When it comes to buying a home, figuring out what is a reasonable offer on a property can be tricky. You want to make an offer that is competitive enough to get accepted, but also fair for your budget and the property’s value. So, how do you determine the right amount to offer on a house in the UK?
Here are the key factors to consider when making a reasonable offer on a house:
1. The Asking Price
The asking price is the amount the seller is advertising the property for. It gives you an idea of what the seller expects, but it doesn’t mean you have to offer that exact amount. Often, sellers price their homes slightly higher than they expect to receive, leaving room for negotiation. However, in a hot market, offering below the asking price might cause you to lose out to higher bidders.
Tip: Research similar properties (also known as “comps”) in the area to get an idea of whether the asking price is fair. Look at recent sales and consider whether the price seems in line with the local market. Zoopla is a good online resource for researching house prices.
2. Market Conditions
The state of the housing market plays a big role in how much you should offer. In a buyer’s market, where there are more homes for sale than buyers, you have more negotiating power, and offering below the asking price could be reasonable. In a seller’s market, where demand is higher than supply, homes can sell for more than the asking price, and you may need to offer the full amount or even higher to stand a chance.
Tip: Speak to a mortgage advisor near you or a local estate agent to understand the current market conditions in the area where you’re looking to buy.
3. The Property’s Condition
Another factor in making a reasonable offer is the condition of the property. If the house needs significant repairs or upgrades, you may want to offer less than the asking price to account for these costs. On the other hand, if the property is in great condition or has recently been renovated, offering close to the asking price might be appropriate.
Tip: A seller will usually allow you to obtain quotes for any work that may need doing to the property prior to agreeing on a purchase price. Although it can be costly, some people even consider getting a property survey done before making an offer. A survey can reveal hidden issues like structural problems, damp, or outdated electrics, which might allow you to negotiate a lower price.
4. Your Budget and Mortgage
A reasonable offer is one that aligns with your financial situation. It’s important not to overstretch yourself and ensure you can comfortably afford the property. Before making an offer, it’s advisable to obtain a mortgage agreement in principle (AIP) to understand how much you can borrow.
Tip: Consult a mortgage broker who can help you secure the best mortgage deal for your circumstances. A broker can also give you a better idea of how much you should borrow, what your monthly payments are likely to be, and the types of mortgage available based on your financial situation.
5. How Long the Property Has Been on the Market
A house that has been on the market for a long time could indicate that the seller is more open to negotiation. If the property has been listed for a while without much interest, the seller might accept a lower offer to get the sale moving.
Tip: If the property has been on the market for a few months or longer, consider offering 5-10% below the asking price to start negotiations.
6. The Seller’s Situation
The seller’s circumstances can also influence what makes a reasonable offer. A seller who needs to move quickly due to a job relocation or financial reasons may be willing to accept a lower offer for a faster sale. On the other hand, if the seller is in no rush, they may hold out for a higher offer.
Tip: Your estate agent can often give you insights into the seller’s motivations. Use this information to your advantage when deciding on your offer.
7. Making the Offer
Once you’ve considered all these factors, it’s time to make your offer. When making your offer, you can also highlight your strengths as a buyer, such as being chain-free, having a mortgage in principle, or being flexible with the completion date. These factors can sometimes make the seller more inclined to accept your offer, even if it’s lower than they initially expected.
Tip: Start with an offer that’s reasonable but allows room for negotiation. It’s common to offer 5-10% below the asking price initially and see how the seller responds.
Conclusion: What’s a Reasonable Offer?
A reasonable offer on a house in the UK is one that reflects the property’s value, market conditions, and your financial situation. By researching similar properties, understanding the current market, and working with a mortgage broker or estate agent, you can make an informed and fair offer that increases your chances of securing the property. An initial offer of 5-10% below the asking price would not usually be considered offensive and is a good starting point for further negotiations.
