Making an offer on a house or flat

Step-by-step guide to making an offer

If you're trying to buy a property, knowing the right amount to offer can depend on a number of factors - from your own budget, to whether future developments are likely to have a knock-on effect on the property's value. 

Here are five things to consider when you're trying to arrive at an offer.

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1. Work out your budget

Before even starting to view properties, it's important to work out an accurate budget.

An online mortgage calculator can give you a rough idea, but for a more accurate assessment an independent mortgage broker can check how much you could borrow based on your personal circumstances.

A mortgage broker can also advise you on whether to apply for a mortgage 'agreement in principle' (AIP); a document from a lender confirming that they would, in principle, be willing to lend you a specified amount.

Some estate agents ask for an AIP because they want to check you can really afford the property - but note that applying for an AIP can leave a mark on your credit report.

Once you've found a property you like, it’s also important to factor in how moving there would affect your living costs.

If the property is listed on Zoopla, you'll be able to see estimated running costs including energy, water, insurance and council tax.

• Find out more: the household bills you'll pay as a homeowner

2. Check the market

Avoid overpaying by researching the local property market. As a starting point, you should compare the property you like with similar homes that have recently sold in the same neighbourhood. 

You can see sold prices on the Land Registry website. Bear in mind that property values can change dramatically from year to year, so the most recent prices will be the most relevant.

3. Play detective

Searching the address of the property you want to make an offer on may reveal previous listings on property portals.

This could reveal when the property was last sold, and how much for - as well as whether the current owners have been trying to sell it for a while, and also whether they've had to reduce the asking price.

4. Talk to the estate agent

The estate agent is there to work for the seller, but they can still be a very useful source of information. Here are a few questions they might be able to help you with:

• How long has the owner lived at the property?
  If they’re moving out after a relatively short time, ask why. If they've lived there for a long time, they may have a stronger emotional attachment to the property, which you should bear in mind when you make an offer.

• Why is the owner selling?
  If there's a time-sensitive reason, eg needing to relocate for a new job or having a baby on the way, they might be more flexible on the price.

• How long has the property been on the market?
  If it’s been on for a while, the owner may be willing to accept a lower offer. However, if it's been on the market for a long time but the owner has shown no flexibility, they may not be in a hurry to sell.

• Has the owner found a property to move to yet?
  The answer will often be no, as many people start house-hunting once their own home is under offer. But if it's yes, this could speed up your buying process.

• How many people have viewed the property?
  The answer here could help you understand whether there's much competition.

• Have any previous offers been made? If so, were they accepted?
  The agent can't legally tell you how much past offers were for, but they may hint at how close they were to the asking price.

• What's the minimum price the seller will accept?
  The agent might not be willing to share this (and they may not know), but it's worth asking.

5. Check external factors

It's not just the property itself that will determine its value. Other factors include:

• School catchment areas: prices can be higher in the catchment areas of good schools
• Transport links: being close to a train station or motorway can push up a property's value
• Local infrastructure plans: could new developments improve services, or make traffic and pollution worse?
• Flood zones: you can check flood maps online, and factor in how vulnerable a property will be to flooding
• Development applications: these can depend on what they are - for instance, a new factory might decrease the home's value, while a property development could attract investment in the area
• Crime levels: you can check the frequency and type of crime in the area using the police.uk website.

Should I offer below the asking price?

The asking price is just that – the price the owner would ideally like to get for the property.

It doesn't have to be based on what the property is actually worth, or even what the estate agent has recommended.

Sellers who aren't in a hurry might start with a high asking price on the off-chance someone will pay it. And, as properties commonly sell for less than the advertised price, many sellers set it for a bit more than the property's true worth.

For this reason, it can often be worth offering below the asking price - particularly if any of the following apply:

• a similar property recently sold for less
• the seller's in a hurry
• the property has been on the market for a while
• you’re not in a chain
• you’re a cash buyer (mortgage-free)
• repairs or improvements are needed (though you might want to wait for your survey results to negotiate on this basis so you have proof).

Even if your first offer isn't accepted, you can still try and negotiate for a figure between your original offer and the asking price.

Making an offer in a competitive market

In competitive markets, properties are snapped up quickly and you may find yourself bidding against other buyers for the same home (find out about sealed bids and best and final offers below).

Gazumping, where you're outbid by another buyer after your offer has been accepted, is also more common.

If multiple buyers are interested in the property, the seller may be less likely to accept an offer below the asking price.

But even in this situation, make sure you're not paying above the odds: do your market comparison and stick to the budget you've set.

Also, keep in mind that you may be buying at the 'top of the market' – so even if the property has grown in value in recent years, it may peak when you buy and could potentially dip again when the market quietens down.

If you're competing against other buyers it's even more important than usual to emphasise the factors that stand in your favour when making an offer. See how to make an offer, below, for more on this.

Should I make an offer before selling my own property?

If your own property is up for sale, you can make an offer on a house you want to buy before you're accepted an offer for the one you're selling.

However, you might find that the seller will only provisionally accept your offer, and continue marketing their property until you're able to progress with the purchase.

In very hot markets, estate agents might not want to show you properties until your own home is under offer, but this is unusual.

How to make an offer on a property

Once you've researched the property, area and seller, and are confident you definitely want to buy, it's time to make your offer. 

First, set yourself an upper limit that you’d be comfortable paying and then, if you're not in a competitive situation, consider going in slightly lower – perhaps 5% – so you have room for upward negotiation. 

