the proximity to your mum – but it will show you what it’s worth objectively before you get carried away and fall in love with it.

6. Talk to other agents

Talk to other local agents who might have pitched for the business. Maybe they valued it lower than the agent you’re dealing with and they can give you reasons why.

7. Negotiate any extras when you’re making your offer

If your offer is to include any extras like carpets or curtains, now’s the time to negotiate it. You might offer to pay the asking price, or increase your offer slightly in exchange for furnishings and you could end up with £10,000-worth of kit. The seller might have been planning to leave the things you want anyway so it might not cost them any money but could help the deal get done. Don’t come back to them later with a list of requests.

Calculating how much to offer is an art, but there are ways to figure it out Calculating how much to offer is an art, but there are ways to figure it out

How to offer

8. Stress what a great position you’re in

You are that most coveted of assets, a chain-free buyer; you don’t have to sell anything in order to buy. If they want the money, even if it’s a bit less than they’re asking for, they can have it by the end of the week. That can be a significant redeeming feature of a low offer.

9. Repeat after us: the estate agent is not acting on your behalf

They are not a broker, they are an agent, and they’re not acting for you. Don’t tell the estate agent more than you need to. If you tell them up front that your parents might chip in for the right thing, they will squeeze you for that extra £30,000 – their job is to get the most out of you, not to get a fair price out of you.

10. But do play ball with the agent

What you’re trying to do here is to get the agent to stop being an agent and start being a broker. They’re paid by the other side but if you can, corrupt them. Some agents want to look like they’re earning their money so you could lay out the top figure you’re prepared to bid up to but offer to bid lower at first so the agent can appear to be negotiating you up to a better price. You could say: “I would be prepared to offer £475,000. Do you want me to start at £425,000 and you can push me up?” Remember, he or she gets paid for doing the deal, not for giving good advice. Offer every opportunity for them to make some money by doing a deal.

Work with the estate agent and they might work with you in return Work with the estate agent and they might work with you in return

When you offer

11. Find out when the estate agent’s targets are calculated

Many London agents get paid entirely on commission because the market is so difficult at the moment so if you can, try and find out how and when your agent gets paid. It may be possible to get a better deal if buying at the end of the month/quarter/financial year when the agent is trying to meet their target and might get their commission or not based on your offer.

12. Confirm that your offer is subject to contract and to survey

When you’re making your bid you want to confirm that it’s subject to contract so under UK law you can walk away from it without any consequences. You want to make sure it’s subject to survey and, if you’re getting a mortgage, it will be subject to a mortgage valuation.

13. Get a survey

A structural survey or at the very least a homebuyer’s survey is very important. Is HS2 going to go burrowing underneath the building? Does the flat have rampant dry rot? Do all the windows in the house need replacing? These things ought to be checked after you make an offer (subject to survey) and before you exchange contracts. If the survey does uncover a problem that will cost you money once you’re the homeowner, you can go back and drop your offer.

14. Confirm everything in writing

Follow up every conversation you have with everybody, whether it’s to a lawyer, a mortgage broker or an estate agent. It’s boring but you can do it easily by email off your smart phone. When you’ve made an offer, send an email to confirm that you’ve made an offer and how much for. There’s less opportunity for people to forget or misunderstand something.

Choosing when to offer can be as important to getting an offer agreed as how much you bid Choosing when to offer can be as important to getting an offer agreed as how much you bid

15. Don’t be afraid to walk away

There are 25 million properties in this country and there is more than one with your name on it. Although it may feel like you’ve been looking for half your life, don’t be pushed, don’t be rushed and don’t be frightened of walking away. You can do this right up until you’ve exchanged contracts. You’d be amazed how many people come back and say “you know that derisory offer you made a couple of weeks ago? On reflection could we take it?” That said, you don’t want to get a reputation for being unreliable so don’t use this as a strategy. There are enough people who’ll let you down, don’t add to it.

Related articles

Property search


e.g. Oxford or NW3
Powered by Zoopla

Other Hampstead and Highgate property news

Dartmouth Park area guide: pubs, schools and family homes

Your guide to all the things to do in Dartmouth Park, including the best restaurants, pubs, schools and cultural activities in this corner of NW5. PLUS our guide to property in the area

Hot property in Dartmouth Park

Our top three include a five bedroom, listed home, a period flat and a ground floor garden flat with a cottage feel

Comment: Email trails tell house hunting horror tales

Even though rents are supposed to be dropping, reliance on emails and extortionate tenant fees makes house hunting a nightmare

Green light for Dartmouth Park house with floating kitchen

Amos Goldreich Architecture has been granted pemission to build this unusual extension project in a conservation area

Proportion of overseas landlords halves, but Hampstead may buck trend

Stamp duty and uncertainty hits overseas investors the buy-to-let market, but in American and Russian interest in Hampstead property has held

Doctor Who’s who: why the series’ stars love Muswell Hill and Crouch End

Jodie Whittiker may be the first woman to play Dr Who, but she’s not the first Time Lord to live in north London

Property of the Week: a new Arts and Crafts style development in Hampstead Garden Suburb

Set within a private residents’ courtyard these six new houses and 39 apartments have been executed in a classic local 19th century architectural style

Floral decor: 3 fresh-as-a-daisy interiors looks

Make rooms look blooming lovely with floral designs guaranteed to grow on you...

