The year 2024 will continue to see a fall in property prices. This is good news for homebuyers.
If you're a newcomer to the property market, you might wonder about more than just the costs of buying a house. Here we take you through the stages of negotiation and making an offer.
We have a more detailed article on helping you authenticate if the other offers on the house are real. Also, find and get tips on registering with estate agents to buy.
Ready to transform your house-buying journey? Let's begin.
Entering the property market in 2024
Many reliable sources are currently predicting a trend of falling property prices in 2024. Local house prices, recent sold prices, and housing market trends play a central role in shaping the asking price of a property.
For instance, in a sellers' market, you may find properties fetching higher prices due to increased demand. Conversely, a buyers' market might see properties going for a tad lower than the asking price, offering a prime opportunity to save money.
Do your homework and study the past few months of property sales in your desired area. Websites that record property transactions can provide insights into what similar properties sold for. Comparing these sold prices with the asking prices of your desired property will provide a clearer picture of what to expect.
Making an offer: initial steps
Ensure that you are financially ready, before embarking on the property search. Your maximum budget must be clear in your mind.
Find out about mortgage rates, approach your mortgage lender, and get a mortgage agreed in principle. A mortgage in principle (MIP) is a certificate showing what you can potentially borrow from a mortgage lender. It's not a guarantee, but it gives an idea of the amount they might lend you.
Find the perfect property. Look for something that fits your criteria and budget.
Once you've earmarked a property, reach out to the seller's estate agent to express interest. It's a common practice, and sometimes it might lead to you getting insights on the seller's position or any other offers that have been made.
Now you can make an offer. Making an offer is not legally binding at this stage. Only once contracts are exchanged, you'll be legally obliged to purchase the property. It's perfectly legal to put forward an offer and later revise it or pull out based on subsequent findings or changes in circumstances. Start with a lower offer: try and bag a bargain whilst giving yourself some wriggle room to put in a higher offer if your first offer is rejected.
How to put in a successful offer
Think carefully about your opening bid
Is your opening bid higher or lower than the asking price? House price trends shift, so making an informed decision about your initial bid requires attention to the market's pulse. Analyse recent sale prices of similar houses in the area, before bidding.
If properties sell quickly, consider a higher initial offer, especially if you're eyeing a property that matches all your criteria.
On the other hand, properties lingering on the market might warrant a lower bid. Remember, it's a balance between securing your desired home and ensuring you pay a fair house price.
Build a rapport with the estate agent
Estate agents, the middlemen in property transactions, often have the inside track on a property's history and the seller's circumstances. While they work for the seller, they also play a key role in ensuring a smooth sale. Building a rapport can benefit you, by granting access to information not readily available elsewhere.
Tips for effective communication with estate agents
Ask open-ended questions to gather comprehensive insights.
Display a genuine interest in the property, emphasising your readiness to proceed.
Avoid revealing your maximum offer or budget. Maintain some ambiguity.
If multiple agents represent a property, liaise with one to streamline communication.
Regularly check in, ensuring you remain a priority for the estate agent.
Decipher the asking-price guide
House price labels can sometimes baffle first-time buyers. The 'guide price' indicates a ballpark figure, often to initiate interest.
'OIRO' (Offers In the Region Of) suggests that offers near the mentioned price will likely be considered.
'OIEO' (Offers In Excess Of) makes it clear that only offers higher than the stated amount are acceptable. Recognising these nuances aids in formulating your initial offer.
Factors to consider when deciding your opening offer
Here are the factors you should stay attuned to, which can make the difference between a rejected proposal and a successful negotiation:
Length of time on the market: properties available for a prolonged period might accept a lower price.
Condition of property: a house requiring renovation could justify a reduced bid.
Other buyers: competition may push you to offer closer to the asking price.
Sale circumstances: a quick sale situation, such as a move abroad, may result in the seller accepting a lower sale price.
Local market conditions: in a buyer's market, you have the upper hand. In a seller's market, properties may sell for more than the asking price.
How to submit an offer for a house
Inform the estate agent, as they are obligated by law to relay all offers to the seller. Formalize your offer in writing (send an email) to minimize potential misunderstandings later on.
Highlight any of your plus points; for instance, being a first-time buyer or a cash buyer. Demonstrating readiness to act swiftly can bolster your case.
Document fixtures and fittings: having these details documented from the outset minimizes the likelihood of disputes and delays later.
Safeguard your purchase by requesting the property be removed from the market upon acceptance of your offer.
Mastering negotiation tactics
It's essential to approach negotiations with a clear head and avoid getting too emotionally invested.
Open negotiations: these offer transparency between the buyer and the seller. In this setting, an estate agent often facilitates discussions, conveying offers and counteroffers until both parties agree.
Open negotiations allow both sides to adapt and react in real-time. On the flip side, they can be time-consuming and may lead to increased emotional investment.
Sealed bids: these, by contrast, involve prospective buyers confidentially submitting their best price. The seller reviews the bids and makes a decision.
The sealed bids method provides a clear deadline and can expedite the buying process. However, it can be stressful for buyers, uncertain if their bid is competitive.
When are sealed bids preferred in the property market?
In the UK, sealed bids come into play when a property garners immense interest. This could be due to its unique features, an attractive asking price, or its location in a sought-after area.
Estate agents might suggest this route to help the seller select the most compelling offer, especially if many buyers are neck-and-neck in their proposals.
Presenting yourself as a serious buyer
Show genuine interest: to stand out in a crowded property market, it's beneficial to show genuine interest and capability to proceed.
