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Negotiating and making an offer - Jo Eccles, Sourcing Property

Negotiating and making an offer

Last month, I talked about how to keep estate agents interested in your search and ensure that you’re at the top of their list. This month, I’m giving advice about what to do when you’ve found the right property and you want to make an offer – how much should you pay and how do you go about making the offer?

The key to any negotiations is market knowledge, and the more you know, the better. London prices are heavily based on price per sq ft so when deciding how much to offer, you need to be sure of price per sq ft figures in the area for this type of property. Look online to see if any other similar properties are for sale on the same road, or on a comparable road. Check to see what price per sq ft they’re on the market for. Remember to factor in disparities, such as the property’s condition compared to the one you’re bidding on.

You can also look at historic prices on www.landregistry.gov.uk (you will need to pay a small fee for this) or free sites such as www.houseprices.co.uk, but there is typically a two month delay between a property being sold and its sale price being registered, so prices may be slightly out of date. One other downside of referring to these sites is that the prices can be meaningless if you don’t have the other details about the property. A good buying agent can get hold of this information and more, which helps you assess where the market is and prices which have actually been achieved, rather than advertised.

Taking into account your comparables and historic information, you should have a good idea about the implied price per sq ft value of the property you want to offer on. The next step is to assess the situation of the vendor. Ask the estate agent questions about the vendor’s situation: why are they selling, have they found somewhere to move to, what is their time scale? This will have an effect on the way you present yourself as a buyer and your offer. For example, if the vendor isn’t in a rush or doesn’t need to sell, they are likely to be more price driven. However if the vendor is in a chain and needs to tie in the sale with their new purchase, then if you can accommodate their timings, it may be more valuable to the seller than a slightly higher offer which isn’t flexible.

You also need to assess the competition and how long the property has been on the market. The general rule of thumb is the longer a property has been on the market, the more room there is to negotiate.

When you’ve decided how much you want to offer, the key is to present yourself as a good quality, credible buyer. Make your offer (subject to contract) over the phone, and then confirm it in writing by email/fax to the estate agent. To add credibility, you could ask your solicitor and mortgage broker to write a letter confirming that they’re instructed to act on your behalf and that you have a mortgage agreed in principal, which demonstrates that you’re ready to proceed. The estate agent is legally obliged to put forward your offer to the seller, so don’t be put off making a low offer initially; you can always increase it later if you need to, as long as you’re not competing against others who are prepared to pay more now.

Next month I’ll talk about the best way to handle sealed bids if you’re facing that situation. Believe it or not, sealed bids are quite common on good quality properties, regardless of where the market is heading.

Jo Eccles

Jo Eccles is Director of Sourcing Property, an award winning and independent London property search company. She is also a widely regarded property expert and frequently comments on the property market in the national press and on TV, appearing as the property and relocation expert on London Tonight, BBC News, BBC2's Daily Politics programme and ITV's Homes & Property series.

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