Researching and Making Your Initial Offer

Research

Before making any offer, you should find out as much as possible about the property, such as:

• The state of the property market
  Buying when the market is flat or during the winter when there are few buyers around may get you a bargain, although you will have to come in much nearer the asking price when the market is buoyant.
• Why the owner is selling
• How urgent a sale is
  Some vendors might tell you outright that they must sell by a certain date and that they will accept any reasonable offer. You may be able to find out from neighbours why someone is selling, which might indicate whether an offer would be accepted.
• The neighbours and neighbourhood
  If there are many apparently desirable properties for sale in a particular area that have been on the market a long time, you should find out why.
• Whether the asking price is realistic
  Compare with similar properties in the area. If it has been on the market for a long time, it may be overpriced, unless it has obvious faults.
• The condition of the property
• When it was built
  You may be able to negotiate a substantial reduction if there's a lot of work to be done.
• How long the property has been on the market
  If it has been on the market a while - why it hasn't sold
• Whether the asking price has been reduced

These three points indicate how desperate a vendor might be to sell. Find out how long the property has been on the market - a good clue is when a property has been reduced in price, which may be indicated in an advertisement or an agent's data sheet. Generally, the longer a property has been for sale, the more likely a lower offer will be accepted.

Making Your First Offer

Calculate the reasonable price of the property based on other properties in the same area (location is the key factor in determining value), the state of the property market and the amount of work that needs to be done. Don't let anyone know that you are willing to go higher, and try to give the impression that your offer is a high as you can stretch to.

If the market is slow, and your offer is rejected, it may be worth waiting a week or two before making a higher offer. Be wary - agents sometimes invent rival buyers and bids - if this is the case, ask them for written evidence.

However, if you've found your dream home, make an offer straight away and increase it until it's accepted. If you really want it and there has been a lot of interest AND it's reasonably priced, you should probably consider making an offer at the asking price.