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How Much to Offer £££

You have found the property you want.  You’ve decided this is the one to go for.  Now the tricky part: how much should you offer? When you decide how much you would pay to own that property (and remember all the extras like Stamp Duty and legal fees), you tell the agent and this is known as your ‘Offer.’ Sometimes it will be the asking price, many times it will be less than the asking price and occasionally it will be more.


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Property isn’t like buying a loaf of bread in a shop.  You aren’t obliged to pay the asking price.  You can literally offer the seller whatever price you think is right.  Estate agents are obliged to forward any offer they receive to the seller (even if it is very low).  Psychologically everyone likes to feel they have got a bargain.  With property what you must consider is how many other people may make an offer and how much you really want the property, aswell as how much you can actually afford (goto Property Budget page again if you need to).

The quickest transactions happen when both buyer and seller think they are getting a good deal.  This way you act quickly as a buyer because you know the price is right and you want to secure the property.  Sellers don’t mess around trying to get a higher price and get their solicitors moving quickly, to get to Exchange of Contracts.

How Much is it Worth?

There is one simple rule here.  A property is worth whatever someone is willing to pay for it.  That is why a rich Oligarch may pay hundred million pounds for a penthouse overlooking Hyde Park: they think it’s worth it, even if you think it’s silly.  So if you are looking at a flat valued at £1.5m and you really think it’s only worth £1.3m, that’s fine: make an offer at your price.  It could well be that 3 other buyers think it’s worth more than £1.5m and they may outbid each other to get the flat for themselves, pushing the final sale price upto £1.65m.

Of course sellers generally always value their property higher than it’s ‘market value’ (the price someone is willing to pay).  Estate Agents will try and guide sellers with lofty expectations to use a reasonable price.  When this doesn’t work you can see properties advertised at a price which seems silly… if that’s the case walk away, or let them know what you would pay.

Click Here for eBook: The Ultimate Buyers Guide

How Do I Value a Property?

Many components come into play when valuing a property.  Some are more unique to London (proximity to a tube station) or more obvious in London (square foot measurements).  When an estate agent turns up to value a property, the reality is they probably use the rule of relatively.  If you could hear what’s going on in their mind it’s something along the lines of “hmm, this is a nice 2 bed flat.  A similar size flat on the next street sold for £750,000, this has a nicer view and more modern kitchen and bathroom, so we should get around £780,000 for it, given the market is still strong and we have plenty of buyers on our books.”

Although this unconscious stream of thought is how many properties get valued – on a relative basis to what has sold in the local area – the reality is over a dozen elements make up the true price.  We’ve listed these below for you, so you can get an idea of all the things that you should consider when deciding how much to offer.  We’re not saying you should be able to come up with the property value from these individual elements, we’re saying that you can use the following elements to help compare against other properties that have sold recently (some of which you may have viewed) and get an idea of if the offer price is fair or not, and how much you should offer.

Area.  One neighbourhood will be perceived as more expensive than another. Maybe the housing stock is better, the streets prettier, it could be closer to central London or closer to the rolling hills of the countryside.  Area is one of the biggest determining factors of price.  In each area there will be a notion of how much a 2-bed flat or 3-bed house costs.  Because of this, it’s hard to sell a property much beyond these notional levels and sellers often suffer by spending a huge amount on renovations to make a home unique, only to find that buyers won’t pay 50% above a similar property in ‘normal’ condition because the “area doesn’t command those valuations.”  So if you’re looking at a £3 million, 3 bed flat in Belgravia, that’s fine.  Yet a £1.5 million super-flat in Hendon just won’t sell as the average price of even the best flats would be under a million pounds.

Transition.  Areas move through phases.  The general belief is that areas only get better, it’s mostly true yet some areas do decline in popularity.  An increasing number of areas are described as ‘up and coming.’  This is mostly true of areas that are on the fringe of areas which are deemed desirable.  Cost will push some buyers out to the edges of the good area, or across the border into the postcode of a neighbouring area which then starts to ‘gentrify.’  You shouldn’t add extra value to a property in a ‘gentrifying’ or up and coming area – a property should be valued on what is true now.  You could decide that this makes a better ‘investment’ than a rival property though, with the price more likely to increase in the future (be careful, this doesn’t always work).

