Following a recent meeting with some first time buyer clients, who are currently looking for a property, i received an e-mail from them. As I composed my reply, i thought that maybe my thoughts might be worth sharing with a wider audience. Here’s a slightly edited version of my reply, which obviously has names removed.
So first, the questions:
I have a question, if that’s OK?
If we like a property and put in an offer, do we offer the full asking price straight away?
If we do offer the full amount, what happens if someone outbids us?
For example, we’re viewing a property at 245k tomorrow and i guess we can offer up to 5k extra .. is that something you deal with? or a conveyancer? or just us?
Also is it bad form to go for the first house we look at? I’m not suggesting we definitely will, but do many people do that? Do you advise shopping around even if we love the first one?
And then some thoughts:
What you buy, and how much you pay for it, is essentially up to you.
I appreciate that the above reply isn’t necessarily too helpful. Whilst it’s not really within my remit as a mortgage adviser to inform what you should pay, based upon my experiences and observations i can share some things you might want to think about:
- How does it compare to others that you’ve seen, either physically or when you have just seen the details?
- What is the vendors position, and why are they selling?
- Has the property been on the market for very long? How much interest has there been?
- Can you see any work that obviously needs doing? I mean more than just a couple of pots of paint.
- Expect that your first offer will be rejected .. because they very often are!
- A house is only ever worth what someone is prepared to pay for it .. This is sometimes, but not always, the amount for which it’s been advertised.
If I were looking at buying a house, then these are all factors that I’d consider before making an offer, for example:
- If the vendor needs to relocate for work, then they may need to meet a particular deadline, or want to time the move so that it’s convenient for schooling if they have children… They may accept a lower offer to meet their deadline, or alternatively might be really appreciative if you can be a bit more flexible on timing to accommodate school terms / holidays.
- A property that’s been on the market for a while may have been overlooked for a reason .. You need to try and work out what that reason is, and whether this might impact on value, or whether it’s something which you’re not at all concerned about.
- Work that’s needed may have been considered before putting the house on the market, but not always .. You may need to make sure that you have funds available to cover the cost, either now or some point in near future (depending on what’s needed)
- Often the offer will become a negotiation, that ultimately leads to you paying between initial offer and asking price. Decide what you want to pay, then offer a bit below, and then you can be ‘talked up’ to the amount you want to pay.
There’s no rule that says you shouldn’t buy the first house you view. If the property meets your criteria, then why not?
In terms of asking price.. I recently heard from a couple we’re working with that they offered asking price for a property, which genuinely surprised because they’re people who enjoy negotiation! They had heard that two more viewings had been arranged, and wanted to avoid the possibility of potentially getting in to a competitive situation. They offered asking price, on condition that the other viewings were cancelled and the house taken off the market. A tactic that proved successful for them, secured the property, and avoided the possibility of the price being escalated by multiple parties competing.
Hopefully the above provides some good ‘food for thought’ and is helpful for you.
P.S. A long time ago I wrote a blog with some house hunting tips, that I believe are still valid, which might be worth a read when you have a couple of minutes: