Making an Offer on a Home
You’ve secured a mortgage and found your dream home, now what? The next stage is Making an Offer.
Finding your dream home can be a lengthy process, but once you have found it, you need to move fast in making an offer if you are to gain an advantage over other interested parties. The process of making an offer on a house is relatively simple, and it boils down to just 3 (or 4) simple steps:
- Advise your real estate agent that you want to by the house
- Make an offer
- If your offer is accepted, hire an experienced solicitor
- If your offer is not accepted, go in with a higher offer (but only if you can afford it)
The Asking Price
In an ideal world, the asking price would be a fixed amount that a vendor would be willing to sell their house for, but unfortunately, it’s not that simple. Real estate agents use different tactics when it comes to setting the asking price, taking location and demand into consideration, and the price listed is often much lower than the owner would be willing to accept.
Having done your research, you’ll have a good idea of how much properties cost in the area you are looking to buy, and so if a price seems too good to be true, you can pretty much guarantee that the estate agent has set it that way to build momentum in the bidding war. This can be frustrating, especially for first-time buyers, and if you are looking to buy a home in the capital or a high-demand area, you should start looking at properties with an asking price as much as 20% below your approved principle mortgage amount.
Buying a Home: How Much Should You Offer Against the Asking Price?
Love it or hate it, haggling is part of every house sale, and while you may be willing to pay the asking price for your perfect home, both your mortgage broker and your estate agent will most likely advise you to go in with a lower offer.
Most sellers ‘round-up’ their asking price to allow for some negotiation, but if you go in too low, you could risk offending them. Your estate agent should be able to give you some indication of what they think the seller would accept and advise you of any other bids made on the property. You can then go in with your own offer for an amount you can genuinely afford.
If your first offer is declined, you can go in with a second offer and even a third, but don’t be tempted to overspend. It’s a tough market out there today for Irish home hunters, and you shouldn’t set your heart on a property until the contracts are exchanged.
Be Prepared: The Highest Bidder Doesn’t Always Win
If you think that houses are always sold to the highest bidder, think again. Many homes are sold for prices well below the original asking price if the buyer is well-prepared and able to close the deal without delay. First-time buyers have an advantage here as they are not tied up in a property chain and can move quickly. Providing you have your deposit and mortgage agreement in principle in place, your bid could be favoured over that of other potential buyers, so make sure that your estate agent conveys this to the vendor at the time of placing your bid.
With your offer accepted, you are one step closer to securing your dream home, but you’re not quite there yet. Your estate agent will provide you with a ‘Subject to Survey’ contract and you will be asked to pay a booking deposit, which could be a fixed amount or a percentage of the property price.
At this stage, both parties can still pull out of the deal and your booking deposit is fully refundable, but by paying it upfront, the vendor will feel more confident that the sale will go ahead, and the estate agent is more likely to remove the property from the market.
Final Step: Surveys and Exchanging Contracts