I have seen a property I want to buy, but how do I decide how much to offer?
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Our property expert Simon Gerrard advises readers on deciding how much money to offer for their chosen property
This is a question estate agents are regularly asked by prospective buyers. No one wants to pay more than they need to, but offer too little and you risk another buyer coming in with an acceptable bid and securing the property you want.
When you have seen a property that you want to buy, some negotiation is to be expected, but judging how much to pay is not an exact science.
Making an initial offer below the asking price, can help to gauge the seller’s reaction and is a good opening gambit. However offering too low may alienate the seller, and skew their opinion of any further revised offer you may make.
If you really like the property and it offers you what you want and need, you should consider offering the asking price – before someone else does. Ultimately you must pay the price you are comfortable with.
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Unfortunately buying a home is more of an art than a science and there are no set rules. There are however certain steps you can take to ensure you pay the right price. Firstly do your maths and confirm your financial position. Don’t forget to factor in the associated costs of buying and moving; stamp duty, conveyancing, survey fees mortgage fees and removals etc. Speak to your lender or an independent financial adviser so you know exactly how much you can afford to pay.
Next you can check what other properties have sold for in the local area. Sale price data is publically available from the Land Registry and also on Zoopla and Rightmove, but consider the gap in time of when similar properties sold, the housing market and prices are moving very quickly. Make sure you are comparing like for like – the same style house just down the road may have had an extension or needed a lot of decorative work which will have affected the sale price.
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Then talk to the selling agent and ask them what position the seller is in. Do they need to buy? Have they found and need to move quickly? The seller’s motivation will go a long way to determining the level of offer they will accept.
These steps will help give you confidence that the price you are offering is right.
Make your offer to the agent and follow it up in writing – an email is sufficient – confirming your offer and what you want included in the price, this can help resolve any confusion or arguments later. The agent should ask you to confirm your position (are you dependent on selling for instance) and clarify how you will be financing the purchase. You may be asked to talk to the agent’s financial adviser to confirm your position. This is not unusual. You are not obliged to use the advisr’s services, but having your position validated will enable the agent to better present your offer to the seller.
Properties that are popular may generate multiple bids, in such cases the agent may recommend ‘best and final offers’. Interested buyers must submit their best offer in writing by a set date and the seller will decide which offer to proceed with, if any. It’s not always the highest price that is accepted, the buyers’ financial position and ability to proceed will affect the decision.
You must always remember that although the estate agent is there to help you find your perfect home, they have a responsibility to the seller, who is paying their fee, to get the best price from the best buyer. Just as you will have a figure in mind that you are willing to go to, so the seller will have a price they will want or need to achieve. A good agent will do their best for their client, give advice accordingly and broker a satisfactory deal for both sides.
Some people recommend you play it cool and not to lay your cards on the table too soon. My advice is to be up-front; if you want the property talk to the agent and let them know you are interested. Don’t try and play mind games, it is a sellers’ market and it is likely that there will be other interested buyers who will step in with an acceptable offer before you, so make sure you don’t hang about.
Simon Gerrard is the managing director of estate agents, Martyn Gerrard and a former president of the National Association of Estate Agents (NAEA). Email your questions to email@example.com or tweet us @HamHighProperty