How To Work Out What To Offer For A Property
Working out just what to offer for a property you are interested in can be tricky, but there are various pieces of information that can help you. Here we are assuming you are buying a normal run-of-the-mill property via an estate agent. Obviously if you are buying at auction or through some other relatively unorthodox method there could be various different considerations to take into account.
The first thing to do is to look at the asking price for the property, and then compare this with what it sold for last time around, the average increase in prices in the area over the interim, and the prices of surrounding properties that have sold recently. If an effectively identical house next store sold for £50,000 less just a month or two ago, then that's something you will very much want to know about and factor into your pricing calculations.
You can find out the prices of properties that have sold recently in the area for free from a range of websites, and also via the land registry website. You usually just enter the postcode to find out. So use these tools to get a feel for the current values: just bear in mind that properties in a road can vary considerably and be of different types: eg detached and you're looking at a semi, so be careful to compare like with like. If you are unsure then some property sites will list details of a house and what it's basic description is, and remember you can also use google streetview to get some idea in many cases.
Some websites even tell you what they think the current market value of a given property is, based on a range of factors, and how confident they are in that valuation, so this might be a figure you want to take into consideration too, though of course bare in mind these are calculated by computer algorithms and so, however sophisticated, they may be fairly inaccurate.
You can use the Land Registry's house price index to see what houses are worth - on average - in a given region by property type, so this information can again be factored into your calculating mix if you want to know the average price of a terraced house in your region.
You might want to do some research on the area around the house you are wanting to make an offer on, and see if there are any factors that could particularly impact on prices - is the town centre undergoing a massive redevelopment that could add value, or much improved rail links with London imminent and so forth - again these could make a property more attractive and tip you towards offering the asking price or close to it; again such things are often already factored into prices, but not always. Or conversely perhaps there is a huge housing development going on nearby that will flood the area with lots of cheap homes.
Of course, these are all factors extrinsic to the house itself - don't forget that first and foremost you will be assessing the house as you have seen it! If substantial work needs doing, for instance, then clearly you will factor that very much into what you offer.
Also you will want to talk to the estate agent and find out how long the property has been on the market, if other offers have been made, if the owner is looking for a quick sale and more besides. These will all have a bearing on what you will want to offer for the property.
Armed with as much information as possible, you will then finally need to decide how much you want the house - and then make your offer. If you really want something and are worried about others getting there first, then you would be tempted to offer more than if you are just trying to snap up a bargain but don't really mind if you don't get it.
As you can see, there are a huge number of factors about you, the seller, the property, the market and the location that will all impact on what you are prepared to pay for a house. Good luck with your calculations and good luck getting that first foot on the property ladder at a price that you are happy with!Last update: 02 Apr 2015
More first-time house buying articles:
- Home improvements that will add value to your property
- Why you should visit a house at different times of day
- Repayment and Interest Only Mortgages
- After Your Offer Is Accepted
- How to interpret a survey