Location.  Within an area, there will be good roads, less favoured roads and bad roads.  Every area has its good and bad parts, or at least it’s good and great parts if you’re talking about Knightsbridge, or somewhere suitably chic.  Locationally where the property is makes a big difference, even in the same postcode.  Being on the tree lined street with little traffic is more exclusive (and expensive) than living on the street that has industrial buildings and a big car park.  The classic property developers catchphrase is “buy the worst house on the best road” because then you have the best chance of your property appreciating in value, especially as you begin to refurbish it.

Transport.  Public transport is a big deal in London as it’s far too time consuming, expensive and inconvenient for most residents to drive all the time and few people are close enough to walk everywhere.  Having a property within a 5 or 10 minute walk of a tube station will add upto 15% to a properties value.  However if you are within 200 metres of the tube station, the property could be worth less because of noise, vibration from trains and all the extra pedestrians walking past your property on way to the station.

Click Here for eBook: The Ultimate Buyers Guide

Being close to a train station is of high value for those commuters coming in from the Home Counties, yet in central London, being close to Euston, Kings Cross or Victoria has typically kept property prices down.  That’s because these areas are often run down with dirty streets, poor shops and lots of travellers loitering around, removing any community feel.  Times are changing and the area around each of these stations is rapidly gentrifying – we’d still be wary though.

Property Type.  Detached houses are worth more than semi-detached houses, which are worth more than terraced or townhouses.  Assuming everything else (street, space, style) are the same, this will always be the case.  Flats are worth less than houses, even if they have the same space.  Large lateral flats (all the space on one floor) are worth more than duplexes (flats spread over two floors) of the same size.


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Style.  Classic Georgian or Victorian houses are valued more highly than most modern build properties, if fitted out to a similar specification.  Flats in converted houses will be worth more than those in post-war sixties blocks, built on sites which were bombed in World War II.  Nash properties (like those around Regents Park) will always trump the hottest new build.  Speaking of new build, high quality apartment blocks with quality materials will command a premium, yet alot of new blocks are cheaply constructed (and look so), which will always leave them at a discount.  If build quality looks cheap now, the building may age badly, so the nice and shiny new home now, could well lose it’s ‘kerb appeal’ in a few years and reduce your chances on making money at sale time.

Size.  Most people in London think that ‘price per square foot’ is the only measure of property that counts.  This measure has become so successful because it’s so simple, plus its the only common thing amongst properties than can be measured!  It ignores the fact that a first floor flat will often have much higher ceilings than a fourth floor flat in a converted Victorian house – hence they may have the same square footage, but their ‘volume’ is very different.  It almost makes more sense to value properties on their volume, but this isn’t going to happen anytime soon.

Ownership.  Freehold properties (or share-of-freehold for flats) are worth more than leasehold properties.  Leasehold properties fall into 4 categories, depending on how long the lease is.  Over 70 years is viewed as very safe and similar to owning a share of freehold.  The truth is that you will still have to pay to extend the lease, so I would discount this over a share-of-freehold flat or freehold house.

50 years+ is viewed as being certainly more expensive as you pay not only a convenience rate to extend the lease but also some ‘marriage value’ as the extension to the lease increases the value of the property.  Less than 50 years and the property is deemed to lose alot of value each year, so apply a big discount.  Below 21 years the lease can be hard to extend and the cost of extension will be many times the cost of the property. If you are serious about buying a leasehold property I would investigate extension costs first and for anything less than an 85 year lease have a formal appraisal, rather than rely on Estate agents to ‘guesstimate’ at the cost.

Condition.   Good condition properties are taken as the ‘norm.’  If a property is tired and in need of updating (new decoration, perhaps new bathroom and kitchen) the value will be much reduced.  Refurbished properties can command big premiums (15% to 20% is common).  This premium can be alot more than the cost of refurbishment, yet buyers seem to value not having to put up with the hassle, noise, dust and disruption and like ‘turnkey’ properties.  Remember condition applies to both the internal and external state of a property.

Aspect.  South facing living rooms for flats or rear gardens for houses can command a 10% premium over similar properties as you will get the sun all day long.  Next best is West facing (sun from midday to evening).  Followed by East facing (only get the sun in the morning).  North facing gardens or living rooms are least desireable and can even attract a 5% discount.

