First Time Buyers – Making an Offer
Advice and Step by Step Guide to Buying a First Home in the UK
Dec 21, 2008
The housing market can be a bewildering place for those who have never purchased property before, even those who are pretty financially astute. Even when buyers find their dream home, there’s no guarantee that they will become its new owner. This step by step guide explains the processes involved at the stage of making an offer on a property, provides advice and helps make the process of buying a first home as smooth as possible.
Visit a Mortgage Advisor/Broker, Get an Agreement in Principle
When the house-hunting has yielded a potential property, and if the buyer hasn't already done so, this is the time to meet with an independent mortgage advisor or broker. First time buyers who feel particularly confident with their knowledge of available mortgage deals may prefer to compare mortgage deals online and approach lenders direct. Others may prefer to have more of a helping hand in the form of a broker at this stage. Read more about the pros and cons of using a mortgage broker. Check the broker’s fees are acceptable before entering into any kind of agreement.
A broker/advisor will go through the various kinds of mortgage options available. They should also advise on the best special first time buyer mortgage deals that might offer better interest rates. They will help calculate the affordability of any loan suggested using repayment calculators. Seek second opinions from trusted friends and family who have mortgages of their own and any other financial expertise available. Buyers should satisfy themselves that the deal chosen is the right one for them.
When a good mortgage deal has been found, ask the broker or lender for an Agreement in Principle. This will show the vendor that the buyer is serious and desirable and that finance is already tentatively agreed. All this bodes well for the swift progress of the transaction.
Discover the Vendor’s Situation, Look at the Home Information Pack
After a second viewing has confirmed that the chosen property is a practical and viable option, the buyer is ready to make an offer. Find out everything possible about the vendor’s position before making an offer. Vendors who need to sell quickly, or who need a buyer in order to complete a chain, may be willing to accept a slightly lower offer than others. Find out from the estate agent whether there are other offers on the property and try to discern the level of interest it’s already generated.
Is the Home Information Pack (HIP) available? The UK’s HIP is a legal requirement of the property transaction, and all vendors putting property on the market must have one. The HIP will provide information about the property’s energy efficiency, likely utilities costs, drainage, and general environmental situation.
Something may appear in the HIP that influences the desirability of the property, for example, the property might be in a radon-affected area, or a flood plain. If this happens, research the findings thoroughly. Decide whether the property is still acceptable and whether any changes, modifications or home improvements might be necessary in light of the problem. Most problems in the HIP can be overcome and need not be deal breakers. However, the evidence gathered at this stage may provide a useful price negotiation tool.
Make an Offer, Negotiate a Price
Approach the agent with an initial offer. Justify this offer using knowledge of the market gained from research and house-hunting experience. Buyers should go in a little lower than they are prepared to pay, and hold their nerve. Don't feel obliged to offer the asking price, or even close to it if research suggests that the value is much lower.
Be prepared for the vendor to reject an initial offer. If this happens you have two options: either wait a few days and go back with a slightly improved and justified second offer, or play hardball and take a risk, tell the vendor that the offer stands and in a month's time it will be X amount less. The shrinking market puts potential buyers in a powerful position when making offers of this nature.
Please note that buying property in Scotland is of a more binding nature much earlier in the process. Seek specialist guidance if necessary.
Patience is a valuable quality in house price negotiations, as this process can go on for days, or even weeks, and every negotiation takes a different path. Ensure time is taken to think about each ‘play’ and don’t feel rushed or panicked into a decision or making a higher offer. Equally, if there is a good deal of interest in a property already, be prepared to act swiftly and decisively in order to secure the property. First time buyers are desirable for the very fact that they have nothing to sell. Emphasise this advantage throughout negotiations.
Instruct a Solicitor, Get the Memo of Sale
When you have agreed a price with the vendor, make sure the property is taken off the market. Estate agents are obliged to pass on any higher offer they receive, if you have not stipulated that the property must come off the market you could find that you are ‘gazumped’ by another buyer.
Inform your broker that you are ready to go ahead, and find yourself a good solicitor. When choosing a solicitor, speak to several different reputable firms with conveyancing departments and get recommendations from friends and colleagues. Choosing a solicitor is largely about balancing costs with the trust you have in the firm. Instruct the solicitors and start work on the forms they send for filling in: normally a purchaser's questionnaire, identity checks and terms and conditions.
The estate agent will issue all parties with a memorandum of sale, which is a non-binding statement of intent to proceed with the transaction.
When all these steps are complete, buyers are ready to work towards exchange and completion.
Readers may also like to learn more about house-hunting and finding the perfect property.
 |
 |
 |
