Q: How much should I offer for a property?
A: Whatever you feel is the right and fair price, but prepare your case. That is to say, it is worth doing some homework.
How much to offer for a property is a thorny subject and potentially a minefield to navigate as clearly some properties come to market that are somewhat over-priced. Shock! Horror! Based on our experience of how such negotiations can go, we offer the following advice.
Like all markets, the housing market changes and sometimes very quickly. Try not to be led or overly influenced by the media, what web portals suggest the price should be, or even when and for how much a property sold for previously (if you can find this information). The last change of ownership might, for instance, have been as a distressed sale due to debt, death, divorce or redundancy.
When you find a house that is suitable it is mostly quite exciting and completely fine to “love it” or simply conclude that “it will do”. You might also consider other things such as how long you plan to own it, what the potential is for improving the property it and if the area up and coming or already well established. Be as clear as you can in your mind as to why you are offering on this particular property.
Ask the agent lots of questions about the sellers and the property. Have there been any offers? What might the vendor take? How quickly would they like to move?
It may be that you feel you don’t want to pay more than a particular sum, lower than the asking price. If so, you may simply choose to chance an offer. That’s fine. A very different situation is when you don’t want to lose the property. You might make a very low offer but would be prepared to go up to what the vendor wants. This is when you need to stop, think and assess the risk. Should you consider being more realistic with you opening bid? If you do you have more chance of creating the positive impression of being a serious buyer, as well as potentially buying some goodwill with the vendor. However, you might get the property at less than market value if you bid low.
Over the years, we have seen genuinely serious buyers (first-time and experienced) lose credibility with an owner very early in negotiations by insisting that they open with an offer that is typically 20 to 30% lower than the asking price. Offering low can be fine and by law agents have to submit all offers to the vendors. However, do also remember that we advise our clients based on our experience.
Imagine the following situation. You are a vendor and have instructed an agent to market your property at £300,000. Some potential buyers are found who meet you at the second viewing. You get on famously. A couple of days later, you receive a call from your agent, who brightly and positively (even though he knows what’s coming) says that he has “great news – I have an offer…of £240,000″. The silence for a moment is deafening. The news is not that great after all.
How seriously would you take an offer at this level? How seriously would you take the person making the offer? Before you know it, negotiations are already strained. You might well get there in the end but blood could be spilled on the carpets in the process. You may end up agreeing at £290,000 but as the purchasers are now the devil incarnate buyers from hell having made a derisory offer in the first instance, you might not allow them to set foot in the property again until after exchange of contracts. You might also decide to strip the place of everything (including the radiators and light bulbs) for good measure and to hell with any garden maintenance during the sale. I’ve seen it happen.
Alternatively, the purchaser could have offered £280,000 to which you might have replied, “they’re trying it on, but we’d do the same. Tell them to come up a bit and we’ll have a deal, plus we’ll throw in the hot tub and a bottle of champagne.” Hey presto! Everyone’s happy and you’re their new best friend.
We work solely for our client – the vendor – to get the best buyer and the best price. However, we will present all offers in the best possible light. We offer a service to the would-be purchaser, too: the benefit of our advice as to what offer is likely to work and get the sale made as quickly and pleasantly as possible. This is a goal which the vendor, the purchaser and the agent all share.
Brearley & Rich
If you would like any further property buying tips or home sales advice please feel free to contact me on [email protected] or 01672 514820