Looking to buy a house after lockdown, but wondering how to go about it?
It’s a tough market for homebuyers at the moment, with a lot of competitive bidding going on.
To secure your dream property, you need to stand out from the crowd.
We’ll show you exactly how that’s done. Here are 6 tips for creating stronger offers.
Screenshot of the Current Climate
There’s no doubt that there’s some pent-up demand caused by the slowing down of the housing market due to COVID-19.
During the peak of coronavirus, mortgage offers were withdrawn and the property market was stagnant. First-time buyers with low deposits were the worst-affected group. This has undoubtedly put some people off buying a home.
However, despite the recession and jobs crisis, the housing market is on the move again. This is thanks to changes such as the stamp duty holiday, and the fact some of the lower LTV mortgages have become available again.
But, one of the difficulties now is getting your offer accepted. It’s really competitive out there and a classic supply-and-demand scenario has created a seller’s market. As a result, buyers are having to compete over the house they want.
Why Are Sealed Bids On The Increase?
Many buyers have now found themselves in a sealed bid scenario. This is where hopeful buyers submit their bid in a sealed envelope by a particular date. No bidder knows how much the others have put forward.
This benefits the seller as often they’ll be able to secure a higher price for their property. There’s usually less opportunity for negotiation.
In the post-COVID housing market, the use of sealed bids has increased due to the sheer volume of interest and competition. Many buyers have been ‘on hold’ and now feel it’s the right time to buy, largely due to the stamp duty holiday.
In short, despite more and more people feeling now is the time to sell, there are more interested buyers than there are properties for sale. This has led to a resurgence of sealed bids; sometimes as high as 11 buyers to 1 property.
How to Win a Bidding War
Here are some top tips for getting your offer chosen over the competition.
Fun fact: prepared buyers are more attractive to sellers (sometimes more so than ones who are paying a higher price).
One of the most important things to have in place is a mortgage agreement in principle. Being able to prove that you’re ready to go and can borrow from your lender puts you in a much more stable position.
Be ready to get a property survey organised as soon as possible should your offer be accepted. Plus, make sure you have a solicitor in place so you can move quickly.
Many sellers are looking for a speedy, easy sale and may prioritise a prepared buyer over a non-prepared buyer than one paying a higher price.
Don’t just put forward your bid. Include other information in your offer that could serve to make you a more attractive buyer. This includes:
- If you’re chain-free (property chains can be notoriously difficult). This is one factor that first-time buyers should use to their advantage! Sellers will also consider risk. The riskier you are, the less appealing you might be
- If you’re a cash buyer
- Proof of funds e.g. mortgage in principle
- Proof that you’re prepared and able to get moving
The key is to make yourself as appealing as possible to the seller. This will help ensure your offer is as strong as possible.
Increase Your Offer
While the price alone isn’t the be all and end all, there’s no denying that money talks. Increasing your offer could help you secure the property.
However, when making an offer on a house, only increase it if it’s your dream home and you’re confident you can afford it. To work out whether this is the case, ask yourself some questions:
- Do you like the area it’s in?
- Remember, you can change many things about a property, but not its location. Get Phil’s property report to find out everything you need to know
- Will your mortgage lender agree to lend you more?
- How much have you already spent? e.g. professional fees? Would it be more cost-effective to increase the price, or walk away?
- Can you see yourself living there long-term?
- Can you find a similar property somewhere else?
If the property passes the test, you may want to push forward and be willing to spend a little more.
With sealed bids, you don’t know how much others are putting forward, so increasing your offer can be risky. However, it could also pay off. But, it’s not something to consider lightly.
One tip: use an odd number! Even a small margin can help you secure the winning bid.
Appeal to The Sellers Emotive Side
There’s no guarantee that this will work, but there’s no harm in trying.
With your offer, you could include a letter that appeals to the seller’s emotive side. So, you could detail why you love the property and why it’s your dream home.
Flattery can work wonders, so when you submit your offer letter via the agent – it might just be a good idea.
While it’s not always possible, trying to build up a rapport with the seller can give you a headstart against the competition.
Use a Buying Agent
Using a buying agent can prove you’re serious about the sale.
This is an extra cost to consider carefully because they also charge a fee.
Buying agents have unparalleled knowledge of the local housing market, including what works and what doesn’t. Ask for their advice and ensure they guide you every step of the way.
Avoid Delays At All Costs
If you’re in a property chain, make sure you make every effort to keep things moving and manage it efficiently. Show proof of this if possible.
While it can be difficult, some advice includes:
- Building a good relationship with other parties involved
- Getting as much information as possible about others in the chain e.g. expected exchange / completion date
- Keeping communication honest and open
- Always be available and respond to queries promptly
- Ensuring your solicitor is proactive
There will be some things that are out of your control. However, you can ensure there are no delays from your side. For example, you need to have all documents ready and that you’re prompt with all your responses.
While it can be tough in a competitive market, it’s definitely not impossible. Hopeful buyers should take comfort in the fact that things are moving again.
Need more guidance? Download Phil Spencer’s complete homebuyers’ toolkit. This will help get you in the best possible position!
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