Assuming the property is being sold via an estate agent, you can make your offer to them either over the phone or in person. You should also submit a written offer (by email should be fine, but check) and ask that it's passed on to the seller.

Needless to say, the most important thing you'll be telling them is the amount you're offering, but you should also emphasise all the other factors in your favour. These might include:

• having a mortgage agreement in principle, which indicates you'll be able to get a mortgage
• only needing a mortgage at a low LTV (ie putting down a large deposit), as this can make the mortgage process smoother
• being a cash buyer (no mortgage means less chance of complications)
• being chain-free, perhaps because you're a first-time buyer or have already sold your former home and are renting 
• being flexible on the moving in date
• being highly motivated to move, for example because you're pregnant or are relocating for a new job
• being organised, with a conveyancer and surveyor already lined up
• emotional reasons: if it's a much-loved family home it's worth saying in your written offer that you loved the property and can envision bringing up your own family there (or whatever fits your circumstances).

The emotional bit might make no difference at all, but it could just be the thing that wins you the house if you and another person are offering similar amounts.

Make it clear that your offer is subject to the property being taken off the market, with no more viewings conducted, as this will decrease the likelihood of you being gazumped.

If your offer isn't accepted, or someone else submits a higher one, don't panic. Weigh up your options as objectively as you can, and only consider making a higher offer if you're confident you can afford it.

If your offer is accepted, try and agree a provisional timescale to work towards and make arrangements with your solicitor and surveyor.

• Find out more: the process of buying a house

How to negotiate a property price

When you enter into a negotiation:

• Keep your budget private. Revealing the maximum amount you’re willing to spend may prompt the agent to encourage the seller to hold out for more money.
  
  
• Play it cool, even if you've fallen in love with the property. Showing too much enthusiasm may make the agent think you’d be willing to pay any amount to move in.
  
  
• Wait to get a property survey. If you think there are structural problems with the property that make it worth less than the owner is asking, it can be worth waiting until you've had a survey done to try and negotiate – then you'll have objective confirmation of the money that needs to be spent.
  
  
• Don’t be overly influenced by ‘sweeteners’. Sometimes owners offer to throw in white goods or other fixtures to push up the price, but the items' value will rarely be enough to warrant the extra you'd have to spend on your mortgage.
  
  
• Take your time to consider your options. The agent may push you to seal the deal, but this is a huge decision and you're entitled to think it over before upping your bid.

If even your best efforts don't secure you the property, try not to be too disheartened. Property-buying is a long-term game and another home will come along sooner or later.

Sealed property bids

If more than one person makes an offer on a property, the estate agent will sometimes ask all interested buyers to submit a bid in a sealed envelope by a set date.

This can be daunting, but it isn't legally binding: either party could still back out at any point before contracts are exchanged.

How to make a sealed bid

It can be difficult to decide how much to offer in a sealed bid: you don't want to overpay, but you also don't want to lose out.

You need to be realistic about the property's value, because if you pay over the odds, you may struggle to get your money back when you come to sell it.

There’s also a risk that the mortgage lender will decide the property is worth less than you've offered when they conduct their valuation, leaving you to stump up the extra cash or pull out of the purchase altogether.

Our guide on how much a property is worth explains what sellers should take into account when setting the asking price on their property, which will also help you work out the property's value.

When it comes to the figure you offer, the National Association of Estate Agents (NAEA) recommends avoiding round numbers to prevent making the exact same bid as someone else – so for example you could bid £200,075 instead of £200,000.

It can also be a good idea to submit the offer in person to ensure that it is definitely received.

'Best and final' offers

When more than one person wants to make an offer, some estate agents will ask buyers to submit their 'best and final' offer by a set date.

The best and final offers process works in a very similar way to sealed bids. The main difference is that your offer doesn't have to be formally submitted in an envelope.

You might initially submit your best and final offer over the phone, but we'd advise doing it in writing, too (in an email or hand-delivered letter) so that all the details of your offer and situation are laid out for the seller to see.

What to do if your sealed bid or 'best and final offer' is rejected

Getting a call to say the vendor has chosen another buyer is disappointing, but sales do sometimes fall through.

If you stay in touch with the estate agent, they'll know you're still interested if the other buyer drops out of the sale.

Is my offer legally binding?

If you’re making an offer on a property in England or Wales, your offer isn’t legally binding until you exchange contracts with the seller.

In Scotland, a binding contract will be in place when all the conditions of an offer have been accepted and you and the seller have 'concluded the missives'.

Withdrawing or changing your offer

You can withdraw or change your offer any time before contracts have been exchanged.

If you have a survey done and it reveals problems, you can try asking the seller to get them fixed before you exchange or offer a lower price, but they're under no obligation to agree to either.

Technically, you can also lower your offer shortly before exchanging contracts, which is known as ‘gazundering’. Though perfectly legal, this can create a difficult situation for the seller and risk scuppering the sale altogether, and we wouldn't recommend it.

After you’ve exchanged contracts with the seller, you’re legally obliged to pay the amount agreed in the contract. If you pull out of the sale at this point, you may lose the deposit you put down and could be sued by the seller.

Scotland

After you’ve agreed a contract with the seller, you can’t withdraw or change your offer unless the seller agrees.

If you don’t meet the terms of the contract, you could be made subject to a court order to fulfil the contract and be sued by the seller for any costs they’ve incurred.