How to make an offer on a house
Here’s our step-by-step guide to making an offer on a house.
Last updated on
Jun 1, 2022 10:57
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Making an offer on a house is both scary and exciting — and with good reason! It’s probably one of the most expensive purchases you’ll ever make, so you’ll want to do it right. Go in too low, you could miss out. Go in too high, you could blow your budget.
That’s why it pays to be prepared.
To help, we’ve broken down the entire process into a few simple steps, from early research and figuring out your borrowing power to planning and making your first offer.
Spotted a house you like? Before you make your first move, it’s a good idea to research similar properties in the area you want to buy.
On sites like Rightmove and Zoopla, you can see how much they sold for. This’ll help you figure out how much you might need to offer to seal a similar deal.
And while you’re scrolling through those property portals, take note of how quickly houses like the one you’re after are selling. Going fast? It could be a competitive market, meaning you might need to offer over the odds to stand a chance. Taking a while to shift? It could be a slow market, meaning you could go in under the asking price and nab yourself a bargain.
(We cover the art of the offer in more detail in step 3.)
A mortgage in principle (MIP) is a handy certificate that shows how much you can afford to borrow. It’s a rough estimate (not a guarantee of a mortgage), and it’ll give you an early sense of your homebuying budget.
Getting an MIP also adds more credibility to any offers you make by reassuring sellers and estate agents that you’re a serious buyer. It shows that you can actually afford the offer you’re making and that you won’t waste their time by scrambling around trying to qualify for a mortgage after having an offer accepted.
You can sort out an MIP in as little as 5 minutes with Habito (get your mortgage in principle here). We just need a few details about your income and deposit. There’s no credit check, and you don’t need to submit any documents.
Note: In Scotland, you’ll need an MIP before you can make an offer — and in some cases, you won’t even be able to view a property north of the border without having a mortgage in principle arranged.
Keep in mind that estate agents tend to price properties between 5% and 10% above their actual value when listing homes on their websites. They do this to try and get the best deal for their client.
Therefore, it’s often a good idea to take those guide prices with a pinch of salt and make your first offer a lower one. That way, you’ll have some room to negotiate if the seller comes back with a counter-offer. If you go all-in with the maximum amount you can afford, and the seller asks for more, you may not be able to go any higher, putting you out of the race.
Of course, this approach is a bit of a double-edged sword. If you go in too low with your first offer, the seller might dismiss you altogether. Keep it sensible. Offering 5% - 10% under the asking price might open the door to negotiation. Offering 15% - 20% under could see your lower offer ignored.
When you’re ready to make an offer on a property, it should go through the seller’s estate agent. You can call them to do this or go into their office. However, it’s wise to put your offer in writing (for example, in a letter or email) to make sure it’s accurately recorded.
By law, the estate agent has to inform the seller of each and every offer. Your first offer might be accepted but if not, don’t panic – you may need to negotiate a little to thrash out a deal (hence the wiggle room we mentioned earlier).
Pro tip: before you make another offer, try to find out if any others have been made. Are they higher than yours? This will help you decide how much to raise your opening bid.
Remember, when buying, you need to consider any other costs you’ll need to pay over and above your offer (like your deposit, legal fees, and Stamp Duty). You don’t want to max out your budget and leave yourself short.
Note: You won’t need a solicitor to make an offer on a house in England or Wales, but you will in Scotland. The rules are different there. Read more: How long does it take to buy a house in Scotland?
There’s more to making an offer on a house than simply jotting down some numbers. This is your chance to add a little context to your bid.
Are you a first-time buyer and/or chain-free (meaning you’re not relying on selling one property to buy another)? Then you’re probably going to be quite attractive to a seller who’s keen to avoid long chains and costly delays.
Are you a cash buyer? That could be another big plus for a seller, as it means you can move more quickly than a rival buyer who needs to secure a mortgage first.
And if you want to go the extra mile, you could write to the seller and tug on their heartstrings. Why do you want to buy their home? Is it because you’re expecting a baby? Relocating for work? Moving closer to family? You never know, they may just accept a lower price if they know their cherished property will be in good hands going forward.
Once you’ve made your offer, there are really only a handful of outcomes available. Your offer can be accepted (result!), counter-offered (meaning the seller comes back with a higher figure they’d be willing to accept), or rejected.
That leaves you with a couple of scenarios:
If the seller turns down your first offer but indicates they’d be willing to accept a higher price, you can negotiate with them via their estate agent.
Keep in mind that the agent works for the seller, putting them at a distinct advantage. If you want some help negotiating a fair price, you could consider working with a buyer’s agent. This is a property professional who’ll act in your interests throughout your homebuying journey.
But if the seller’s counter-offer is too high for your budget, you may want to back out altogether.
Whether it was your first or your final offer, if it’s been accepted, you can enjoy a quick high five or fist pump — but keep the bubbly on ice for now!
Just because an offer is accepted does not mean it’s legally binding. That only happens once contracts have been signed and exchanged.
The seller can still back out until the exchange of contracts, and they can also accept a higher offer (known as gazumping). Your best chance of avoiding this is to protect your position and ask that the property be taken off the market as soon as your offer has been accepted.
To prove you’re a serious buyer, you need to be prepared for every house offer outcome. And with Habito’s complete home-buying service, we’ll have you ready to roll from the moment you have your offer accepted.
We’ll help you find the best mortgage deal for your situation, sort out the legal work and property surveys, and be on hand with advice until you pick up the keys to your new home!
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