Making an offer
This content applies to England only.
Housing laws vary between England and Scotland. Get advice relating to Scotland
Once you find a property you like, you may decide to make an offer to buy it. This is usually done by making an offer to the seller's estate agent. You don't necessarily have to offer the asking price, and the price you pay when the sale is final may be different. You may have to pay a small holding deposit to ensure the property is taken off the market.
The price
You don't have to offer the asking price. In fact, many buyers and estate agents will expect lower offers. It's worth doing some research to find out what similar properties in the area are being sold for. The likelihood of a lower offer being accepted usually depends on:
- demand for properties in the area at the time
- whether the asking price is realistic compared with similar properties
- how quickly the seller wants to move
- the condition of the property.
Offers below the asking price are more likely to be accepted when the property market is slow. When there is a lot of demand you will probably have to offer a higher price. Some properties may eventually sell for more than the original asking price.
The seller may be more willing to accept an offer below the asking price if you are a first-time buyer or you are able to move quickly. The process is usually less complicated and time consuming if the buyer is not involved in a chain of people waiting to sell their homes.
It may also help if you have already got an 'agreement in principle' from your lender, saying that you will be able to get a mortgage on a suitable property. Most lenders can give you a certificate confirming approximately how much you will be able to borrow.
What the offer means
The offer you make is not necessarily the price you will pay if the sale goes ahead. You can make an offer verbally or in writing, but it should always say that it is 'subject to contract'. This means that there is still room for negotiation about the conditions of the sale. This will be very important if a survey or homebuyer's report finds problems in the property that would be expensive to repair. If this happens, you may decide that you want to:
- agree a lower price
- get the seller to carry out repairs before contracts are exchanged
- pull out of the sale.
You (or the seller) may also want to change the price agreed if property prices fall (or rise) dramatically before contracts are exchanged. If the sale falls through, any fees you have already paid will not be refunded and the seller won't have to give you any money as compensation.
How the offer is made
If the property you want is being sold through a private sale, you need to make your offer to the seller directly. However, most buyers find a property through an estate agent. If this is the case, you will make your offer to the estate agent. The agent should inform the seller of any offer you make. The seller will decide whether the offer is acceptable. The estate agent may come back to you with a counter offer (a minimum price below which no offers will be considered). If you can afford to do so, you may decide to increase your offer.
Dealing with estate agents can be difficult. They are not impartial. They get commission from the sale and may try to convince buyers to increase their offers. You shouldn't do this unless you think the property is worth it and you can afford it. Remember that estate agents may exaggerate the interest other buyers have shown in a property and don't have to point out any problems to you.
Estate agents can't insist that you agree to arrange your mortgage through them before they tell the seller about your offer. If this happens and the estate agent is a member of the National Association of Estate Agents or the Ombudsman for Estate Agents, you can make a complaint.
Holding deposits
Some estate agents ask buyers to pay a refundable holding deposit when they make an offer. Not all agents do this, so you may want to ask before you view properties a particular agency is selling. Holding deposits are usually around £100 to £300. The estate agent normally keeps them from the date the property is taken off the market until the sale is final. This doesn't mean that you are legally obliged to buy the property, but it probably won't be refunded if you pull out. If the sale goes ahead, it should be taken off the amount you pay.
Taking the property off the market
If the seller accepts your offer, you should be told that the property has been taken off the market. If it stays on the market there is a very good chance that the seller will get a better offer from someone else and you could be gazumped before contracts are exchanged. To avoid gazumping, you may be able to sign an agreement with the seller as part of the legal preparation. However, these agreements usually involve extra legal fees and/or a separate deposit.
