Purchasing a home can be a stressful and complex business, so let’s look at this with some useful tips on how to place a bid and become the winner.
Before you make an offer
During the initial meeting with the estate agent you choose, be clear and unequivocal about the amount you are prepared to spend and make it a little less than what you really can afford. Estate agents will often present at the top end of the budget, so this will put you into a good position from the beginning when it comes to negotiations.
Many people are excited and sentimental when it comes to finding a home that they really love. Do not be too obvious that you’ve fallen in love with a property or the seller will know that you would be willing to pay more for it. Try to be calm and ask a lot of questions.
Keep a close eye on what is happening in the property market in the area you want to buy. How many were sold and how quickly are they selling? If they sell slowly and below the asking price, then you know you are in a strong position to put in a lower bid.
Put in a bid
Tell your estate agent, because by law they have to pass on any offer they receive to the seller. It’s good practice to place a bid in writing as well, following an email or phone call will suffice. If the seller is interested, then the negotiation process can be initiated through estate agents. As an agent works for the seller, you may feel there is no one else to act on your behalf. Often buyers will hire a buyer’s agent to assist in the negotiation process.
A lower bid is more likely to be accepted if:
The property has been on the market for some considerable time
If the seller needs to move quickly
You are the only person to show interest in the property
Completion date suggested by you works well for sellers
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Tactics for bidding
The bidding process can vary and be open or closed. Open negotiations are much more common.
With open negotiations, such as the bidding process, start low. Maybe think about offers 10% lower than the asking price. It is often expected by the seller, so they put their property on the market higher than they expect to receive.
You will usually be notified if another offer beats yours, so you can bid again if it’s within your budget limit. Remember to stay cool and polite, interested but not desperate.
Sealed bidding involves writing down your offer and sealing an envelope, the seller chooses the highest. It is more common in very high demand areas such as London.
Once the bid has been accepted
Gazumping is a problem that about 1 in 10 have experienced. Even when a bid has been accepted, it is still not legally binding until contracts have been exchanged. Sellers have been known to pull out if they receive a higher bid, leaving many buyers out of pocket. There is little to do other than ‘counter-gazump’.