Demand.  Quite simply, if there are lots of serious buyers looking for a similar property to you in the same area, anything you see is more valuable than if you are the only interested viewer in a few months.

Supply.  Flats in a newbuild block where there are 300 new homes for sale are not as valuable as a flat in an area of period housing, where nothing has come onto the market for 3 months.

House price direction – local market.  House price moves aren’t often talked about on a national level.  London usually performs differently and within London ‘local markets’ exist.  It’s important to get an idea of the trend in the local market you are looking in.  The easiest way is to see how quickly property sells and if each month properties are selling for more (upwards trend), similar levels (within 5% would be sideways trend) or less (downwards trend).  If properties sell quick they are more likely to be in an upwards trend.  If alot of properties are hanging on the market and not selling, the trend is likely to be lower.  It’s very hard to predict or even detect a changing trend, so don’t worry about that.  One thing to look out for – asking prices are not the true trend, sale prices are, so take asking prices with a pinch of salt.  ‘Bubbles’ or very fast price rises often occur just as an upwards trend is about to change, so be aware if asking prices are jumping up considerably every month – it could well be the bubble is about to burst.

Psychology / temperature of the market.  If the economy is doing well, buyers are happy to pay asking prices or pay more this month than they were for the same property last month.  When the economy cools, buyers get nervous and hang back.  Are the papers full of positive or negative news on the economy?  Are share prices moving up or down (look at the FTSE100 rather than individual shares).  This gives you an idea of the markets temperature.

Click Here for eBook: The Ultimate Buyers Guide

Lets categorise the property and your intentions:

i) Property has been on the market for over several weeks with no offers, you like it, yet you won’t cry if you don’t get it.

Suggestion:  Make a cheeky offer, much lower than the asking price.  Tell the agent you don’t wish to offend the seller, but it’s only worth buying the property if you can get it a very good price.  You can always go back and raise the offer. A few sellers get offended and won’t deal with those who make an early low offer, even if they later raise their offer, so politeness is a strategy here.

ii) Property recently added to the market, you like it, but not enough to be emotional about it, and you know there are several others viewing.  Estate Agents’ most common deception is to make you think others are interested in the property and will be making an offer.  Introducing the element of competition gets their seller a higher price.   Well it’s unnecessary.

Suggestion:  Decide what you think the right price is (maybe a small discount to the asking price, or a big discount if you think the property is overpriced, needs alot of work, has something undesirable..) and make your Offer.

iii)  Property just came on for sale, lots of viewers, you love it, you know it is well priced and desirable.

Suggestion: Quickly make an offer at the asking price or very close to it.  You can go back for more viewings if your price is accepted.  In this scenario, as has been the case with many central London properties recently where demand far outstrips supply, you know if you like it others will, if you can afford it and don’t think you’re being ripped off, there is no point in playing games.  Act quickly and professionally.  When the survey results are in, you can always try for money off, if you discover work needs doing – just be reasonable and be prepared to pay the price you first Offer.

If you need more advice on negotiating, it’s good to ask anyone you know who works in sales (the tactics are always the same, regardless of the product).  You can ask the Estate agent for advice, just be aware that they work for the seller, so take anything they say with alot of scepticism and ask for concrete examples of ‘why?’, if they say the property is worth a certain amount.

Better still – ask an Agent you are registered with – who is not marketing the property.  Alot of agents will be quite honest about what they think of a rival property, including what they think it is worth.  It’s best to ask 2 agents, just to check you hear a similar opinion.  Offer to buy them a bottle of wine if they help you out – gifts go a long way and the advice is valuable.

Want more advice?  Check out this page from consumer group Which?   Which? guide to making an offer on a house

Special situations:

Estate Agent ‘flaky’ about your offer.  If you are concerned that the Estate Agent is not passing on your offer to the seller, as they think it is too low, or you believe they are favouring another buyer, simply write a polite note and post it through the sellers letterbox (e.g. “I just wanted you to know that I made an offer of £XXX to your Estate Agent and hope this offer finds it’s way to you.  Should you wish to discuss, you can contact me on: 07770 123 123”).  Ok some Agents may be upset you resorted to this, yet if you don’t trust them, take matters into your own hands.

