How to get your offer accepted
After months of searching you’ve found your perfect property. Your deposit is sorted, you have a provisional mortgage decision from a lender and so now it all comes down to is making your offer. Time for your best poker face.
So how do you play it? Do you put in a high offer to clinch it, but risk paying over the odds? Or put in a low offer but risk losing your dream home? Everything feels like it’s riding on this one move.
As stressful as it may be, there are some steps you can take to increase the chances of your offer being accepted. To help you we’ve put together a four stage plan of attack.
Step 1. Know what you’re up against.
First things first, you need to do your background work. As any top coach will tell you, the key to success is in the preparation. The more you know about the market and the house on offer, the better positioned you are to decide your approach.
Your background research could include:
- Maintaining close surveillance of the property market, and in particular how much similar properties in the area are selling for, and how quickly they are selling. If they are moving very slowly, and going below the asking price, then you are in a stronger position to put in a lower offer.
- Has the house has been on the market for a long time? This could suggest they are having problems selling and other people think it is overpriced. Has the asking price dropped since it was put on the market?
- Why is the house for sale? Does the seller want to sell quickly? Are they looking to buy a specific new house but are caught in a chain? Are they having to move to follow a job?
- Are you the only person who has expressed interest in the property? If so, the seller will realise you are probably their only hope.
- Is the seller is using multiple agents? The estate agent will then be more likely to want to persuade them to accept a lower price, to guarantee they get the commission rather than another agent.
Step 2. Leveraging to your advantage.
Having completed your research, the next stage is about how you position yourself in front of the estate agent.
Estate agents often face a dilemma when it comes to selling properties. They want to sell for as high a price as possible as they are often working on a commission basis, but at the same time want a quick sale without too much effort, so that they can collect the commission and move on to the next job. If you leverage the latter to your advantage, you can position yourself in pole position.
To help increase your chances of success you should:
- Building a relationship with your estate agent will help ensure you’re getting the best possible advice about your purchase. Try and go into their offices rather than having a phone call. Sit down with them to discuss your requirements so that later down the line they can put a face to your name.
- Think like a seller. Sellers are busy, they don’t want time wasters nor do they want the inconvenience of having lots of viewings. And remember, the process is just as daunting for the seller. Selling their property could impact on whatever their next steps might be.
- Be proactive to show the seller you’re a serious contender. If you like the look of a property, don’t dawdle – be the first to get a viewing.
- Play it cool. If you fall in love with a property when viewing it, do not prance around declaring that you have had your heart stolen. If you’re too obviously keen the seller will know you will be willing to pay more.
- Make it clear you have the finances in place. The seller will be less interested in someone who will take a long time, may not be able to raise the funds, and could pull out later. If you have your finances in place with a large deposit, then you will be much more attractive to the seller.
- Similarly, if you are not in a chain, either because you are a first time buyer or have already sold your home, make sure it is clear. The seller will then not have to wait for you to sell your house before you can buy theirs, with the accompanying risk it might all fall through.
- If you can, be flexible with the completion date & suggest a date that works for the seller.
Step 3. Making the offer.
The first step is to speak to the estate agent. By law estate agents have to pass on every offer they receive to the seller, however ridiculous. Once the estate agent has passed your offer on, if the seller is interested, then the negotiations start (via the estate agent).
It is a good idea to put the offer in writing (a telephone call followed up by an email will be fine) in order to reduce scope for confusion or argument later.
As for the offer here are our top ten tips:
- 1. Some buyers try and unnerve sellers by putting in very low initial offers. Be careful with this approach as it can backfire if you offend the seller. What’s more, stay polite and calm at all times. You’ll only alienate everybody if you get irritated.
- 2. Make sure you are clear with yourself on the maximum you will pay. Don’t let emotion take over (easier said than done).
- 3. As with all negotiations, start low. A good rule of thumb though is to offer 5% to 10% lower than the asking price. Don’t forget that sellers often take this into account and deliberately put their house on the market for more than they expect or would accept.
- 4. Utilise the relationship you have built with the estate agent. Make sure they tell you of any bids that trump yours, and give you a chance to offer a second or even third bid.
- 5. On that note leverage your relationship to see if the estate agent will give you an indication as to what amount they think would be accepted.
- 6. Only offer more than the asking price if you know the seller has already been offered that, or if you are really worried about not getting your once-in-a-lifetime dream home and you think there are lots of other buyers.
- 7. Play hard to get, but stay realistic. If you think the seller is desperate, it is not in your interest to appear too keen.
- 8. Perhaps contact the seller directly and negotiate in person. But remember they could be harder to negotiate with that the estate agent who wants to close the deal as soon as possible.
- 9. Don’t be overly influenced by other things thrown in with the deal. For example, unless very new, second hand white goods are usually worth very little and its often less hassle to sell them with the house than move them.
- 10. Always offer a few more pounds and pence than a round number. For example, offer £375,050 rather than £375,000 just in case another bidder offers that round number.
Step 4. Sealing the deal.
Once your offer has been accepted, you’re almost on the home straight. Before cracking open the champagne, there’s just a couple of things to finalise.
You should be aware that even after an offer has been made and accepted by the seller, it is not legally binding on either side (in England and Wales; there are different rules in Scotland). In fact, until the exchange of contracts either party can still pull out (although as buyer you might lose your holding deposit).
Approximately 1 in 10 people have experienced the seller pulling out of the deal after accepting their offer because they have received a higher offer from elsewhere. This is called “gazumping”, which is more likely if your offer is on the low side. To help stop this happening, once your offer has been accepted, ask for the property to be taken off the market straight away. This can minimise the chances of additional offers coming in over and above yours and finding you’ve been trumped. They do not have to, but if they do this will prevent other potential buyers butting into your purchase. If they don’t, then ask why they are still marketing their property, and be careful about spending thousands of pounds on surveys, solicitors and arranging mortgages.
Unfortunately, if you are “gazumped”, there’s not much you can do about it apart from counter-gazump (putting in a higher bid than the gazumper). Therefore it’s best to be proactive to ensure your avoid finding yourself in this situation.
Besides being “gazumped”, the only other thing to then finalise regarding the offer is what’s included in the sale in relation to fixtures and fittings. Whilst not usually a big issue, it’s important to have this all agreed in writing to prevent any later disputes.
We hope you found this useful. If you would like more information or would like to speak to someone from Furnley House, please contact us on 0116 269 6311 or at email@example.com. We’d love to hear from you.
Your home may be repossessed if you do not keep up repayments on your mortgage
Furnley House Limited is authorised and regulated by the Financial Conduct Authority (ref. 624579). There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be £295 if you are re-mortgaging and £395 if you are buying a home.