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Thread: how to make an offer on/buy a property

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    how to make an offer on/buy a property

    if we're house hunting, and ever find something we actually like that we can also afford, what is the process for actually buying the thing? I imagine it won't be as simple as saying "want that one" and "here's some money". Presumably step 1 is make an offer, but how is this done? And what then?

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    Re: how to make an offer on/buy a property

    Assuming you're talking about England & Wales (Scotland, as always, doing it a bit differently) step 1 is normally to make an offer either to the vendor direct or, if he/she has one, to their agent,, I.e. the estate agent that showed the property. Of course, nit everyone yses an estate agent, so if the vendor is marketing directly, approach them.

    One thing the vendor, or agent, will want to do is to verify, at some point, that you're serious, and that will mean being able to demonstrate that you can afford it. One way is proof of income, another (preferabke, IMHO) is to have finance lined up, with a guaranteed offer of a mortgage .... presuming that you don't have the cash. If you do, it's pretty easy to prove your credibility.

    It's also a good idea to have a solicitor, or conveyancer if you go that way, lined up, because sooner or later, after acceptance, you need to start the legal stuff, I.e. drawing up contracts, doing searches, etc.

    Also, decide what level of survey is needed. The loan company will almost certainly insist on a minimum standard that's acceptable to them, but about all they care about is whether the place is worth what they lend. You care about possible big bills, so ...

    - is the roof sound, or are you in for tens of thousands replacing it?
    - is the wiring sound, or foescit need an expensive rewire?
    - any damp problems?
    - any sign of subsidence?
    - plumbing, heating, etc sound?
    - and so on.

    That can get expensive, but consider .... miss one of those and repairs could be VERY expensive.

    So, anything the survey finds either tells you "walk, or run, away", or gives you scope for negotiating the price down, or at the very least, gives you some peace of mind that you're not buying a total disaster.

    Just bear in mind, different levels of survey give you different degrees of coverage, and detail, but can vary a LOT in price.

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    Re: how to make an offer on/buy a property

    Oh, and some estate agents will (or did, last time I bought) try to get you to use a mortgage firm, or lawyer, or surveyor, they recommend. Personally, I wouldn't touch that with a bargepole. I want these people working for ME, not having a cosy little arrangement with the agent working for the seller. I regard that as a clear conflict of interest and no way would I agree to it. But they can push quite hard.

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    Re: how to make an offer on/buy a property

    Quote Originally Posted by Saracen View Post
    Assuming you're talking about England & Wales (Scotland, as always, doing it a bit differently) step 1 is normally to make an offer either to the vendor direct or, if he/she has one, to their agent,, I.e. the estate agent that showed the property. Of course, nit everyone yses an estate agent, so if the vendor is marketing directly, approach them.

    One thing the vendor, or agent, will want to do is to verify, at some point, that you're serious, and that will mean being able to demonstrate that you can afford it. One way is proof of income, another (preferabke, IMHO) is to have finance lined up, with a guaranteed offer of a mortgage .... presuming that you don't have the cash. If you do, it's pretty easy to prove your credibility.

    It's also a good idea to have a solicitor, or conveyancer if you go that way, lined up, because sooner or later, after acceptance, you need to start the legal stuff, I.e. drawing up contracts, doing searches, etc.

    Also, decide what level of survey is needed. The loan company will almost certainly insist on a minimum standard that's acceptable to them, but about all they care about is whether the place is worth what they lend. You care about possible big bills, so ...

    - is the roof sound, or are you in for tens of thousands replacing it?
    - is the wiring sound, or foescit need an expensive rewire?
    - any damp problems?
    - any sign of subsidence?
    - plumbing, heating, etc sound?
    - and so on.

    That can get expensive, but consider .... miss one of those and repairs could be VERY expensive.

    So, anything the survey finds either tells you "walk, or run, away", or gives you scope for negotiating the price down, or at the very least, gives you some peace of mind that you're not buying a total disaster.

    Just bear in mind, different levels of survey give you different degrees of coverage, and detail, but can vary a LOT in price.


    definitely sound advice
    Last edited by Dingo; 18-07-2014 at 04:39 AM. Reason: poor grammar at a late hour @)

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    Re: how to make an offer on/buy a property

    Everything Saracen said!

    On average most houses sell for 95% of the asking price but the local market could be hot (everything sells fast and over asking price, a sellers market, or nothing sells or for less than 95% - a buyers market).

    It also depends on what you feel the house is worth but you might want to check out comparable properties in the area and this site is helpful for that: http://www.zoopla.co.uk/

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    Re: how to make an offer on/buy a property

    Recent increases in background checks mean finding a free appointment with a mortgage advisor/bank takes longer so I would get this out of the way asap. They just give you a piece paper saying how much they are willing to lend you but its useful to have when making an offer.