Sealed Bids.  If a property is highly desirable and many buyers have been looking for the same thing, there may be many offers at the asking price.  In this situation the Agent often asks for ‘Best and final sealed bids.’  Each buyer (including you) submits your highest Offer price.  Once they are all collected (there may be a deadline 24hours or 48hours away), the bids (same thing as an ‘Offer’ in Estate Agent speak), are viewed and in most cases the highest price gets the property.  Sometimes you will be asked for details of your situation (e.g. cash buyer, mortgage, do you need to sell first).  Regardless of if you are asked or not always include other details with your offer price to make you look attractive. How do you do that? Put down as much financial and personal detail as possible that shows you are in a strong position and ready to execute, e.g. you have 30% deposit in cash (less likely mortgage company will refuse the loan), you have no property to sell, or you think you can exchange and complete very quickly, write these points with your Offer price.  It is common for sellers to take a slightly lower Offer price if they think the buyer is of better quality, so the more you present your case, the better.

‘Offers over.’  When a property is hard to value – it may be unique, there may not have been any similar properties selling for a long time, or it may need complete refurbishment, estate agents often hedge their bets by inviting “Offers over” a certain asking price.  If they ask for Offers over £800,000 it means the buyer will be upset if you offer £800,000.  In this case you have to decide how much you value the property at, perhaps ask local professionals like surveyors or even other Estate Agents what they think it is worth and then offer what you think is right.  If you doubt there will be many interested buyers, feel free to offer the base price, or even lower.  All they can do is say No!  This method is also used where a property would normally goto auction, yet the seller thinks an Agent may get a higher price, as auction buyers are often developers who don’t like overpaying.

Complete and Exchange in 24 hours.  In the phenomenon spectacle that is Prime Central London property transactions, where there can be hoards of buyers with lots of money wanting to buy the same property (think Oligarchs fighting over a one of a kind, rarely seen on the market, mansion in Knightsbridge) sellers can dictate some impressive terms.  Amongst these, there are often properties (multi-million pound or not) that are sold and Exhanged in 24 hours.  Basically the buyer finds the property so desirable they won’t perform any checks as to the quality of the property and only perform basic legal checks, to win the property.  It is only advisable to conduct a property transaction like this when you are very wealthy and have a first-rate solicitor, as if you get it wrong and discover something terrible with the property later, you’ll have no redress and could have to ‘write off’ some of the property value.

Holding Deposit.  Sometimes the seller will ask for a holding deposit.  This is usually between £1,000 and £5,000.  Sellers like to have this to demonstrate that the buyer is serious and won’t mess them around.  This is often the case with developers who are selling several flats or houses in a new development.  Often buyers agree to buy a property then decide they like something else or just change their mind.

Holding deposits are rarely guaranteed by a contract, so the seller can still change their mind and pull out (by returning your deposit), yet if you change your mind, even for a valid reason such as discovering the property is not as advertised, or your Bank not agreeing to give you a mortgage for that property, you will lose your deposit (the seller may return it out of good faith, but you can’t be sure).

Where possible, completely avoid paying a holding deposit.  Of course, should this be the norm, as in new developments, or should you feel you need to because others want to buy it too, do so at your own risk and try and get a ‘Gentlemens agreement’ in writing that if you pull out for a genuine reason (survey finds fault, or reason beyond your control such as Bank refusing finance) that the deposit will be returned. Whatever deposit you are asked for, always negotiate it down and if the seller is too insistent on a holding deposit and it doesn’t feel right, walk away… there could be a reason they want to ‘lock you in’, like hidden issues.

Etiquette.  The English system of property buying is actually quite poor.  Despite our great laws and rules, very little protection is afforded to Buyers or property.  So a seller can mess you around if they wish.  To best prevent this, use the following tips:

Click Here for eBook: The Ultimate Buyers Guide

The Art of The ‘Offer’: tips for Success

* Name a specific price. Example: “we offer £750,000”, not “we would pay around £750,000.”  State everything that is to be included.  Should you want the fridge freezer and cooker included in the sale price, don’t assume anything, especially curtains and window blinds will be left behind).

