How to buy a home. (A beginners guide)

The new year brings news stories of rising house prices, of falling stock levels and even the return of dreaded ‘gazumping’. Buying a home hasn’t been this tough for many years but it’s important to remember that across 90% of the country the buyer still has considerable influence and in many cases can actually dictate terms of a sale.

Making money on a property isn’t down to what you sell it for (the market when the time comes will dictate that), it’s based on what you pay for it. Money saved now ensures that whatever happens to prices in the future you are better insulated than if you hand over the asking price straight away.

There is a long tradition in this country of not wanting to haggle, of not wanting to cause offence by risking making what might be seen as a derisory offer. As a buying agent I have to say that if the selling agent isn’t appalled by the level of my first offer I probably haven’t aimed low enough. If you are going to disagree with an agents view on price, if you’re going to negotiate its vital that your offer looks credible. So what are the important things to remember?

  • • Retain a solicitor to handle the conveyancing so that you can include their details in any offer you make.
  • • Speak to a mortgage broker or to your bank and get an agreement in principle so that you can be confident of how much you have to spend. Ask how long their valuers take at present since this is often the slowest link in any purchase & difficult to influence – you need a lender who is proactive! Get any such offer in writing.
  • • If you have a house to sell or other assets to dispose of then at the very least get it on the market. In some instances you may need to have exchanged contracts in order to compete with other buyers so don’t rush a sale, prepare it in advance.
  • • Speak to a surveyor if you might want a structural survey done. They are busy people and can get booked up.
  • • Do your homework. If you are going to offer 20% less than the guide price you will need some evidence to back it up. Use the tools on Rightmove to look and see what similar homes have sold for, what similar homes are on the market for and calculate the rental yield. Anything less than 6% should be used like a club to bash the estate agent with. 4% gross may not be untypical in some parts of the country but this doesn’t mean it’s sensible.
  • • Don’t show too much of your hand. The estate agent will want to know as much as possible about you, the reason for your move and how you are going to fund it. Don’t be too eager to volunteer information about how your mother-in-law will chip in £10k if you really need it. He will only find a way to make you!
  • • Don’t be tempted to make the first bid. If you can, get the agent to tell you what he thinks his client is hoping to get. It’s often less than the guide price and sets the bar lower than the advertised price.
  • • Don’t be too quick to raise your bid. Just because it’s not acceptable doesn’t mean you need to be the one to blink first. Make sure the agent knows it’s a credible bid but that it’s not one that will be on the table for ever.
  • • I’ve often paid less for a house than I might have because the seller has liked my client. Not all vendors want the last penny, some would like the home to be enjoyed as they have. Connect with them if you can – establish common ground, schools, clubs, parish council or perhaps a love of a garden.
  • • Remember statistically half of homes offered for sale don’t sell. The seller, his agent and the press all want your to believe that prices are shooting up and that if you don’t bid today you will regret it. But most price indexes are calculated with reference only to the homes that sell. Remind the agent of the properties that haven’t sold.
  • • Leave something on the table for the other side. Don’t try and screw the seller to the floor, leave him with some dignity and he may reluctantly accept your terms.
  • • Be relaxed and professional. Big prices are paid by people who fall in love with properties. Buy with your head, not with your heart.

Prepare your bid in detail. Make sure you have everything you need to make your offer look as attractive as possible so that both the seller and their agent can see you are serious. Stingy perhaps but serious. They need to decide if taking your derisory offer is balanced by the speed and certainty that you will perform – is it the proverbial bird in the hand.

Remember to mark your bid ‘subject to contract’ and ‘subject to survey’ too if you want a structural survey. If your offer isn’t acceptable, you can always bid more but you could also consider one of the other 700,000+ homes for sale in the UK. Be firm, be fair and be determined. You may agree a good deal but you will need to fight just as hard to get the deal done!