Making An Offer

Whether you are a first time buyer or an experienced buyer, every house purchase can run differently and it can be challenging to know how high or how low to set your offer on a property.

Despite the saying that ‘something is only worth what someone is willing to pay for it’, there’s a lot more to the negotiation process than just numbers. Seller and buyer situation has a large impact, as does the market climate, area of the property and competition.

A good way to help to estimate a house’s worth is the local area. How are similar properties priced? How quickly are they selling? If similar properties are constantly printed on the ‘for sale’ pages for months on end, or if they’re selling below their asking prices, this is a great position to go in with a lower offer. An active, dynamic market with ‘Sold’ signs popping up in the neighbourhood generally means there is some competition and you should start with a bid that will capture the seller’s attention.

Furthermore, the seller’s situation plays a large role in offer acceptance. Maybe they have a new job or children on the way – all of which can work in a buyer’s favour. This is not the go-ahead for a rock-bottom bid, but more an opportunity to make a reasonable offer and have a smooth and stress-free transaction.

Additionally, your situation directly impacts your negotiating position too. People, who are not ‘on the chain’, i.e. have already sold their house and therefore have money in the bank are in the enviable position where sellers may accept a lower offer if it presents a way to dodge the pitfalls and hassles associated with the property chain. If you are not in this position, getting your mortgage pre-approved will earn you more leverage with a seller.

Sadly, there are no hard and fast rules to follow in negotiations as every sale is unique, however as a guideline, may people say that it’s best to open with an offer which is around 10% lower than the asking price. Not only does this show genuine interest, it also leaves you some room to keep your final bid as low as possible.

As a general note, ensure that you keep your highest offer in mind – one which you’d realistically want and be able to pay. The property may be perfect, however negotiations don’t always run our way and sometimes it might be better to walk away and take the opportunity to explore other property options!