Show financial preparedness: one way to gain the interest of the seller is by having a mortgage agreement in principle, which signals that your finances are in place. Providing evidence of your holding deposit, or stating your position on the property ladder, can further cement your standing.
Be knowledgeable: engaging openly with the estate agent, asking informed questions, and showcasing knowledge about the key aspects of the property can also position you as a serious contender.
Real-life negotiations' outcomes in case studies
A property chain dilemma: negotiation to the rescue
Sarah and Mark, moving up the property ladder, faced a snag when their buyer pulled out last minute. With their dream house in sight, they risked losing it. They spoke to the estate agent, explaining their situation and commitment to the sale. By negotiating a slight increase in their offer and an extended completion date, they secured more time to find another buyer for their current home.
A first-time buyer securing a dream home
David, a first-time buyer, eyed a chain-free flat in Birmingham. Rather than giving a lowball offer, he proposed a fair price slightly below the asking. During the negotiation process, he emphasised his readiness for a quick sale, backing it up with proof of his mortgage agreement in principle. David's straightforward approach and genuine enthusiasm won the seller over, even when other buyers presented higher price offers.
Advantages of being chain-free or a cash buyer
Being chain-free or a cash buyer offers a distinct edge in negotiations. Chain-free means you aren't dependent on selling your property before buying the next, reducing potential sale complications. Sellers often view chain-free buyers favourably, as the buying process can be quicker and smoother.
Cash buyers, those purchasing without a mortgage, can often expedite the sale even further. With funds readily available, there's no waiting for mortgage approvals, making the entire process more efficient.
Using surveys and inspections as negotiation tools
Surveys offer insights into a property's condition. Any issues uncovered, from minor repairs to significant structural problems, can be grounds for negotiation.
Discovering defects post-survey can lead to various outcomes. You can negotiate a reduction in the house price to cover repair costs.
Alternatively, you might request the seller to fix the issues before finalising the sale. Communication is key here, ensuring both parties remain informed and on board with any changes.
Benefits of engaging a buying agent
Buying agents offer expertise that can make all the difference in securing a dream home, especially in a competitive market. They have the following advantages:
- Agents can analyse the local property market professionally.
- Agents bring to the table seasoned negotiation skills.
- They represent you, ensuring your interests remain at the forefront.
- They can achieve a price reduction, saving you more money.
- Agents help avoid bidding wars, which often escalate the house price.
- They present your final offer in the best possible light to the seller.
- Buying agents often have insider knowledge, which means they might be privy to properties before they even hit the market. This can provide you with a distinct advantage in the quest for just the property you desire.
- Comparing conveyancing fees and the value an agent brings can be a balancing act. You will be incurring an extra cost by hiring a professional, but their expertise can translate to savings in the price you eventually pay.
- If time is of the essence, an agent can expedite the process.
To determine the worth of an estate agent, review their track record. Past success can be indicative of future performance.
The post-offer phase
Once your offer on a house is on the table, the ball starts rolling rapidly. Knowing what to expect can ease anxieties and help you prepare.
Holding deposit payment
A holding deposit often follows a verbal agreement of sale. This deposit solidifies your intention to purchase and usually amounts to a small percentage of the asking price. The holding deposit:
Demonstrates to the seller your commitment to the property.
Provides you with a window to finalize mortgage arrangements and other details.
Acts as a deterrent for other potential buyers, minimising the chance of a better offer coming in.
However, it's worth noting that at this stage, the sale isn't binding. If either party changes their mind, the holding deposit is often refundable, depending on the agreement.
Exchange of contracts
Once your offer has been accepted, the countdown to exchanging contracts begins. This phase sees the involvement of solicitors, property surveys, and the finalisation of mortgage offers. Several key points arise during this period:
Any issues detected in property surveys can be grounds for renegotiation.
Both parties will settle on a completion date.
Once contracts are exchanged, the sale becomes legally binding.
This phase requires diligence, timely responses, and clear communication to ensure a seamless transition to the final step of completion.
How to handle a rejected offer and recalibrate
A rejected offer can be disheartening, but it's not the end of the road. Here's how to recalibrate:
Re-evaluate your offer in light of feedback from the seller or estate agent.
Broaden your search to increase options. Look at other properties.
Stay abreast of market changes. Sometimes waiting a bit can bring about better opportunities.
In conclusion...
A bustling property market demands swift and strategic actions. Here are some tailored tips for such scenarios:
Prompt viewing bookings: if a property catches your eye, book a viewing without delay.
Robust mortgage preparation: possessing a mortgage agreement in principle can display serious intent.
Engage proactively with estate agents: regular communication can keep you informed about new listings or price changes.
Research thoroughly: while you need to act quickly in a competitive market, thoroughness of research in the local property market, before decision-making, remains paramount. Finding out the most recent prices for homes on the same street will put you in a strong position for negotiation
Sealed bid readiness: In an environment of multiple offers, some sellers might opt for this. Be prepared for this possibility by understanding the process of sealed bids.
Feedback loop: after viewing, provide feedback to estate agents to refine your property search further.
FAQs
How soon after viewing can I make an offer?
Post-viewing, many homebuyers wonder about the ideal window for making their move. You can make an offer immediately after viewing a house if you're confident in your decision. However, it's wise to consider the property thoroughly, evaluate its value, and maybe even book a second viewing.
When is an offer legally binding?
In the UK, your offer on a house is not legally binding until contracts are exchanged. Before this exchange, both the buyer and seller can retract their decision without legal repercussions. You can negotiate house price It's common practice to have a solicitor review the contracts to ensure all terms are agreeable before finalising.