MONEY MONDAY: How To Make An Offer On A House




A few Money Monday’s ago, I wrote a personal post about my house buying experience and my lessons learnt as a first time buyer

I’ll be honest, I was basically clueless before I started this process – I knew a biiiit about offers, mortgages, legal fees but was still heavily reliant on typing "advice on buying a flat- HELP" on Google.

8 weeks and 3 offers later, Mr FV and I are feeling like the Phil and Kirsty of N5! (currently debating who is who - we both want to be Phil, obvs) The offer process is no longer the deep unknown, but it’s still just as scary!


Last time I talked about my assumption of the house buying process vs what actually happens, how easy it was to get a mortgage agreed and other things I didn't know about.

Today I’m talking about what I’ve learnt when making an offer - once you find a house you like! And believe me, it may take a few frogs before you find your handsome prince, it might even be the very first one you see, or (like me) you might fall in love several times!

Seriously- basically every other house that I saw was ‘the One’. The important thing is to get an idea of the market - how much places are going for, and how they compare to the others. This will help to inform your offer that you bid.




Key things to consider.

Size – look at the floorplan which will tell you the total square footage. Are you paying the same price for a flat which is 50sq ft smaller than all the others? Could be a bargaining chip to lower the price.

Parking – it’s common in London not to have a dedicated parking space or drive, so check the on-street parking restrictions. Is it resident permit only or is there pay and display available? If you can't get any parking, should you be paying as much as the flats where you can?

I learnt that you may not be entitled to a resident permit if you home is new, or an existing home split into two. If you don’t have a car that’s fair enough – but consider things like where your Tesco online grocery delivery might stop, and where your nearest parking is in case one of your friends decides to brave London's roads to come see you.

Location– you can do up the whole interior but you can't pick up the flat and move it. Location and structure are the ones you need to be happy with. Really think about how far you want to walk/how long you want to drive. Yes, you could get a bus to your nearest tube station but a 2 minute walk is priceless in comparison. What may sound 'do-able' might not be when you do it every day, for the next 5 years!



Outside space – whilst this is all very well and good, there’s a difference between a lovely little lawn and a dark, dingy patio. We saw a place which had a  bedroom balcony (I was like, swoon it's the One!!) but it was on the north side, so the house blocked out any sun and as a result it had become damp and manky. Sadface. If the outside space is tiny and north facing – you might end up not using it as much as you think - don't assume that just because you have it, you should automatically pay loads for it.

The same goes for windows too – south facing windows will get the most light, you’ll get lovely bright morning light through east facing windows and warm sunset views in the West. Not that I’d base the whole decision of my house on where I do my blog photography, but it’s worth thinking about!

Boring maintenance things like the boiler and ventilation. How old is the boiler? Will it need replacing as soon as we get in? Has there been any structural repair done recently – like the roof or the damp-proofing? We saw a lower-ground flat which was HUGE but the bathroom was in the center of the flat with a weedy plastic fan that didn’t duct to the outside and didn’t do much to stop it from feeling damp.  It’s not just about what you pay now, think about what you might have to end up paying later!


Once you’ve considered all these things, you’ll be able to decide the first bit - is the property worth the asking price?
Here's us between house viewings!

The next thing to decide is probably the most difficult decision of the whole process. HOW MUCH TO GO IN WITH? Even if you think the property is worth the asking price, do you want to go in with a lower offer in case you can get it for cheaper?

The answer is – it depends. Classic get-out clause I know soz, but it really does depend! Are there scores of people making an offer on the place? Is the asking price at the very top of your budget?

Going in low can do wonders – we offered 10% lower on a place which was definitely overpriced. Mr FV was convinced we were being cheeky and that we’d be laughed away but the vendor came back with 5% off the asking price. WIN FOR ZOE! The point is – you never know. If you start high, you can only go one way, but if you start low, it’s only going to go up anyway.

The downside of negotiations is the fear of losing the property to someone else. You could offer 20k lower, and then someone could come in at the asking price. In most situations, the estate agent will come and ask if you want to make another offer but by then multiple parties may be interested and then you'll panic and you may even enter the nightmare that is ………



....SEALED BIDS.
This is probably one of the most stressful emails you will write in your life. You’ve found the house you want, everyone’s prepared to pay asking price, now you give in your final offer. How high do you go? You don’t want to overpay if everyone’s only going to increase their offer marginally, but you also don’t want to lose the place.

My advice is DON’T GO IN OVER YOUR HEAD. I’m highly excitable, and easily caught up in drama – it took all of Mr FV’s strength to stop me from offering our first-born son. Offer what you’re prepared to pay, NOT what you know will get you the house.

Finally - when making an offer, BE WARNED! You can offer over what the property is worth but this may have an impact on your mortgage. Your mortgage provider will do a valuation as part of the process and if it’s less than what you agreed, your borrowing options may be limited. 
For example:  if you have 50k and buy a 250k house, you need to borrow 200k (80%) but if the Mortgage valuation values the house at 220k then that 200k becomes 90% of the house value. A 90% deal will be more expensive and have less options than an 80% deal.  UH OH.


So once your offer is in – now comes the waiting part. It may be a yes, it may be a no, it may be a negotiation but I'll tell you one thing - THE WAIT IS EXCRUCIATING. It's exciting, yet terrifying and nervewracking at the same time.

And that’s as far as I’ve got at the moment…. We put an offer in today on another dream flat. Hope to provide you with an update soon, eeeep! Fingers crossed!



Got any house-buying words of wisdom or questions? Tweet me @FaceValueBlog or drop me a note on Facebook!

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