How much should I offer?
I’ve found a home I like but… How much should I offer?
It’s a question that is often asked of agents by inexperienced buyers. The more attentive buyer will also notice that this question is often accompanied by a faint but distinctively brisk rubbing noise. What they may not know is that this is caused by the friction of the agents hands, as they move across each other at a pace that would cause damp kindling to burst spontaneously into flames.
And so, you make your first mistake as a buyer. You have just given away a very large bargaining tool. Estate agents are not on your side in this process. Yes; we may be genuinely friendly and helpful and bend over backwards to accommodate your social diary at the expense of ours when you want to look at a property BUT, our customers, the sellers, pay us to squeeze every last drop of blood out of you (financially speaking) in the form of an offer.
So what should you offer? Well, there is no hard and fast rule and every property will be different but, here are my pointers for how to ensure you end up with the property you want at a fair price.
First off, do your homework. Check your finances if you need a mortgage and then look at house prices. There are countless websites out there that will give you a good idea of sold prices for similar properties and, a quick trawl of property portals will also provide a good idea of asking prices too. Just bear in mind that selling prices will usually be at least 3 months old and won’t tell you the condition etc of the property in question (or if it was sold to a family member at a reduced price etc). This should give you a rough figure of what the property might sell for. What it is actually worth to you may be a different matter though.
So now you have a rough figure that you think you could afford and are prepared to go to as a maximum. Offer time! Do you make a silly offer and hope to get lucky or, offer the asking price to secure the your dream-home off the market?
For many owners, a silly offer is one that is 10% or more below the asking price. A silly offer may get lucky and you might bag a bargain but, you may also put the owners’ backs up and end up, ultimately, paying more for the property than if you had come in with a reasonable offer to start with. Dependent on the local market conditions many (but by no means all) agents, in conjunction with the owners wishes, will add around 5% to the expected sale price. Having done your research, you will have some idea of whether this is the case in the property you want. You will also notice that many properties are priced distinctively: e.g. £199,950 this also often denotes the expected selling price (usually the next whole multiple of five or ten thousand below). In this case, the agent may expect to sell at £195,000. So judge your offer accordingly.
Having made your first offer, listen between the lines to the agents reply. Yes they are there to get the best price out of you but, they are also there to ensure they achieve a sale for the customer at an acceptable figure. Most sellers would rather have a sale at a fair price than hold out for a price that may never be achieved and the agent, having advised the customer, will be given instructions on how to handle the negotiations. What they say and how they say it, will give you good clues as to whether you are close to a deal or way off. Good luck.
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About Chris Wood: Chris is an estate agent with over 25 years of property experience. His business, PDQ Estates Ltd is based in Penzance and Helston, West Cornwall. He has worked with all sizes and types of businesses from single office independents to the management team and board of RBS and Tesco. A former President Elect of the NAEA and board member of NFoPP until he resigned in 2009, Chris has always championed the highest professional standards forestate agents in the UK. No stranger to the media, he has appeared on various programs including BBC, News 24, ITV, independent and BBC radio and is a regular contributor to trade journals, local and national Newspapers. Chris is on KloutLinkedIn Ecademy Facebook and Twitter Chris is a former member of the Territorial Army. In 2010 he mobilised for a tour of duty in Afghanistan with 1 Rifles as part of 3 Commando Brigade.