Making an offer on a house is an exciting moment.
But it isn’t easy to know exactly when a property is reasonably priced.
Many potential buyers offer below the asking price. But is the risk of doing this worth the reward?
Read on to find out more.
Do homeowners ever price their property fairly?
In some cases, yes. Some property listings are priced far more fairly than others.
In an ideal world, a homeowner will get several opinions when listing their house.
They risk overpricing their home if they follow whatever their estate agent recommends.
Estate agents often have an incentive to win new clients.
Unfortunately, suggesting a higher – rather than a more accurate – selling price can help them achieve this.
Of course, the seller will inevitably need to lower the price to complete the sale.
Tips to see if a house is fairly valued
You can judge the accuracy of a house valuation in several different ways.
It’s best to take your time to follow these steps to avoid overpaying.
1. Compare with similar properties
One of the most common methods is to compare it to similar properties in the area.
Remember that each road and postcode has unique features that impact price.
See if any other properties with similar square footage and number of bedrooms are available on the same or nearby streets.
2. Ask a property expert for their opinion
You could also ask a property expert for their opinion. Your estate agent (if you’ve got one) could offer insight on this.
An independent property valuer may have an opinion, too.
Make sure you factor in any survey results as part of this, as it can have a significant impact.
3. Look at the selling price history
Try to check out the history of the house’s selling prices.
This is sometimes available on Zoopla. Since the property was last sold, check how much its value has increased.
The compare this with averages for the area during the same period.
4. Look for hidden issues
Pay attention to some of the more minor details the sellers could hope you’ve missed. Once again, a survey is helpful for this.
They might’ve painted over mould or failed to mention that the lease is extremely short.
Disputes with neighbours, or debates over land ownership, are other examples.
Should I always offer a house below the asking price?
It depends on the situation.
Lots of house buyers work on the assumption that every seller overprices their property. But there are exceptions to this rule.
If you think a property is overpriced, you should decide how much by.
But you could also need to compromise if you’re committed to getting the house.
The seller’s estate agent may indicate the offers they think the owner will accept.
For example, the seller may be desperate if the property has been listed on the market for half a year without any offers.
This could cause them to accept an offer they’d otherwise turn down.
How much below the asking price should I offer?
Many potential buyers start at least 5% below the asking price. This is done on the assumption that the seller usually overprices it.
The seller may be insulted if you offer 10%+ below the asking price.
For the rest of the time, keeping communication open is in your best interest.
What if the listing states ‘can’t go lower than’?
Sometimes, the seller will specify that they only accept offers over a certain figure.
This will usually be made clear on the Rightmove listing and by the estate agent.
It can be risky to offer below the asking price in this scenario – the seller may be offended, stopping you from ever standing a chance of buying it.
Will a seller be insulted if I offer below the asking price?
Not necessarily. It often depends on how this offer is communicated and how far below the asking price you go.
Your seller’s perception of their listed price (i.e., how fair it is) significantly impacts this. It’s a careful balancing act.
The seller’s estate agent could guide how likely the seller is to accept a certain offer. They can advise on the seller’s psychology towards the sale.
If you offer below the asking price, it’s usually best to give your reasons.
This shows that you’re not a timewaster and have carefully considered the local market conditions.
Should I explain why I have offered below the asking price?
Yes. It’s never a bad thing to give an explanation – unless you don’t have a good one!
This can create an open dialogue between you and the seller, which is crucial to making progress.
Otherwise, the seller may be insulted if you give a low offer without any explanation. This can destroy your chances of buying the house.
What if the estate agent advises me not to offer below asking price?
Some estate agents do this as a negotiating tactic. Perhaps they’ve been told to say this by the seller.
Others may be genuine in their advisement.
For example, if the house has been listed online as only accepting offers over the listed price, this could indicate that you should follow this guidance.