* Give details of your situation.  Example:  We have a 30% deposit, our mortgage is agreed in principle, this is a similar property to that which we advised the bank we would be buying, so we see no delays in approval, we have an offer on our own property and that sale is progressing smoothly.

* Sellers sometimes try and control the situation when they have heard your offer by not responding or saying they are ‘considering it’ while really they are just waiting to see if further viewings will turn up a better offer.  Take this control out of their hands by putting a time limit on your offer.  It is fair to say something like “We offer £750,000 and our offer is good until the close of business of Friday.”  Give the seller at least 3 days to consider.  If you are panicking that competition will be high and you are making an offer at or near the asking price you could try just giving them 24hours to agree.  Just be aware that you might be gazumped if they accept, then keep showing the property.

* Don’t back down on details if they are important to you.  If the seller says they accept your price but want extra for the kitchen appliances, you don’t have to bow down to their every whim.  If you protest that you are paying a good price and that you will walk away if they don’t include these, the Agent will often talk sense into them to ensure the sale goes through (sometimes Agents have even paid for items themselves, to ensure completion of a deal and their commission).

If your offer is accepted:

* Ask the Agent to confirm this in writing and confirm no other offers will be forwarded to the buyer.

* Ask that all viewings stop immediately.

* Ask that an ‘under offer’ sign is placed on the website and any advertising board immediately. If you can, pressure the agent into removing the board and web listing, or placing ‘sold’ up instead of under offer.  We have been outbid on a property where a buyer who saw the ‘under offer’ sign, knocked on the door and offered the seller more money directly.  Greedy as they were, the seller agreed. We had to pay thousands extra to keep the house.  This is known as ‘Gazumping.’  Oh how I wished we’d insisted on that For Sale board coming down (in future I’d probably just remove it after dark one night 🙂

* Contact your Solicitor straight away, tell them they need to move fast as there are other buyers trying to outbid you (even if it’s not true, it prioritises your case).  Have them contact the Estate Agent to get the sellers solicitors details, get the legal searches going and contact them every 48hours for a progress report.

* Contact your mortgage provider.  Tell them it’s urgent and they must move fast!  Have them supply you with the contact details for their surveyor as you will want this survey undertaken and approved as quickly as possible.

* Decide on which type of survey you want.  Our next section will help you with this.  Organise a surveyor fast and get them in quickly.

If your offer is declined:

* Ask specifically, Why?  If the price is too low for the seller, but within reach of the true price they have in mind as their ‘low’ they may counter-offer.  Now you are negotiating, so be prepared to offer a little more as a gesture, or because you believe the property is worth more to you. Keep the seller engaged by responding within 24hours (don’t respond within less than 2 hours or you look desperate to buy).

* If the seller does not counter offer and the agent says no-one else has offered, try and re-engage them and ask the Agent to ‘sound out the buyer’ to get a deal done. If the agent can smell a possible sale they will try and convince the seller to reduce price as they would rather get a quick sale and a guaranteed commission (even if it’s slightly smaller) than risk the property languishing on the market and another Agent coming along to market the property.

* Was there a higher price offered by someone else?  If so can you match it (don’t get carried away, but if it’s only slightly higher, you may wish to).  Does the other buyer appear to be a ‘safer buyer’ (buying with cash, no mortgage, no chain etc.).  If so, write a letter to the buyer stating your situation and show how good a buyer you are.  Pass this to the agent and also post a copy directly if the seller lives in the property.

* Ask to be kept in mind as the ‘second buyer’ if the first buyer changes their mind, can’t get financing, takes too much time etc.  Make the agent believe you are ready to step in should the first buyer fall out.  This happens alot, especially when buyers (often developers or people over-stretching) try and haggle down the price after making an initially high offer, once they think the competition is out of the way.  Estate Agents would rather call you and have you step in and purchase rather that go through the hassle, expense and embarrassment of re-advertising the property for sale.

* Tell the Agent you would buy a similar property if they find one.  They may contact neighbours and tell them they have a buyer waiting at the same price level if they wish to sell too.  Neighbours, seeing a property on their street sell, often decide to get their properties valued by the same agent – if that agent knows you would quickly step in, they may put together a deal for you without ever advertising the property to other buyers.

Click here to goto: Exchange of Contracts

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