What Is a Cheeky Offer On a House?
Making a cheeky offer on a property you believe is worth less than the listed value is a gamble. Your offer may annoy the seller, potentially leading you to miss out on the opportunity to make a more reasonable offer. When the negotiations go in your favor, however, you'll end up with a property for considerably less than what the seller may have wanted.
So what is a cheeky offer on a house? This article explains what a cheeky offer is, how to maintain a strong relationship with the seller, and outlines the circumstances under which a cheeky offer may be accepted.
What percentage under the asking price is a cheeky offer?
A cheeky offer is typically 10% to 25% below the property's asking price. For example, a seller has listed their property at £250,000, but you've only offered £200,000. This is a 20% decrease between your offer and the asking price. Most sellers expect to receive the figure they have requested. So by putting in an offer for £50,000 less, you're bound to ruffle some feathers.
Why is 10% to 25% below the asking price a 'cheeky' offer?
Making an offer considerably below the asking price can be deemed disrespectful to the seller. You must anticipate the seller walking away completely at this stage, as they feel your cheeky offer undercuts their valuation. Most sellers will instruct their agent not to waste their time with offers below a certain amount. If the agent has this in writing, your offer won't even make it to the seller for their consideration.
The seller's estate agents will provide a valuation of the property based on comparable properties in the nearby area. This valuation will be for properties within the property's area only, as extending the range can tack on thousands.
This doesn't mean you can't get the price lower; however, there are plenty of reasons a seller could accept a cheeky offer.
When might a cheeky offer be accepted?
The seller's circumstances increase the likelihood that a cheeky offer will be accepted. Typically, the seller needs the money, meaning they want to sell their property as quickly as possible. Let's explore some circumstances in which a seller might accept a cheeky offer:
Financial difficulties
A seller facing financial difficulties increases the likelihood that a cheeky offer will be accepted. The seller needs the money, potentially because they have lost their job, or even worse, their property is about to be repossessed, and they want to get as much as possible before losing the home.
Seller has passed away
In the unfortunate event that the seller has passed away, the property's beneficiaries may want to expedite the completion process to receive their funds.
Property defects
A cheeky offer may be accepted when property defects are discovered during the property survey. In this instance, you'll return to the seller with a cheeky offer, using the property defects as evidence to support it. As long as no contracts have been signed, you're free to renegotiate the price, even if the original offer was accepted.
The property has been on the market for a while
Buyers can take advantage of a seller who is desperate to sell their property. For example, a seller has had their property listed on the market for a while, consistently decreasing the price in the hope that their home will sell. If you are the only person making an offer, you have the negotiating strength in this situation.
and use it to negotiate the price down
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Work out how much you can offer in a 'cheeky offer'
Before making an offer, buyers need to understand not only what they are willing to pay, but also what they can afford.
Buyers ideally should obtain a mortgage in principle before making any offer. Sellers are more likely to take you seriously if you have a mortgage in principle. This establishes a rough guideline for how much the bank will be willing to lend. This figure, combined with your savings, will be your total budget.
Have information prepared when making a cheeky offer
As the buyer, you must put yourself in the strongest position possible when negotiating, even if it's a cheeky offer. You need to come prepared with information that will make it difficult for the seller to reject your offer.
For example, you can gather important information on properties in your area that have recently sold and what they sold for. We offer a helpful house offer calculator that allows you to compare similar properties in the area. This calculator also lets you calculate the property's cost per square meter. These calculations are then compiled into a handy PDF that can be sent to the seller's agent.
The seller won't simply accept your cheeky offer without justification. Preparation is crucial when making a lower offer.
What are the tax implications of a cheeky offer?
Stamp Duty Land Tax will still be applicable, even when making a cheeky offer on a property. If your cheeky offer is successful, you could pay less SDLT if it falls into the lower tax bracket. However, it's important to be aware of when the SDLT payable would be different, for example, your company making a cheeky offer on a property you own. Even if the offer is below market value, the SDLT your company will have to pay will be based on the full market value.
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
