Mastering the Essentials: crafting your perfect property offer

One of the most common questions asked by First Time Buyers who have found a property that they love is “What percentage below the asking price should I offer?”

This question gets asked time and time again by prospective buyers, yet its answer remains as elusive as ever. Why, you ask? For a number of complex reason, so let's delve into most common of these factors together.

Seller's Circumstances:

Even if you are told the seller’s reasons for selling, it’s likely that you won’t entirely know all of their motivations for the sale. For example, it could be partly driven by wanting to downsize, or wanting a bigger home, but often that is only the property-related reasons that they feel comfortable telling you. You are not likely to know what their financial situation is. Whether they’re buying elsewhere that is comfortably within their budget or if they're stretching themselves to the max, hoping the equity from the sale of their current home will bridge the gap between what mortgage they can get and the home they want to buy. There are an infinite number of little secret reasons why the seller might be holding out for a higher offer and hasn’t accepted yours, even if you’ve offered the asking price. 

Estate Agent Dynamics:

Then, there's the matter of estate agents. Many engage in a practice known as "Valuing for the Listing," where they inflate the potential sale price to lure in sellers, only to manage expectations downwards later. This habit can leave you uncertain about whether the asking price reflects fair market value or wishful thinking.

Furthermore, remember that estate agents represent the seller, not you. It's in their interest to secure the highest price possible, often by stoking the flames of competition among potential buyers. And if they sense the possibility of a bidding war, they may advise the seller to hold off on accepting your offer, regardless of its merit.

Location Matters:

Let's not forget about location, either. The UK property market isn't a single dimension; it's a multi-faceted number of micro-markets, each with its own quirks and nuances. In sought-after areas, competition can drive offers closer to the asking price, while less popular locations may offer more room for negotiation. 

So, what's the magic number, then? In truth, there isn't one. Each transaction is a unique exchange between buyer and seller, shaped by a myriad of known and unknown factors. The key is to arm yourself with knowledge, understand the seller’s situation and local market dynamics, and plan your negotiations in advance so that you can do so with confidence.

Remember, its far easier to negotiate upwards than downwards. So, don't be afraid to make an offer that reflects your understanding of the market and your perceived value of the property. With the right knowledge about motivations, you'll navigate the twists and turns of the property market and master your offer with ease.