Congratulations! You’ve finally found your dream home and want to submit an offer, but are unsure how to go about it or how much to offer in the current housing market.
Buyers typically pay a 10% deposit on exchange, which is £29,200 when purchasing a property at the £292,000 UK average price.
We'll take you through the offer process, from researching recent sales in the area to how to make an offer and negotiate a better deal.
How to Put an Offer on a House
Here is the best way to make an offer on a house:
Before Making an Offer on a House
There are two main steps you should take before deciding how much to offer on a house:
Arrange an Agreement in Principle
An Agreement in Principle (AIP) is a statement from a mortgage lender that gives you an initial idea of how much you could borrow.
Having an AIP in advance shows the seller you are ready to begin formal proceedings, giving your offer more weight.
Hiring a mortgage broker to process your AIP takes away a lot of stress and time. They can offer expert advice, so you can submit an house offer that is likely to get accepted by the seller. Read more on our guide on making an offer on a house before making an offer.
Research Sale History and the Housing Market
Understanding the local market conditions and the property’s sale history will ensure you are prepared for negotiations. If there are multiple transactions, investigate why this is, as it could be due to structural problems or issues with noisy neighbours. You can check similar homes on property portals and the Land Registry.
A buyer's market means you will have the upper hand in negotiations as the seller is likely struggling to sell the property. Seller's markets mean you will face a lot of competition from other buyers, so the seller has the upper hand.
You can also hire a buyer's agent to conduct a comparative market analysis to determine a suitable price range.
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What is a Reasonable Offer on a House?
You should offer an amount you are willing to pay, and think is fair. A lot of people think they have to offer under the asking price, but you should only do this if you believe the property is worth this cost.
If you do plan on offering under the asking price, make sure you are prepared to justify this to the estate agent and/or seller.
Here are some common offer-related terms you may come across and their definition:
| Offer Terminology | Definition |
|---|---|
| Below Asking Price | The buyer's opening offer is under the asking price by up to 5%. |
| Guide Price | A price set by the seller toften used in auctions and is typically 5–10% below their asking price. |
| OIRO (Offers in the Region Of) | Sellers will consider offers around the asking price, usually up to 10% below. |
| Cheeky Offer | When the buyer's offer is significantly lower than the asking price, approximately 10-25% under. |
| OIEO (Offers in Excess Of) | A price set by the seller that they refuse to negotiate less, especially in a seller's market. They are typically expecting 1-3% above. |
| Above Asking Price | Another price set during seller markets, this can achieve 5-15% above asking when there is high buyer demand. |
| Sealed Bids | Buyers submit anonymous final offers in writing, not knowing what other buyers have offered. This can achieve approximately 34% above the asking price. |
Asking price and cheeky offers are the most common types of property purchase and offer more room for negotiation, whereas guide prices and sealed bids are popular in London, where there is high interest and demand.
Your mortgage broker will consider the offer type when advising on what your best initial offer should be.
How to Make an Offer on a House
Follow these four steps to make your offer:
1. Provide a Written Offer
Submit your offer in writing to the estate agent, as this will get the ball rolling and establish a paper trail for the conveyancing process.
You can disclose your offer verbally, but this doesn’t provide the same level of protection if communications falter.
2. Justify Your Offer
If your offer is below the asking price, you should explain why in your email.
Sellers are more likely to negotiate if the buyer has done their research and can rationalise their lower offer.
3. Stress Your Position
Sellers will gravitate towards chain-free buyers, including first-time buyers. Essentially, anything that can move the process along a bit faster will be prioritised.
If you are buying and selling at the same time, ensure that you mention whether your property has already been sold.
4. Be Ready for Negotiations
You can't anticipate the seller's reaction, but establishing a maximum budget and non-negotiables in advance means you are as prepared as possible.
It can also help you further down the line by lessening the time taken on decision-making.
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How Do You Negotiate a House Price?
Here is the best way to negotiate a house offer successfully:
Open With a Reasonable Offer
While it may be tempting to jump in with an extremely low offer, you risk insulting the seller and them refusing to negotiate further with you, especially if there is no justification for the offer.
Don’t Exceed Your Maximum Budget
Establish a maximum budget early on based on what you’re willing to pay for the property, making sure you have enough funds for your solicitor, surveyor, and other third parties.
Be Flexible
When buying a property, it’s important to negotiate and compromise with the seller, as they want to get the best deal from the transaction as well. Making sure you are flexible with the seller’s counteroffers and conditions will increase your chance of success.
Stay Polite and Calm
Property negotiations can be stressful, especially when dealing with a stubborn seller. Regardless of how ruthless negotiations become, making sure you remain calm and polite ensures you can make well-informed decisions.
Disclose Your Position
Use your buying position as a negotiating tool, if possible, as the seller may be willing to accept a lower offer if it speeds the process along. For example, cash buyers may get a reduced price as they don't have to worry about applying for a mortgage.
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FAQs
Can you put an offer on a house without an offer on yours?
You can submit an offer at any point, even before you've accepted an offer on your own property; however, sellers aren't likely to accept due to the risk that your sale may be delayed or fall through.
Can you lower your offer on a house?
It is possible to lower your offer, especially after your survey. This is known as gazundering and is a common tactic during the negotiation and enquiry stages before the exchange of contracts.
Read more on how to renegotiate after receiving negative survey results.
Are cheeky offers rude or disrespectful?
Cheeky offers are not supposed to be rude or disrespectful. However, if you want to offer below 10% of the asking price, it’s best to have justifications as to why you are doing so.
What happens if my offer is rejected?
Having your offer rejected with no counteroffer isn’t a common occurrence, but it happens when it's a seller’s market and there is a high level of interest in the property.
Those with enough in their budget could submit an increased offer that reflects what the seller is looking for, but if this isn’t an option for you, then take this as a learning experience and continue your property search.