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    Re: how to make an offer on/buy a property

    I would also look at decent mortgage brokers rather than direct with the bank:

    http://www.reviewcentre.com/products2397.html

    has a good table of who the top performing brokers are with London and County providing a best buy on their web site which compares a moderate amount of providers.

    I would probably go for brokers where you pay a fee upfront rather than commission paid i.e you don't pay the broker. That way they won't have a vested interest in giving you a mortgage where they get more commission but may not be the best for you.

    Which mortgage advisors come recommended

    Important when making an offer to have an Agreement in principle certificate certifying how much you can borrow or etate agents wn't take you seriously and out your offer below someone who actually has the objective means to buy.

    As a post above mentioned, get a decent surveyor via review websites, property Solicitors/lawyers. Generally I wouldn't bid more than 10% below the asking value, you will quickly find your calls not being answered or ignored.

    Don't forget you need a decent life and home insurance prior to exchanging of contracts.

    Expect the process of buying a house take between 3-6 months.

    Recent Mortgage Market Reviews Here has made it increasingly difficult to get a mortgage that you can use, they take alot more into account like SKY subs, food spending and subtract this to make a clearer picture of your disposable income. Rightly or wrongly, it's probably a good thing to ensure affordability as they will do a stress test to see if you can afford more than 5% interest charges if there is another recession.

    I would therefore recommend that you cancel or stop any unncessary spending for at least 3-6 months prior to you thinking of buying a house as they will demand bank and credit card statements.

    If you are self employed you need 2 years of evidence of your income, while employed people expect to be in their jobs at least 1 year and expect to give at least 3 months of their payslips as evidence.

    If you are thinking of having kids while applying for a mortgage this will severely impact the amount you borrow as their estimates for taking care of a child is very over the top.

    I also highly recommend visiting the Money saving expert forums on mortgages, quite a wealth of useful information there and you don't need to registered to view.

    good luck, it's going to be a long process
    Last edited by csgohan4; 18-07-2014 at 03:06 PM. Reason: spelling fail lol
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    Re: how to make an offer on/buy a property

    The first step these days would be to get the mortgage sorted and get a Decision in Principle. This basically tells the agent / buyer that you are serious, and that you have the funds available to you. Then you are free to make an offer whenever you want and they will take the offer seriously.

    Also make sure to push the fact that you are a first time buyer and so don't have any chain. This can be a big sway with sellers.

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    Re: how to make an offer on/buy a property

    Quote Originally Posted by csgohan4 View Post
    .... Generally I wouldn't bid more than 10% below the asking value, you will quickly find your calls not being answered or ignored.
    Generally, yes. There are exceptions.

    A friend bit £180k on a property advertised at £330k. And it was accepted. Why? Some small subsidence problems put other buyers off, and apparently, over some months, it was the first credible offer. So, he did his homework, got expert reports showing the subsidence problem could be fixed for under £5k, and based on those reports, got a guaranteed insurance cover for subsidence, for 10 years.

    Oh, and the seller was a business, not a private individual.

    Sometimes, in the right circumstances, a cheeky offer can really pay off. But, as you say, "generally" a stupid offer is a sign of someone either not serious, or that's likely to be a nightmare to deal with later.

    Which, ik9000, brings me to another thing to bear in mind.

    Remember, quite a high percentage of accepted bids end up falling through, for various reasons, before "completion". Try not to get too attached to a given property, even after a bid is accepted, because there's a good chance it'll go wrong.

    On the same issue, be aware that a percentages of sellers are opportunistic bleeps, not averse to playing silly beggars once the process is underway.

    Bear in mind, you WILL, under the English system, end up with your tail feathers hanging out in the breeze. Once the offer is accepted and you start the ball rolling, you will start incurring costs, like solicitor's time, search fees, survey fees, etc. And that is when some sellers decide to try to hike the price up.

    Be warned, it's not uncommon. So you need to be emotionally ready, and to cold-bloodedly consider what to do, if it happens. One option is, pay up. Another is negotiate. A third is walk away, or threaten to. Personally, I use the latter. If someone tries to jack the price, I decline. Either they stick to their agreement, or they don't. The very first house I tried to buy, they tried that. Accepted the offer, then shortly after, jacked the price. I refused to budge, so they changed their mind. Fortunately, not much cost had been incurred by me. They mistimed it.

    So, it fell through. A week later, the agent is back on the phone, wanting to go ahead with the offer. I declined. He said, what would I offer? I said, nothing. He was stunned. Wanted to know why. So I told him - either he, or his client, had tried to gouge me, and had therefore destroyed any trust, or goodwill. So, I don't trust that if I go ahead now, they won't try it again once surveys, searches etc have been done and I have much more to lose if it doesn't complete, so I'm not interested at any price.

