Once you've got your savings, you understand the overall cost, have the Mortgage in Principle and have found a property you want to buy, the next step is to make an offer. The rules are different in Scotland than the rest of the UK. We'll talk about Scotland first:
Making an offer in Scotland. If you wish to make an offer on a property in Scotland, the process is:
- Find a solicitor / conveyancer. If you haven't already found one, you will need one at this stage. There are plenty of comparison websites (search for "find a conveyancer" or words to that effect) or follow the link at the end of this page to go to the Money Supermarket Comparison site.
- Make a note of interest. Tell the conveyancer / solicitor that you have found a property you are interested in and ask them to make a note of interest.
- Closing date. If a number of people have made a note of interest, the seller will set a closing date for offers. In this event, you have to decide how much you want to offer for the property and submit your offer before the closing date. A closed bid system is the norm in Scotland - you will not see what other people have offered, and you won't have an opportunity to change your offer after the closing date. The seller will then select the offer they prefer (this might not always be the highest offer - they may be more interested in someone who can move in sooner, for example).
- No closing date. If no closing date is set, it could mean no one else has noted an interest. If this is the case, there may be room for negotiation, and you may be able to buy the property for under the asking price.
- Does it cost to make an offer? Some solicitors / conveyancers may charge you, but there are plenty that won't - they'll get their money the they complete the sale for you.
- Information needed. To make an offer, your solicitor / conveyancer will require:
- Details of the property you wish to make an offer on (address and type of property).
- Proposed move in date.
- What you are offering to pay.
- Any items you want from the seller.
- Any other conditions you have.
- Is this legally binding? Although you have done all this activity through a solicitor or conveyancer, you are not legally committed until the missives are signed, nor is the seller. This is covered in the Exchange of Contracts Section.
Making an offer (rest of the UK). For England, Wales and Northern Ireland, the process is:
- Make the offer through the estate agent. Unlike Scotland, you don't need to get a solicitor or conveyancer involved. You can make the offer by engaging with the estate agent selling the property, or the seller themselves if they are not using an estate agent. If you do this over the phone, follow up with an email.
- Information needed. The estate agent in this case only needs the property address and what you are offering to pay, but at there is no harm in giving them some or all of the detail in the Scotland section above.
- Closing date. As above, the seller may decide to set a closing date. It could be a closed bid process as discussed above, but outside of Scotland an open bid system may also be used. In an open bid system the estate agent will tell you what others have bid to give the opportunity to raise your bid.
- Is this legally binding? No. In England, Wales and Northern Ireland, you are not legally committed until contracts are exchanged, and nor is the seller. This is covered in the Exchange of Contracts Section.
Things to consider. House prices will be advertised as
offers over or
fixed price. The differences are:
- Offers over. The seller is providing a guideline of what the minimum price is that they will accept. When the property market is in the buyer's favour, and they have a lot of interest, they will likely expect to get a reasonable amount over the offers over price. In my experience, when there is likely to be a lot of interest, and the market favours the seller, they will give an offers over price.
- With offers over, it's not uncommon for a popular property to sell for over 10% more than the offers over price. Importantly, if you offer over the actual value of the property, the mortgage provider will only provide a mortgage based on the value, not necessarily what you paid. This explained further in the Property Valuation Section.
- The Home Report in Scotland really helps here - the valuation on the Home Report is often what the mortgage provider will work off, so make sure you are covered if you offer over the home report value.
- This is where having a subject to valuation condition on your offer is very useful. If you offer more than the mortgage provider's valuation says it is worth, you don't need to continue the purchase.
- Fixed price. The fixed price is a price that the seller will accept on the property, and will likely be the first person who offers that price that will get it. This tends to be used when the seller wants a quicker sale, it's been on the market for a while, or the housing market favours the buyer.
- Unless you are really concerned about someone else beating you to it, don't go straight in at the fixed price. It's worth trying to get a lower price to try and see what the minimum a seller will accept is. Ideally, when you make an offer below the fixed price, the seller should respond with a counter-offer, and you can negotiate. If they don't budge on the fixed price, at least you know you tried!
- Of note, if you pay less than the property value, the mortgage provider will lend the money based on what you are paying, not the value of the property.
