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It’s an ownership thing.
Making an Offer on a House
You’ve found your dream home and now, it’s time to seal the deal. Making an offer is tricky enough at the best of times. Throw a global pandemic into the mix, and you’ve got yourself asking more questions than before. Shared Ownership is the solution to all your worries! You can buy the home you’ve fallen in love with, without the hefty price tag. Still not convinced? Don’t worry – we’ve got all the tips and tricks, to make the process a smooth-sailing ride.
What to consider before making an offer?
There’s always a checklist involved, especially before it comes to making a bid.
Keep your emotions at bay
Don’t wear your heart on your sleeve! Love at first sight trips up many first-time buyers, and even the more experienced ones. Shop with your mind and let your budget guide you. Also, don’t waste your time looking at houses you can’t afford - that’s the quickest way to disappointment. Getting attached too early in the game, will make you ignore potential problems with the property. That’s not to say that the faults aren’t fixable. We’ll let you in on a little secret – sometimes problems within a home can be your ticket to negotiating a good deal!
Find a trusted estate agent
Now it’s no secret that estate agents get a slice of the pie, when it comes to selling a house. Of course, that makes people hesitant to use them, in case it drives up the total cost. Remember though; the seller probably isn’t thinking about your interests. So really, you wouldn’t be saving any money. A good estate agent though, chosen by you, can protect your interests far more and steer you in the right direction. Don’t be afraid to ask questions, in fact, we encourage it! Ask questions like why has the seller put the property on the market and how long has the home been on the market? By building an image of the seller, it’ll give you a feel of whether there’s opportunity to strike a deal.
Do your research
The day you decided to begin your home-buying journey, should’ve also been the day that endless amounts of research started. Long before making an offer on a house, you have to keep a close eye on the housing market in your chosen area. How long are the properties within your budget spending in the marketplace? Have there been huge leaps in the asking prices for certain ones? These are all the questions you need to be asking! This is why estate agents are your best bet, they’ll help you get to grips, with any housing jargon you’re unsure of.
Don’t overestimate your budget
It doesn’t matter how much money the bank is prepared to lend you, the real question is, can YOU afford it? Will you be able to live comfortably, paying that amount each month? Now let’s be real, you don’t want to sacrifice all the luxuries in life. It’s nice to treat yourself every once in a while! So, don’t let the bank or estate agent tell you, what you can and can’t afford. You’re your own boss, so you tell them!
Options, options and more options
There’s always other alternatives and routes. Imagine being able to buy the dreamiest of homes, with a smaller mortgage and lower deposit. Well, you absolutely can! Shared Ownership is the answer to all your prayers. This scheme lets you buy between 25% to 75% of a property. You don’t have to go through the daunting process of making an offer on a Shared Ownership property. You just register your interest! That’s because you can only make an offer on the asking price. Say goodbye to bidding wars, and hello to first-come, first-served!
Making an offer
When you’ve ‘found the one’ - the next step is to make that killer offer. But you’re probably wondering, how to make an offer on a house? If you’re submitting your offer to an estate agent, you can either do it verbally or in writing. We recommend doing it in writing though – you can never have too much evidence! They’ll then pass your information onto the seller for consideration. Now, all you have to do is sit back and wait. Don’t forget, this is your chance to sell yourself. You need convince the seller of what makes you the perfect buyer. You need to persuade them, that you’re going to love this house, like it’s your baby. Don’t make the assumption that it’ll be an in, out job, just by paying the asking price.
Why wait for the other side to float the first number? Take control, make yourself the negotiator! Now we know open negotiations can be scary. But relax, give your opening offer confidently and accurately. Part of being organised is knowing values. If you truly know the value of what you’re offering, the opening bid is easy to understand. It’s up to you, to decide how much of a bargaining window you want to leave yourself.
