For most first time buyers making an offer on a property is an exciting part of the process. It’s not easy though. Obviously you want to get the house at the lowest price possible. But then again you might feel awkward about making an offer so low as to really upset the seller.
The first thing to understand is that this is a negotiation process. It’s unlikely that your first offer will be accepted unless you go in at very close to the asking price.
Most sellers (aka Vendors) need to maximise their selling price. They have plans of their own, perhaps they need every penny possible to secure a new home for themselves. Whatever their intentions, you are trying to find the “magic number”. That is to say, the lowest possible price they are willing to accept so you can move forward.
This number is often slightly lower than they ideally wanted to achieve and slightly more than you ideally wanted to pay!
To help you get to this point, before you offer you need first time buyer mortgage advice and get yourself organised to give yourself the best possible chance of success. This is especially important if the property is new to the market or you are in competition with another prospective purchaser.
Any decent Estate Agent will want to check that whether you are a cash buyer or need a mortgage that you have funds in place. No one wants an agreed sale to fall through so it’s reasonable for them to check you have the means to proceed.
They also have their own anti-money laundering checks to run so you may also be asked to prove your identity and address. Some corporate Estate Agents exploit this diligence (aka Offer Qualification) in order to cross-sell other products and services to you.
They prey on purchasers who have fallen in love with a property by intimating they have a greater chance of success by using an in-house Mortgage Advisor. This just isn’t true; most people see right through it and it is a poor practice that ought to be banned.
Sending in your Agreement in Principle and other documents should be proof enough that you can go ahead and if not, simply tell the Estate Agent you will bypass them and approach the vendor direct.
If you have a property to sell to raise a deposit for your purchase, it is far more effective to have sold it prior to making an offer. The issue sometimes is that you might not really be looking for a new home until a specific one comes up for sale!
If this happens to you then by all means go ahead and view the property and express an interest. Trying to agree a price at this point though is to negotiate from a position of weakness. Even if you ignore this advice and agree a purchase price, the vendor will be advised by their Estate Agent to keep the property on the market anyway, so it doesn’t achieve very much.
Get all your paperwork in order. When you apply for a mortgage you will be asked to provide proof of income, ID, address, deposit and 3 months’ bank statements.
Start to pull all your documents together into a folder so the second your offer is accepted you can put the wheels of your formal mortgage application in motion.
Emotions can run high when it comes to selling a home. If you are buying a house for your family and the seller has raised their own family in that house, then it might well resonate with them if you tell them your plans. This will build empathy.
Telling them about all the shortcomings of the property is unlikely to get you very far when negotiating so this should be avoided. For example, if the property is not double-glazed for example, the vendor already knows that so pointing out the obvious won’t really help you.
Finding out a little bit about the seller’s plans doesn’t do any harm at all within reason. Have they already found a house to buy themselves? What are the reasons they are moving? Have they had many offers?
Answers to these questions and others may signal how likely the vendor is to take a low offer. Generally, people can’t wait to talk about themselves and if you listen carefully you could easily find yourself in a better negotiating position.
One final thing – if your first offer is accepted the chances are your opening bid was way too high! Always offer less than you are truly willing to pay.