You made it to the stage where you are ready to make an offer, now what?
Below I explain making an offer in easy to follow steps.
Always make an offer based on what works for you. If you can't make the numbers work at the purchase, you are more than likely setting yourself up for failure.
Let's go through the steps to ensure you get the deal that works for you and provides your protection in the offer.
The basics of putting together a good offer.
Things you need to do and think about:
- Ignore the asking price at first.
- Combine all the information you have on hand
- At what price is this property good value?
- At what price is this property good relative value?
- Is there any work I need to do to make this property work for my intended purposes?
- How long will it that take to complete all the work
- What will be the total costs of the work? (all the costs; the cost of the actual work, the cost of the mortgage, the cost of your time etc.)
- Calculate all your other costs to purchase. Solicitor fees, Stamp duty, land registry fees etc.
Now reconfirm that the deal still works for you. Adjust your offer accordingly to make it work.
You set yourself up for failure buying at a price that already puts you over budget or well below your desired yield.
Remember to always keep in mind how much more would the property be worth, in sales or lettings terms, with all the work completed.
Making your offer:
First, your offer should be legal and should always be in writing. It sounds "sexy" to do a big deal on the phone, and it can be, but and this is a very BIG BUT, immediately follow it up with a written offer.
What should your offer include?
- The property details
- The amount you are offering - I recommend doing this in letters and numbers, £1,000,000 (One Million Pounds)
- How quickly you can proceed with your offer, it is often beneficial to a seller if you can exchange and complete swiftly.
- How you will finance your project, especially if you are not relying on finance this can make an offer more attractive.
- Any Subject to elements. Example your offer could be subject to a structural inspection.
- By when you need a response to your offer, a cut-off date.
- How to contact you & your agent - I still can't believe how many times I have received offers without contact details!
- If a potential property has a formalised bid or offer process set out, of course, include all other information requested for your offer to be deemed valid as well as submitting it correctly before the deadline.
Submit your offer:
Once your offer is submitted, the patient waiting game begins. If your offer was well considered and reasonable, you should not need to wait too long to get a response. If it was drastically different from the asking price, then you might be surprised with an immediate NO, a counter offer, or a long wait while a "committee" decides over their response to your offer.
Once your offer is accepted, Congratulations, now make sure you thank all the people who helped you get to this stage.
Now get going on getting the deal exchanged and completed!
I have seen some interesting offers over the years, what are some of the craziest offers you have seen over the years? Leave them in the comments below.