    As it happened, I already had an offer in, and accepted, on another property by then. I think, judging by some of his comments, that in that week between them jacking the price and me refusing, I was supposed to cave in and go back with an "how about meeting half way" type offer. Like hell!!!

    So .... on the next property, the process droned on, searches done, survey done, etc, costs incurred, and two "exchange of contract" dates had been missed, when someone further up the line .... yeah, you got it, jacked the price.

    So, I countered that gambit. I instructed my solicitor, on a Tuesday ..... "no increased payments, and send word up the chain, either we exchange by Friday, or I'm pulling out". And I told my solicitor ('cos it was true) that I meant it, literally. Either exchange happens on Friday, or (at least with me, being the cash buyer at one end of the chain) I'm done. Enough delays, already. Time to poop, or get off the potty.

    We exchanged on the Friday.

    I don't know who paid what, other than that I paid what I'd agreed. Whoever jacked the price might have caved in, or several above me might have paid a bit each. Don't know, or much care. I do know that I was utterly serious, by that time, that it was Friday or never. Period.

    Of course, that kind of hardball strategy might have broken the chain, and left me paying for searches, survey, etc, that were now useless. And, you have to be prepared for that, if the chain falls apart.

    The long and short of it is, this can be and usually is a stressful process, and if you get emotional about it, it can be much harder on you. Hold it in, don't get too excited or invested in your 'dream' home, UNTIL you've at least exchanged, if not completed. Too much can go wrong.

    Just be prepared to come across problems, delays, frustrations and perhaps, a few bar-stewards.

    Have a nice day.

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    Re: how to make an offer on/buy a property

    We have all the time in the world. No deadlines to have to move by. No chain to worry about. I will be taking a very similar stance to yours Saracen should anyone try that price humping trick. In fact they may find my offer goes down in return. Even to zero as you say!

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    Re: how to make an offer on/buy a property

    No chain to worry about .... yet. Unless you're buying a property from someone that's either a builder, or selling but not buying, you'll end up with one, in all likelihood.

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    Re: how to make an offer on/buy a property

    Didn't really know too much about the whole process, Saracen , it was a real useful read many thanks

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    Re: how to make an offer on/buy a property

    Buying and selling houses can be horrendous. I had no end of problems on both ends of my one and only house - two purchases fell through, and when I sold it took the best part of a year to shift it and I ended up getting more than £10k less than the asking (which was £99,950, incidentally).

    When buying, on one property I'd paid for all the surveys/searches/etc., and was assured by the vendor that she'd exchange contracts on x day, and complete a week later. Well, x day came, no exchange - things were still fine, but she needed a couple more days. Which came and went, then another couple, then we'd exchange and complete on the same day, and on that day - she pulled out. She couldn't get the house she wanted to buy, so she changed her mind and decided not to sell. A lot of my money went down the drain that way.

    When selling, I accepted an offer a little below my asking, started making all the arrangements with solicitors, and then the buyer turned round and said they'd miscalculated the mortgage they could get, and would I take £10k less. I said no, and my house sat on the market for another 6 months, before I eventually had to sell it, at that lower price, to the people who made the offer, because I couldn't afford to pay the mortgage on top of the rent/bills I was paying living elsewhere. In retrospect, I should've been kicking my agent's rear end a lot harder and more often; I guess we live and learn.

    What I've learned, is that I really have no desire to get back on to the property ladder. I can kind of understand the desire to have somewhere that's your own, and that you can shape as you see fit. But frankly I get to have so much more flexibility from not owning, that I don't think I'd want to go back to it. If you're set on buying, though, the best thing is simply to be very wary, and remember there is no legal obligation until contracts are exchange, so up to that point any money you spend is at your own risk.

    Good luck!

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    Re: how to make an offer on/buy a property

    There certainly are advantages to renting, as Jim pointed out. Buying isn't for everybody.

    On the other hand, it is worth taking a view on what you expect long-term property prices to do. What's the chances they'll drop, or even hold where they are, in say, 5 or 10 years? Well, nobody knows, for sure, of course, and it IS possible to buy, right before prices dip. And if, then, you lose your job and can't find another one, you're in deep trouble.

    But, on the other hand, if prices continue to go up, as many do, at a healthy level, then it's worth remembering that you might well not be able to afford to buy (a similar property in the same area) in 5 or 10 years.

    It is not, for me at least, about making money on the property. I buy a home to live in. But it was at least in part about getting on a ladder that was, and so far still is, getting pulled up.

    As it happens, I could move now, to a nicer property, in a nicer but less expensive area, and end up with more land, a bungalow (which REALLY appeals) and trouser about £150k in the process.

