How To Make An Offer On A House

Making your first offer on a house is an exciting and nerve-wracking time. For most of us, it's the biggest, scariest spend of our lives. Getting this part right can save you thousands, as well as being the difference between winning and losing your dream home.

How to make an offer on a house in 5 steps

Step 1: Get your approval in principle:

• a) budget, and;
• b) provide with your offer, if you expect the seller to take you seriously.

Step 2: Work out what you can afford:

Your mortgage in principle, plus whatever you have saved for your deposit (including any gifts from family) is your total budget.

Step 3: Decide how much to offer.

• Know your budget

• Do market research

• Calculate the value of the property

• Will your budget cover this price, as well as other costs?

The last part is important, as you'll need to account for conveyancing fees, mortgage fees, stamp duty and other moving costs, such as a removals service, new furniture or decorating.

If you're thinking of offering over or under the asking price, be sure to check out these FAQs.

Step 4: Write a house offer email.

This is where the insider advice really pays off. Most first time buyers (and even experienced home movers) get the same thing wrong; they see an offer as simply the figure itself. In every type of negotiation, you need to:

• Be likeable and engaging;
• set a boundary that you control;
• make an offer based on evidence;
• set caveats to your offer that link to the needs of the seller; and
• have a timeframe as to when your offer expires.

It's important to show interest before you make your offer, but in the formal written offer, make sure you don't seem too keen. Playing hard to get will put you in better stead to negotiate; setting boundaries and caveats at this stage retains what control you have over the transaction and shows that you won't be pushed around.

The real art is making an offer which allows all parties to win. (See more below).

Step 5: Negotiate the price and terms of the sale.

The big negotiations come later, when your surveys are completed and your conveyancing solicitor has made their legal enquiries. It is possible to knock a fair amount off the purchase price at this stage if defects with the property or covenants on the title are uncovered.

Negotiation at this stage will be based on the other offers that the buyer receives, if they're taking open bids. If they're taking sealed bids, you won't get a chance to negotiate at all; each buyer makes their offer in a sealed envelope, which the seller opens all at once. In open bidding, the agent will normally tell you if they've already received higher offers, giving you a chance to increase your offer.

The seller can accept your offer, reject your offer, or make a counter offer. This is where it's extra helpful to know what 'wins' the seller is looking for. You might get a discount as a cash buyer, or your seller might want more money if you've set certain repairs as a caveat on the offer, dropping those may afford you some bargaining power to bring the price down.

The estate agent will be your go between on these negotiations, remember that they are acting in the seller's interest. If you want a professional negotiator on your side, consider appointing a buyer's agent.

Remember to make special considerations if you're buying an unusual property, such as one in a Conservation Area, where you may need to leave more room in your budget for meeting their legal restrictions on any improvements or maintenance you'll need to carry out.