How To Make An Offer On A House
Making a good offer on a house is crucial in securing your dream home. Below are some tips to help you to make a reasonable house offer that is more likely to be accepted.
Be Aware Of Your Mortgage
It may seem more logical to make an offer on a house and then get a mortgage as you know how much you’ll need.
But maybe there’s another way?
A very simple way that seems obvious but it’s where many buyers go wrong.
Be aware of what the mortgage lender is willing to lend you before you put in the offer.
You don’t want to view or put an offer on a house of a certain price only to find you can’t borrow the amount you need from the mortgage lender. It’s better to be safe than sorry, and it’s for this reason that it’s best to begin the mortgage process and to be aware of how much the mortgage lender is willing to let you borrow as early as possible.
If you’re a first time buyer and a bit baffled by the idea of mortgages, take a look at the video below which provides a good explanation.
Not only can being aware of your mortgage help you make an informed offer and make the sale less likely to fall through, it will also help you to set your budget as you’ll know how much you’re able to spend. Just remember to still be cautious, as a mortgage-in-principle is not an approval. Don’t offer the property seller more than you are able to afford.
But there’s more to this…
Aside from providing you with peace of mind, being aware of your mortgage can also put you in a favourable position with sellers.
The proof is in the research. Findings by the Nottingham Building Society have shown that over one in three house sales have fallen through because mortgages have not been arranged in time. Being at some point in the mortgage process is more attractive to sellers because it can speed up the buying process and you can provide a somewhat informed offer, with the likelihood of less problems down the line.
For more information regarding mortgages, you can contact A Move Mortgage director Sharon Owens on 01244 478780, who will be happy to give you a free of charge no obligation phone call.
Research Similar Properties In The Area
So you’re aware of roughly how much the mortgage lender is going to let you borrow and you’ve set yourself a budget.
Next, it’s time to research similar properties in the area. Some buyers might not think to do this when looking for a new property but it can play a crucial role in making a reasonable offer whereby you are not taken advantage of by the seller.
Knowing how much similar properties are currently valued at and how much they are selling for in the area you are looking to move to enables you determine whether the asking price is fair, and to make an offer that is in line with current property prices, your mortgage offer and the actual value of the house you are interested in.
For example, if the semi-detached house you’re viewing is on the market for £180,000 but other properties of the same type in the same area are only valued at £135,000, then you’ll know that something is a bit odd. There could be a perfectly valid reason for the higher pricing – for example, the price could be higher because it has a large extension or has been completely refurbished. Meanwhile, the cheaper property may have structural issues. You can always ask the estate agent why one property is priced differently than other, similar properties, and then make an offer based on your research and negotiate if required.
It’s that simple.
Understand The Current Type Of Market
While researching similar properties is helpful it’s also important to understand whether your desired location is a seller’s or buyer’s market.
If it’s a sellers market, give the best offer you are willing to give as there will be more buyers than there are houses available in the area – they are likely to receive lots interest in their property, resulting in a large number of offers and can easily reject lower bids in order to take the best one.
Despite this, keep in mind the actual value of the house. This is particularly significant if you’re looking at a house that is overvalued compared to similar properties in the area but is still a seller’s market. It might be a seller’s market but that doesn’t mean you should go over your budget unless you are able to or because it is your dream home, you can afford it and you simply can’t say no.
If you do make an offer and it’s accepted, you are able to ask the estate agent to remove the listing. This will stop any other potential buyers jumping in at the last minute and snatching the property from under your nose by making a higher offer.
It goes without saying that in a buyers market, you have the advantage.
It’s possible to go in with a lower offer as the number of houses exceeds demand and the seller wants to sell their home for the best price they can in these circumstances. However, it’s best to approach this carefully as you don’t want to be seen as not taking the process seriously.
By now you’re probably wondering when this type of market is likely to occur.
It tends to be during the spring months, so March – May is the best time to go house hunting and make an offer that a seller can’t refuse.
Sellers are also more likely to negotiate on price and accept a lower offer if they are in a hurry to move or the property has been on the market for a while. Ask the estate agent about both of these to examine whether it’s worth going in with a lower offer.
Be Appealing To The Seller
Being likeable to the seller is crucial as you need them on your side in the buying process.
This part is easy.
When at the viewing or corresponding with the seller, try to give a good impression both personally and regarding the buying process.
Show that you are genuinely interested in buying their home, compliment it and be friendly. Simply put, if they like you then they are more likely to favour you. Don’t point out the things you don’t like if the seller is home as this will instantly make a bad impression.
The next part is a little more difficult, as it depends on circumstance.
In terms of the actual buying process and making an offer, confirming that you are not in a chain is a plus as you can use this to your advantage as well.
Think about it?
Chances are that most sellers will want to seal a deal quickly, and by not having the stress and uncertainty of a chain then you may be able to make a reasonable offer within your budget that will be accepted. This is appealing to sellers and makes you the favourite in negotiations, especially if they are in a rush to sell as for them it means the process will be over quicker than if you were in a chain.
By knowing what you can afford, researching the market and being likeable to the seller, you can make an offer that is reasonable and acceptable. Just remember not to stretch your limits too far, as you don’t want the home buying process to fall through and to lose the property that you bargained for.