    Also, we paid off the mortgage a bit early, and by the time we did, a mortgage that was barely affordable when we first got it was, relatively speaking, chump change in payments by the time we paid it off. And, a few years earlier, I paid more for a car than the amount of my original mortgage.

    So, for some years now, our annual living costs have included neither rent nor mortgage payments. And THAT, believe me, is nice.

    So yes, buying isn't for everyone (even if you can) and yes, it can be a millstone, and yes, buying and selling can be a right pain the the ar..., backside. And especially if your career is at a stage when mobility, even international mobility, is essential, then it may not be right.

    But it's also worth thinking 15, 20, 25 years down the track.

    If you don't buy, you'll be paying rent, with or without benefit help, for the rest of your lives. Buy, if you can, and providing you don't keep re-mortaging or extending, you pay for a fixed period, then ..... CHEAP LIVING.

    If I wanted to buy my house now, I couldn't afford it. That is the advantage of getting on the ladder while, and if, you can.

    That'll likely only change, in much of the country but likely not all, if nothing happens to dramatically drop house prices. And, while possible, I doubt a huge drop will happen. And personally, it won't matter much to me if it does, because if my house droos hugely, so will anything I'm likely to want to move to. I might well end up with less cash left over, buf oh well, that's life.

    There are, in other words, risks and advantages to both buying, and not buying. Which is the best strategy is dependent on the individual's own circumstances, and which set of risks to wish to run.

    The only thing that's certain is that is you can buy, you run risks either by doing so, or not doing so.

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    Re: how to make an offer on/buy a property

    I don't understand why people recommend using mortgage brokers at all?
    I bought my house last year without one. I'm on a 5 year fix at 2.59% and all I did was go to the comparison sites and pick the best deal for me. It's not rocket science.

    First, I got a free credit file on myself and my partner. I went through both to make sure there wasn't anything dodgy on either.
    Then I asked for a mortgage in principle - at that point I was committed to getting the mortgage within 6 months or losing the booking fee.
    Then I sorted out a conveyancer.
    Then I started putting offers on properties me and my partner had seen. I made damn sure that any potential sellers knew that my offers were backed with a mortgage in principal, I was ready to move and chain free.
    I also specified that the offer was conditional upon the property being removed from any advertising - online or at the estate agents as well as subject to contract. Always make sure the property is taken off the market as a condition - this reduces the risk of getting gazumped.
    First one fell through as the sellers were never serious about selling any way.
    Second one my offer was accepted on.
    Think of it like this:
    You are trying to sell a house.
    One buyer has no financing, conveyancer or anything else arranged and could just be living in a dream world.
    The second buyer has all of this sorted

    Which one is more likely to go through?
    Which would you choose, even if the second offer was a bit lower?
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    Re: how to make an offer on/buy a property

    Quote Originally Posted by badass View Post
    I don't understand why people recommend using mortgage brokers at all?
    I bought my house last year without one. I'm on a 5 year fix at 2.59% and all I did was go to the comparison sites and pick the best deal for me. It's not rocket science.

    ...
    No, it's not, but nor is it idiot-proof.

    With a comparison site, care still needs to be exercised.

    For a start, they generally offer fairly limited information, and "headline" rates. But a given applicant will not necessarily get that rate. Getting it might depend on 20% or 30% deposit, and if you only have 5% or 10%, you'll either get offered a different rate, or even cross-sold onto a different product.

    Also, what about other fees? When I paid of my mortgage, there was no early termination fee, and the ONLY charge above the outstanding balance was a very small fee for getting the deeds back from the B.Soc vaults.

    So, when you plan on moving, and early termination fees, might be a good reason for avoiding an apparently cheaper mortgage and going for one that comes up further down the rankings .... if it's on a comp. site at all.

    Bear in mind, comp sites often only go on information provided to them by banks .... who are aware of the way comp sites work and the way users think, and present information in a way that best suits their objectives, i.e. selling mortgages.

    A good broker, a whole of market broker should have access to a more sophisticated search, including knowledge of direct and/or limited offers, and if they're rewarded by a fee paid by you, not a commission from the mortgage seller, then they're more likely to be diligent in getting you what's best for you. They get paid the same, but reputation counts.

    Don't get me wrong. I'm not dissing comp sites. They're certainly worth checking, and for some, may be right. Just be aware, you'll be paying them, too, directly or indirectly, one way or another. And what I'm answering here is your question, "why use a broker", not for a balanced comparison of pro's and con's.

    A comp site might be best for you. For someone with specific needs, maybe self-employed, it might not. Sometimes, human knowledge, expertise and contacts works best.

  18. Received thanks from:

    csgohan4 (25-07-2014)

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