You see the house of your dreams and work out your budget. Before making a decision about making an offer, we advise a little bit of research.
First of all, search on Zoopla or Rightmove to find out what the average house prices in the area. Don’t take its figures as gospel, but if you look at the most recently sold homes, you’ll get an idea of whether it’s a fair price.
Ultimately, a house is only worth the amount someone is willing to pay, but make sure the asking price is reasonable. If you see a similar property on the market nearby, check out its price too.
If it’s way above recent selling prices, you need to find out why.
Mortgage in principle
You need to find a mortgage, so you search for “a local mortgage broker near me”.
Once you speak to that broker, they work out whether you will be offered a mortgage in principle. This is a statement from a lender saying that they’ll lend a certain amount to you before you’ve finalised the purchase of your home.
Also, you are usually asked to provide this in writing (which is sometimes called a decision or agreement in principle) as evidence that your offer is serious. So, having it in place before you take a further step is advisable as waiting until after the offer has been made, it could slow things down.
The mortgage in principle offer – which comes from the lender – will last you three months.
So, if you don’t end up buying the house, it’s still active if you find something later.
If you have been given the mortgage in principle, it’s now time for the big step: to make an offer on the home!
The next step is to think about your offer. Do you want to show you are serious and make an offer close to the asking price?
Or do you want to put in a lower offer to see if you can get a bargain? Either way, be prepared for your offer to be rejected.
Don’t be downhearted. You can always increase your offer. If it’s close to the asking price it may well be that a slightly higher offer is enough to be accepted.
Make an offer
With all your preparation, you can now make the offer. Contact the estate agent that is selling the property and tell them you’re calling to offer a price on the house you like.
They may ask questions about whether you have a mortgage in principle, and that’s why it’s always best to have it ready as it proves you are serious.
You may also be asked about how quickly you want to go ahead. These questions are normal as they are working on behalf of the seller and need to be happy that your offer isn’t bogus.
If the offer is rejected you can consider something higher, but don’t decide straight away. Think about it. It’s OK to ask the agent whether other offers have been made.
If the seller is holding out for the asking price, think carefully. If it’s at the top of your budget, remember you may have higher stamp duty to pay if you offer the asking price.
Even if it is a dream home, be ready to walk away if you feel the offer is reasonable and affordable to you.
Once the offer is accepted it’s onto the next step of the process.
My offer is accepted
Although your offer is accepted, it isn’t legally binding. That doesn’t take place until your contracts have been exchanged.
So, at any point, the seller may decide to take the property off the market for personal reasons, or you may have to wait until they find a new home.
Or, they may tell you they’ve accepted a higher offer!
To try and avoid this, it is reasonable for you to ask the estate agent to stop marketing the property. If the ad says, “under offer” a lot of people will move on to something else. But it doesn’t mean they cannot accept another offer.
Be ready for a long legal process. Sometimes, it’s quicker, but you have to remember that your solicitor needs to do a lot of legwork. This often results in delays. We’ll explain this more in a future blog.
Be ready to set a realistic date for exchanging contracts. Your solicitor can give you a better idea of the timescale.
If you want things to move along quickly, make sure your solicitor knows. Ultimately, some of the delays will be because it is their responsibility to make sure you don’t end up with a legal problem.
If everything goes smoothly, you can move onto the next step, which will include organising independent homebuyers’ reports. There are a number of things you need to do, and we’ll look at this in our next blog.
If you’re thinking about buying a home The Mortgage Dog can help. We’re a “whole of the market” mortgage broker in Washington with clients across the North East and you can contact us now