When you’re buying, you need to swot up on some handy, bidding techniques. Remember, money talks! You may choose to go down the route of a sealed bid. But, then there’s the question of how much to offer in a sealed bid. You don't want to over-pay, but at the same time, you don’t want to lose out. There’s no need to start pulling your hair out though. You just need to be realistic about the property's value. If you pay more than it’s worth, you’ll struggle to get it back, if you ever decide to part ways and sell. When it’s time to submit your bid, stay away from round numbers! You don’t want to make the same offer as your rival – awkward!
If you really want to show you’re serious, putting down a holding deposit is a good idea. This is only if you’re absolutely positive, that this is the home for you. If you suddenly decide you don’t actually want the property, the other party can just keep the money. None of us want that - that’s your hard-earned cash! Once you’ve handed over the holding deposit, the 15-day countdown begins to enter a tenancy agreement.
Your third offer should be your final offer, no questions asked! If the seller isn’t budging on the asking price, you can adapt your offer slightly. However, it should never be more than what it’s worth. Make sure you get across, that this is your final offer! If it’s gotten to this stage, chances are, you’re the only person left in the bidding pond.
How to negotiate house price?
When it comes to the property ladder, haggle away! Don’t be embarrassed to negotiate. Imagine how much better it’ll feel, knowing you’ve saved yourself a few pennies. You’ve got room to be a little cheeky and give a lowball offer. This is normally a bid 25% less than the asking price. Let’s be realistic, most of the time, sellers will probably turn their nose up at this type of offer. So, the likelihood of it being accepted is very slim. But hey, at least you tried!
If you do want to make a low offer, understanding the seller’s position is important. Are they wanting to sell quickly or are they happy to wait it out? Have they had any other offers? These are the key questions people! Technically, the estate agent isn’t allowed to tell you how much the other offers are. However, they can hint, as to whether they’re in the same region as yours or nearer to the asking price.
Do your homework before you barge in with a low offer. Whether it’s a rusty looking kitchen, or there’s damp in one of the bedrooms, justify your offer. This is your chance to make your case and grab yourself a deal! As a buyer, remember the estate agent is working for the seller. So, don’t tell them your absolute maximum price. Everyone loves a bit of mystery!
Legal implications if you change your mind
We get it, buying a house is a super big decision! You may get cold feet. However, backing out isn’t something to be taken lightly, so you need to know your rights. Can you just change your mind and walk away? Or, will there be consequences? All of these questions depend on the circumstances.
Technically, you’re not legally obliged to follow through with an offer until contracts have been exchanged. Still, there could be some financial implications, that let’s face it, you could do without:
- Pulling out before contract exchange may mean losing non-refundable costs e.g., surveys
- Pulling out after contract exchange may mean losing your deposit
Remember, once you’ve signed on the dotted line, you’re legally bound! If you pull out of the sale, after contracts have been exchanged, you’ll face some substantial penalties. Yes, that’s even if it’s for reasons beyond your control! All the money you’ve spent on things like surveys and advisor fees – all gone! It's very easy to look at a house and it be love at first sight, only to change your mind after. So, don’t make any regretful decisions!
If you’re wondering; once an offer is accepted on a house, can some else make an offer? The answer is yes sadly. Sometimes, it’s the seller who backs out. This is what we call gazumping. They reject your bid, for that last-minute juicy offer. Unless you can find the cash to make a higher counteroffer, most of the time, it means your efforts have gone to waste. Don’t worry though, there’s steps you can take to minimise the risk!
Our top tip to avoid this situation – ask the seller to take the property off the market, once they’ve accepted your offer! Get it in writing or it won’t be legally binding. Otherwise, they can just change their mind whenever they please. It’s worth noting though, they aren’t legally obligated to do this. However, you certainly have the right to question their reasons if they say no!
Getting onto the property ladder is a task and a half. In situations like this – Shared Ownership should be music to your ears. Cut out all those boring, long processes like negotiating and making offers, and skip straight to the good part! Secure the home you’ve been eyeing up, for an affordable price and through a repayment well within your reach. Just imagine this – you won’t have to share what’s yours, decorate to your heart’s desire and live how YOU want.