How to Make and Accept an Offer

publication date: Jul 8, 2010
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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How to Make and Accept an Offer

        
Once you have found a home you like, or indeed someone has made an offer on your own home, don’t just make a snap decision to accept or reject.  Take your time.  Properties are worth differing amounts of money to different people, depending on their circumstances.  So whether you have received a low offer you want to reject or have fallen in love with a property and want to offer the asking price immediately, just stop, think and research the offer first.

If you are selling it’s worth working out the minimum offer you need to buy your next home and the amount that you would like.  If someone makes a low offer don’t dismiss it out of hand.  If it means that you can still afford the property you want and they are in a good position to buy (for example a cash buyer with nothing to sell) then it might be worth seeing if you could negotiate a lower offer on the property that you want to buy.  It is better to accept a low offer and be in a position to buy the property that you want, than not take it and lose your dream home.  You could accept the offer on the basis that you can still market your property up to exchange and make it clear you will accept a higher offer should one come along.

If you are buying, then spend some time researching what the property is worth.  The way to do this is to go to Hometrack and put in the postcode of the property you want to buy.  This will give you a list of properties in the same road that have sold recently – and the prices they have sold for.  Look at the property numbers that have sold in the last 12 months, driving by ones which are most like the one you want to make an offer on.  If you can’t see one, look at roads nearby with similar properties and do the same. Speak to local agents to and ask them for their opinions.

Then to find out whether the market is going up, down or staying the same, look at what percentage properties are selling for versus their asking price.  For example, Hometrack might give you an average figure of 95% of the asking price, which gives an indication of what others are offering.

Armed with this information, the property might be marketed at £180,000.  Similar properties might have sold for £165,000 and £170,000. But currently Hometrack might suggest that prices are going down slightly, say by 2%. If we take the £180,000 marketing price of the property and multiply it by 95% (average offers against asking prices) it gives a suggested offer price of £171,000. With prices being down by 2%, that suggests an offer of around £170,000 might be fair, unless the property has £15,000 of added extras versus others sold, for example a garage, bigger garden, or an additional bedroom.

It might even be that £170,000 is all you can afford and that’s the reason you want to offer that amount, and if so it’s worth being upfront about this and even offering or agreeing to be checked by a mortgage contact via the estate agency.  Ideally you will already have your Mortgage Agreement in Principle as this shows that you have already investigated what you can afford.

Once an offer has been accepted it isn’t always the end of the negotiations.  For example, your independent surveyor might find some damp and decree that it will cost £2,500 to fix, so they value the property at £170,000 - £2,500 = £167,500.  The seller may agree to this, or say they will meet you half way, now pricing the property at £167,500 + £1,250 = £168,750.

So remember, there is no ‘one price’ for a property, merely what a seller is willing to sell at and a buyer willing to pay.  But if you use a practical analysis based on “sold” property prices and information from the survey, then it’s much easier to let your head make or accept an offer than go with your heart.

Need an independent valuation on a property, then contact us or tel 0845 838 1763.

For more help when buying or selling a property, then take a look at our tips and articles:-

What are the Pros and Cons of Selling Privately

Working with Estate Agents

How to Value a Rural Property for Sale

Quick Sale Top 10 Tips


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