In a bind about bindweed?

Bindweed is one of the most difficult of weeds to eradicate - but there are ways to stop it strangling your plants

Haringey tipped as one of top ten for house price growth

Portico has revealed that Haringey is poised to be one of the hottest areas for house price growth in the next four years as developers eye up the next target for gentrification

Four of top ten Metropolitan police property sell off in north London

The Metropolitan police have sold off £1 billion worth of property in the past five years including in Hampstead, Highgate, St John’s Wood, Marylebone and Golders Green

The way we lived: an interactive tour of our local domestic history

From Golders Green in 1910 to 1960s Highgate, take an virtual reality tour of 400 years of London’s domestic style at the Geffrye Museum in Hoxton

Camden to have £7 million investment in affordable homes

The Mayor has today announced 335 new affordable homes to be built in Camden as part of £1.7 billion deal with local authorities and housing associations

Hornsey area guide: shops, restaurants, pubs, library and schools

Your guide to all the things to do in Hornsey, including the best restaurants, shops, pubs, schools and local history. PLUS our guide to property in the area.

Hot properties in Hornsey

A garden flat, modern one bed apartment and a striking end of terrace complete with turrets make up our top three in Hornsey

Got wood: inside the V&A’s new plywood exhibition

In a world-first exhibition, plywood is placed under the microscope for an in-depth look at the material that’s full of surprises.

Bank of England scrutinises long term mortgage lenders

PRA cautioned against a return to pre-2007 antics and warned long term mortgages could be storing up problems for the future

Next station: the Paddington Basin development including a gym, primary school and a hotel

Paddington Basin has long been in the shadow of the King’s Cross redevelopment, until now

Collective thinking: discover the new app that’s disrupting the way we rent

Sick of the stress of searching for a private rental property? There’s an app for that. Meet the St John’s Wood husband and wife team behind The Urban Collective

Comment: Roll up, roll up, the most frustrating show on Earth

Renting property in the circus of London is an eternally irritating game of hook a duck

Up, up and away: how to save Camden’s green spaces

The Campaign to Protect Rural England has urged London’s councils to build upwards rather than destroy the capital’s much loved green spaces

Kilburn offers the most choice for renters

8 per cent rise in rental stock matches 8 per cent fall in asking rents in a competitive market, but Kilburn comes top of the polls for supply

Easy does it: house price growth eased 1 per cent in June

House price growth slowed last month to the lowest annual rate since May 2013 as effect of stagnating wages and stamp duty on second homes bites

Property of the Week: A Grade II listed Georgian Terrace in Dartmouth Park

This five bedroom family home on Grove Terrace just moments from Parliament Hill is on the market for £2.4 million

Review: Ornament is crime celebrates our Modernist architectural heritage

In a much needed re-evaluation of Modernist architecture, Ornament is Crime celebrates the enduring architectural legacy of the last century. Frankie Crossley speaks to co-author Matt Gibberd.

Inside Bill Oddie’s Hampstead garden

Birdwatcher Bill Oddie on his weird, wacky and wonderful garden full of Disney memorabilia, gorillas and black magic

Can’t stand the heat? 9 top tips for a perfect summer garden

The Royal Horticultural Society offers these practical tips to help your plot stay healthy in the fierce summer heat

A green fingered dynamic duo

Green fingered husband and wife duo, Peter and June Lloyd are heading out of London, leaving behind a legacy of dedication to gardening

Wild about Wimbledon? The top homes for tennis lovers in north London

Tennis fan? Then you’ll love these homes with tennis courts on the doorstep, across the road and in the garden

Which Hampstead house should Alexandre Lacazette spend his £200,000 a week salary on?

The newest Arsenal striker has a big budget to play with and Patrick Vieira, Mesut Ozil, and his hero Thierry Henry all owning property locally he’d be in good company

Newsletter Sign Up

Sign up to the following newsletters:

Sign up to receive our regular email newsletter

Newsletter Sign Up

Sign up to the following newsletters:

Sign up to receive our regular email newsletter

2016 © Archant Community Media Ltd

Terms and conditions | Cookie policy | Jobs at Archant