When you have found a home you are happy with, you are nearly ready to make an offer as a start to the house price negotiating process.
House Purchase Making an Offer – Tip
Have a look at Land Registry reports for houses that have sold in the same area and compare asking prices with actual sale prices. The direction asking prices are heading is a good indicator of the local and national market.
Depending on the circumstances, consider what you can afford and work out your offer price on the house based on the lowest amount you want to “try on”. Have a clear idea of a median price you’d be happy with, and if things get tough make sure you have an upper limit based on the most you can afford and would be prepared to pay.
By doing your own price comparisons you should be able to get a good idea of a reasonable value before making an offer on a house. When making comparisons between houses, bear in mind that its value can be increased by factors such as extensions, loft conversions, fitted kitchens, being in a good location, or being a brand new house. Similarly, the value can decrease, for example, because of extensions that fill the whole garden or being in a bad location. Keep an eye on the local and national housing market. Check that the house is worth the price you are willing to pay.
Before making an offer on a house check whether the property is freehold or leasehold and agree with the seller what fixtures and fittings will be included as this will avoid later confusion. It can also form the basis of negotiation at a later stage.
Your offer must be “subject to contract and to survey and without prejudice”. This means that you are not legally bound to proceed until a survey has been satisfactorily completed and signed contracts have been exchanged. This is very important and should always be included when you are making an offer on a house in writing.
In a buoyant housing market there may be more than one potential buyer for a house and the seller may send out contracts to more than one set of buyers. The buyers then have to race each other to send a deposit and the signed contract gets the home. Solicitors are legally obliged to inform any buyers involved that they are in a contract race. Be careful – you may win, but if not you could lose a lot of money from all costs you have in the period before exchange of contracts, so only get involved if you have a very good chance of winning.
Once your offer has been accepted, it must be made formally, in writing, and subject to certain terms and conditions. Specify what fixtures and fittings you want to be included, and what work on the property you want to be undertaken before the sale has gone through. You will usually asked to put down a deposit as an act of good will can help to show your good intentions.
The estate agent will be in the middle of any ensuing negotiation. Don’t forget that the estate agent acts for the seller and not you. They will be trying to get the highest price possible.
House Purchase – Making an Offer Top Tip
When the property market is buoyant make it a condition of your offer that if it is accepted then the property be taken off the market to avoid the danger of gazumping.