Making An Offer

Once you have found the perfect property, you then need to decide how to bid for it. Do you put in a high offer to clinch it, and risk wasting money? Or a low offer and risk losing your dream home? What are the best tactics to ensure you get the perfect property at the best possible price? In this mortgage guide we explore your options when making an offer on a property and explain practical tips to help you decide the approach that will best suit you when making an offer on a property.

Before making the offer

When first meeting with the estate agent, downplay the amount you are willing to spend. Estate agents tend to show you homes that are slightly more expensive than your limit, and it will put you in a stronger position when it comes to negotiation.

If you're too obviously keen the seller will know you will be willing to pay more. Play it cool, and ask questions that will set you in good stead for the negotiation process. Maintain close surveillance of the property market, and in particular be aware how much similar properties in the area are selling for, and how quickly they are selling. If they are moving very slowly, and going below the asking price, then you are in a stronger position to put in a lower offer.

Agree with the agent a written list of which fixtures and fittings will be included. Having it in writing reduces the chances of disagreements later in the process.

How do I put in an offer?

Tell the estate agent. By law estate agents have to pass on every offer they receive to the seller, however ridiculous. Some buyers try and unnerve sellers by putting in very low initial offers.

It is a good idea to put the offer in writing (a telephone call followed up by an email will be fine) in order to reduce scope for confusion or argument later.

If the seller is interested in your offer then the negotiations start. These are conducted via the estate agent. Note that this puts buyers at a distinct disadvantage - the seller has a professional negotiator (the agent) working on their behalf, while the buyer is left to their own devices. If are you worried about this, you can appoint a buyers agent

When is a low bid more likely to be successful?

While making an offer on a house can seem daunting, keep in mind that the seller is also probably pretty worried about getting the price they want. Circumstances can be in your favour, making it more likely the seller will accept a bid lower than the asking price - sometimes much below. This is especially the case:

  • If the house has been on the market for a long time, which suggests they are having problems selling and other people think it is overpriced. Has the asking price dropped since it was put on the market?
  • If the seller wants to sell quickly. For example, this would be the case if they are looking to buy a specific new house but are caught in a chain, or if they are having to move to follow a job
  • If you are the only person who has expressed interest in the property - the seller will realise you are probably their only hope
  • If you suggest a completion date that works for the seller
  • If you can show you can act quickly, and are a more certain buyer. The seller will be less interested in someone who will take a long time, may not be able to raise the funds, and could pull out later. If you have your finances in place with a large deposit, then you will be much more attractive to the seller. Pure cash buyers can normally get a better price than those encumbered by a chain and mortgage.
  • Similarly, if you are not in a chain, either because you are a first time buyer or have already sold your home. The seller will then not have to wait for you to sell your house before you can buy theirs, with the accompanying risk it might all fall through.
  • If the estate agent is keen to get a quick sale. While the agent works for the seller and is looking to sell for as much as possible, they are often looking for a quick sale without too much effort, so that they can collect the commission and move on to the next job.
  • If the seller is using multiple agents. The estate agent will then be more likely to want to persuade them to accept a lower price, to guarantee they get the commission rather than another agent
    • Negotiations and sealed bids

      Before making an offer or entering a sealed bid, decide on how much you want to spend and think hard before exceeding that amount. Do not forget the extra costs of buying a property, you can calculate the typical costs using our Moving Home Calculator

      What are the best bidding tactics?

      This depends on the bidding process - whether they are open negotiations (more common), or sealed bids.

      Open negotiations

      When making an offer, as with all negotiations, start low. A good rule of thumb though is to offer 5% to 10% lower than the asking price

      Don't forget that sellers often take this into account and deliberately put their house on the market for more than they expect or would accept

      The agent will normally tell you of any bids that trump yours, and give you a chance to offer a second or even third bid

      You should only offer more than the asking price if you know the seller has already been offered that, or if you are really worried about not getting your once-in-a-lifetime dream home and you think there are lots of other buyers

      Stay polite and calm at all times. You'll only alienate everybody if you get irritated

      Play hard to get, but stay realistic. If you think the seller is desperate, it is not in your interest to appear too keen.

      Don't be overly influenced by other things thrown in with the deal. For example, unless very new, second hand white goods are usually worth very little and its often less hassle to sell them with the house than move them

      Sealed Bids

      If bidding is via sealed bids you will have to write down your offer and seal it in an envelope. The estate agent will give all the bids to the seller who will usually choose the highest

      This is designed to get a high price as buyers, worried they will be outbid, put in their highest offer

      Sealed bids often result in the seller getting more than they asked.

      In some areas where demand is particularly high - notably London and the surrounding counties - sealed bids have become a norm. Bidding via sealed bids can be stressful, especially if certain pitfalls are not avoided:

      While it is very tempting to offer an amount over what you would otherwise have paid to ensure you win the bid, it is important to stick to your budget.

      If you do end up bidding more than the asking price your mortgage company may not cover you, so make sure you have adequate finances in place before bidding.

      But, sealed bids can also be beneficial to the buyer:

      There is no pressure from estate agents or seller and, as long as you overcome the temptation to overpay, you only pay what you think the property is worth to you.

      If you can find out from the estate agent or seller how many other people are bidding you may be able to make a more educated guess at how much to bid.

      While it's not very usual, you can still negotiate if you loose the bid: accepting a bid does not wrap up the sale

      Always offer a few more pounds and pence than a round number. For example, offer £375,050 rather than £375,000 just in case another bidder offers that round number

      After the offer has been accepted

      Even after an offer has been made and accepted by the seller, it is not legally binding on either side (in England and Wales; there are different rules in Scotland). Until the exchange of contracts either party can still pull out (although the buyer might lose their holding deposit).

      1 in 10 people have experienced the seller pulling out of the deal after accepting their offer because they have received a higher offer from elsewhere. This is called "gazumping", which is more likely if your offer is on the low side

      If you are "gazumped" you can potentially lose hundreds or even thousands of pounds in pointless survey fees, land search fees, and solicitor's fees. You can use our Mortgage Fees Calculator to gauge what you can expect to pay in mortgage fees.

      There is not much you can do about it apart from counter-gazump (putting in a higher bid than the gazumper)

      Once a seller has accepted your offer, ask them to take the property off the market, which they should do if they are serious about accepting your offer. They do not have to, but if they do this will prevent other potential buyers butting into your purchase. If they don't, then ask why they are still marketing their property, and be careful about spending thousands of pounds on surveys, solicitors and arranging mortgages.

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