Step 7: Making an Offer

Once you’ve identified the property you want to buy, you need to sort out the price you’re going to pay. This will depend on a lot of factors, not least of which is how much you can afford. You need to pay a price that you are comfortable with and which the buyer will accept.

What to Offer

The seller will generally have set a price on the property and the easy option is simply to agree to pay the price. However, this can be a mistake. In some cases, property owners set a higher price than they are willing to accept in the expectation that buyers will make a lower offer. If you accept this initial amount, therefore, you will be paying an inflated price for the real estate.
Many people put forward the view that you should always offer a set percentage below the asking price because the seller inflated the price by that amount in the first place. That way, you’re just getting back to the figure they really want. On that basis, of course, you should really be offering below that figure to try to drive the price down.
This is all mind games and guesswork. In reality, what the seller will accept is dependent on the state of the market. If it is a buyers’ market, the owner may be desperate to sell and you can often get a deal at a cheaper price. When demand is high, on the other hand, sellers often expect to get the asking price and are sometimes even offered a premium by buyers who are keen to secure the property in the face of competition from other interested parties.
The outcome is that the buyer will either accept your offer, reject it or make a counter offer. In the last two cases, you have to decide your reaction. There may be a protracted period of negotiation, with offers and counter offers, before you come to an agreement or decide not to proceed. Either way, you need to pay close attention throughout the proceedings so you don’t miss out.

Other Considerations

Whatever you do, don’t focus exclusively on the price of the property and forget everything else. The price is only one element in the proposal to buy the property. Also important are the terms, which can involve significant additional costs for the buyer. It’s essential, therefore, that you understand all the implications and you may need professional advice for this.
Another critical element in the deal is the condition of the real estate. Your viewing of the property is unlikely to tell you much about its actual state. It’s vital that you organise for a professional and thorough inspection to be undertaken. This will reveal any structural defects, establish if expensive repairs are needed, determine the land boundaries and review title to the property. The findings of such a survey can materially affect its value, so any offer you make will be conditional on a satisfactory outcome.