Buying your first home can be an exciting experience but it can also be quite daunting, with a number of hurdles to overcome before you sign on the dotted line. When you find the home that you want, you must then place an offer. Most properties, especially in urban areas, are in huge demand these days so you will most likely have to bid against other potential buyers.
Someone who is buying their first home may be inexperienced and even a little frightened when it comes to the bidding process, but Ryan Coyle from MyHome.ie gives us some handy tips to take with you to the bidding table.
Do your research
Most properties will have an asking price but it’s a good idea to do your homework prior to making a bid in order to get an idea of recent sale values in the area. Find out everything you can about the property and the seller. Has it been on the market for a long time? Is the vendor looking for a quick sale? Are they in a chain? The estate agent is working for the seller but you are perfectly entitled to ask as many questions about the vendor as you can. You should also look at the property register and compare property websites to get an idea of the going rate for similar properties. If your chosen property has something that makes it stand out from others - a recent renovation, or a large south facing garden - it may be in greater demand and you may need to factor that in when making a serious bid. Once you have all the information to hand you can then come up with a strategy to make a reasonable offer.
Making a first bid
Once you have done your homework on the property, the seller and other bidders, you can then decide on the figure you are willing to bid.
If the property has been on the market for a long time, or there doesn’t seem to be much in the way of competition, you could start with a low bid. But on the flip side, you don’t want to enter lengthy bidding wars if this is the property you really want. It will come down to how much you believe the property to be worth and how much you are willing to pay for it.
If there are already a number of offers on the property, you may need to go in high in order to overcome the other contenders.
Show them you mean business
What the seller wants more than anything is a serious buyer who is not going to fall away or drop out at the last minute. Letting them know that you are serious about the property could set you apart from other candidates. As a first-time buyer, you are not in a chain and are probably ready to move quickly, so you are in a strong position. However, you may be up against cash buyers or other first-time buyers. Bringing in a surveyor can show a level of serious commitment and also means that when you do make an offer, it is made with confidence.
Giving proof of the deposit and mortgage in principle to the agent also lets them know you mean business.
Set a limit
It can be devastating but you must be ready to walk away from the property if the bidding goes well above what you can afford to pay. In cities especially, properties can go for well above the asking price and you must know when to admit defeat. Even a few thousand above what you can afford to pay could mean a drop in your standard of living, or leave you with very little money to kit out the property when you do move in.
If your offer has been accepted be careful of being gazumped, whereby the vendor accepts your offer but then backs out because a higher bid has come in. To put a stop to this, once your offer has been accepted let the estate agent know that it’s subject to the property being taken off the market. Offering a small deposit of goodwill will reassure both parties that the sale is not going to fall through.
Case study: Seán and Gráinne
Sean and Grainne have just moved into their first home and as first-time buyers they explain their personal experience of the bidding process.
“We weren’t experienced bidders. We hadn’t gone through the bidding process before, but when we landed on a place we really liked we really went for it.
First, we worked really hard to get as much information as possible in terms of the prices of houses in the area - what other places were selling for and what houses had sold for recently. It gave us an absolute ceiling of what we were prepared to pay and what we thought the property was worth. That meant when we did bid we did so quickly and confidently.
My top tip is to get a surveyor in early - we were very serious about this place and as soon as we put our first bid in we requested access for a survey, which showed our intent to buy the property.
There were three couples bidding for the house and we asked as much information as we could from the estate agent about the other bidders: were they cash buyers, first-time buyers or in a chain?
Any time there was a bid from another person we responded with a new bid within 24 hours, and did so in good increments. When we hit our limit, we stopped bidding. The other bidders put in another small top-up and the bidding hovered around there for a while, but the property was eventually offered to us - the other bidders were in a chain and as first-time buyers with a survey already in place, we think that’s what gave us a bit of an advantage. We were lucky in that we got the first house we bid on.”