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Making an offer

After all the searching, you've finally found the home you want to buy. Now it's crunch time. How much do you offer for it? Fortunately, the internet has made it far easier to research house prices by street.

In cities where you have rows of identical properties, it's simple to find out the right range. But with individual homes it's harder to know their true value. Remember, too, that the condition of the property and the standard of decoration, fixtures and fittings inside will influence the price too.

What is the asking price?

Not for nothing is the price of a property often called a guide price. No-one knows for sure the true value of a property. The agents base the price on what similar homes in the area have sold for in the past, the demand for similar types of property in the area and the condition of the property.

Property websites and estate agents' information will tell you what percentage of asking prices is being achieved. Shortly after the start of the credit crunch in 2008 many properties were only achieving 80%-90% of their asking price. But by 2010-11 in desirable London areas desperate buyers were often paying far more than the guide price. Don't imagine that the national picture will necessarily apply, you need to research your local area closely.

Find out how long a property has been on the market – the longer it has been, the lower your offer should be. Also, has the seller lost other potential buyers? In this case, the seller could be desperate to do a deal.

Don't go in at the full price unless you feel you have to. And don't delay. You can always revise your offer later especially if the survey uncovers some nasty faults.

Once your offer is accepted, you should ask for the house to be taken off the market. Be warned that the seller may only do this once you've had a survey done, which shows you are serious and lessens the chances that you'll ask for a reduction based on something found in the survey. The seller will also be keen to know that you have a buyer for your own home if you're not a first-time buyer or between homes and that you have your finances arranged.

Buying in Scotland

In Scotland the rules are different. Properties are usually marketed as 'offers over' meaning the price is the lowest amount that will be acceptable. Or it may be advertised with a fixed price in which case the first written offer at this price is normally accepted. If there are several interested buyers, a closing date for offers may be set after which time the seller can consider competing bids. You should be told at this time how many other buyers are interested in the home.

You need to engage a solicitor early on in the process as he or she will put in a written offer for you. Once solicitors for the buyer and seller have agreed terms in writing – known as concluding the contract – the price is binding on both and neither the buyer or seller can pull out without paying a penalty. Making an offer is a serious business in Scotland as it is binding on the buyer at a far earlier stage. This prevents gazumping and gazundering, which have often been a blight on the housing market elsewhere.

Gazumping and gazundering

These are both mean practices that have crept into the property buying process. Gazumping is when the seller accepts a higher price after accepting yours. This is frustrating and costly, as you may have already hired a surveyor and solicitor who will have started work on your new home which means you'll incur fees.

It usually only happens during a rising market when there is a lot of competition in the market. You can, of course, increase your offer to at least match the new one and show that you can move quickly, but do be careful you don't over-stretch yourself in the heat of the moment. You don't want to saddle yourself with a huge mortgage you'll struggle to pay for years to come. Asking the seller to take the property off the market once your offer has been accepted should prevent this or at least lessen the chance of it happening.

Gazundering is the other side of the coin, where a buyer comes back with a lower offer after it's been accepted by the seller. If the seller has already found a new property and is committed to making their new purchase, it puts the seller under enormous pressure to accept it. This is more likely to happen in a slow market or when prices are falling. Again, the seller may be tempted to accept the new offer, making it harder to afford their new purchase.

It's up to you and the situation you are in at that stage whether you succumb to these last-minute guerrilla tactics. There has been talk of outlawing such moves and changing to the Scottish system, but it has not amounted to a change in the rules.

Lender Initial Rate Duration Standard Rate Overall Cost For Comparison Max Loan To Value Fee
2.59% 2 years 5.69% 5.4% APR 75% £999
2.69% 2 years 4.99% 4.9% APR 75% £495
2.94% 2 Years 5.69% 5.4% APR 75% £199
2.99% 2 years 4.99% 4.9% APR 85% £495
2.99% 3 years 4.99% 4.6% APR 70% £499
3.0% 2 years 5.69% 5.5% APR 80% £999
3.19% 5 Years 4.79% 4.2% APR 80% £995
3.35% To Jul 2014 4.95% 4.6% APR 75% £999
3.5% 2 years 5.49% 5.1% APR 75% £595
3.84% 2 years 3.94% 4% APR 90% £499

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