Been outbid? What to do next
Thu 16 Jan 2020
Paul Bennett, Director
We are seeing more property confidence in 2020 and with this, a competitive element to house buying may return and purchasers might find they’re not alone in making an offer. So, what should your course of action be if there are several buyers keen on the house you would like to purchase? Behr & Butchoff has put together suggestions for those who find themselves outbid on a property.
Make a higher offer
The natural next step is to increase your offer and if you know you can afford to go higher, then give it a try. In a buoyant market, however, you need to prepare for a bidding war - and you must know when to stop. Your purchasing rival might be at the bottom of their budget when they place an offer, whereas you might be close to the top or even over yours.
Remember your budget
On this note, it’s important not to let your heart rule your head, which can be very difficult when you feel you have found your dream home. It’s possible that FOMO (the fear of missing out) may cause you to be reckless but don’t offer a price you simply can’t afford or a bid more than your mortgage company may loan on.
Do your research
Be aware of what the property is worth in terms of the market. Behr & Butchoff can help you identify the value of similar properties in the same area, advising you whether a higher offer is a good financial investment. Your research should also take the form of questions posed to the sellers’ estate agent. Find out how long the property has been on the market and if there have been any other offers. Don’t forget, Behr & Butchoff can ask this on your behalf.
Offer a holding deposit
Although not a common step, offering a holding deposit can be useful in a competitive London market. This takes the form of a small cash sum that shows that you are serious about a purchase. The holding deposit is usually held by the seller’s solicitor in an escrow account but it might not be refundable if you withdraw from the purchase.
Highlight your other credentials
Remember, the best buyer isn’t always the person who makes the highest monetary offer. Factors that are equally important, because they bring speed and security to a transaction, include: -
Having a mortgage offer agreed in principle
Coming to the purchase chain free – as a first-time buyer or from a rented property
Having your current property under offer, if you have a property to sell, as this will reduce the transaction time
Being part of a small chain, as this is the next best thing to being chain free. If a first-time buyer is purchasing your home, the chain will be short
Being a cash buyer, therefore not being held up by a mortgage decision
Being flexible to fit in with the seller’s plans. If you can work with their timeline, then you should find favour. They may want to move super quick or perhaps in a matter of months, if they haven’t found an onwards property to buy.
For advice on navigating a competitive housing market, guidance when making an offer and assistance during the negotiation phase, contact us today.