Help me offset my homebuying naïveté, UK Edition
May 9, 2022 6:48 AM   Subscribe

My wife and I are looking to buy our first home, after putting it off for a decade so that we could have adventures. Of course, we've picked a lousy time to do it, but circumstances are against us. I'd appreciate help with understanding how to navigate this process without being completely financially and emotionally crushed by it.

We're early 40s, with no dependants except for a horse, who has a place of her own (😉).

We'd decided that it was time to start looking at buying around the start of 2020. Of course, a lot of stuff happened that year, and so we put it off, opting to extend our lease for a further two years and save more money towards a deposit. All well and good.

This year, our landlords told us that they'd decided to sell up at the end of our lease, which happens around November. They told us in April, so we had quite a bit of time to get planning. We've got a decent chunk of money in the bank, I can draw more out of my business, and my wife can put to from her business (she's self employed; I run a limited company) to give us a decent deposit.

We've got a decision-in-principle from a lender, and we're finally looking at houses. We've identified a price point that we're interested in (the D-I-P is for ~25k more than the houses we're looking at). And here's where it starts to suddenly feel really hard.

Talking to friends who are also buying at the moment (though none of them are first timers) the market is really quite unpleasant right now. One friend put an offer in at asking price on a house which went for asking + 50k… that sort of thing is just not going to work out well for us.

On our side, I know that
  1. We've got no chain
  2. We've factored the cost of breaking our lease early in to buying a house, should we find the right one at the right price
But still, everything feels extraordinarily scary. Added to this is the fact that whilst I'm generally quite a stoic / zen kinda guy, my wife can get very pessimistic about things, so I want to be able to reassure her when things get tough that we're not going to be completely screwed over. We do have a plan B — which is to rent somewhere else if we need to — but I really hope it doesn't come to that.

So, my questions are:
  • If we find a house we love, how much should we offer for it? Do we offer at asking price? Under? Over?
  • Realistically, how much of a bidding war should we expect to get into?
  • Is there anything we can do to help sweeten the idea of selling to us for a vendor
  • If you were at our stage in the buying process, with a D-I-P lined up, a budget, and a deposit ready to go, what else would you do before looking at a house you thought you might want to offer on, just to make sure you could move as quickly as possible (in terms of buying, not actually moving)?
  • What am I inevitably forgetting to account for — financially, logistically, and emotionally — in all of this?
Help me, AskMeFi; give me your wisdom.
posted by gmb to Home & Garden (25 answers total) 8 users marked this as a favorite
This varies a lot from place to place within the UK; London and some other cities are very difficult to buy in, but other places are less bad. I'd take the advice from your local friends, and also speak to an estate agent or two about what you should expect.

One thing to be prepared for is passionate disagreements between you and your other half about what kind of house you'd like to live in! It might be worth going on a few 'dummy' viewings just to get a sense of how each of you would feel about living in one as your home.
posted by vincebowdren at 7:04 AM on May 9, 2022 [1 favorite]

"Realistically, how much of a bidding war should we expect to get into?" How much do you want to? As you say, the market is very tight at the moment, so the question is how desperate are you to buy? You are certainly attractive to sellers, with no chain associated with you, but if your area is competitive money is going to speak.

You can also do the maths on this. If you have to rent again, then that will cost you X money for moving, and for each month you will be paying Y instead of Z on your mortgage (also you will be losing some amount each month which would have gone towards paying off your mortgage). This can probably guide you a little on how much you need to get involved in a bidding war, and whether you can just wait another year for the market to settle.
posted by Cannon Fodder at 7:15 AM on May 9, 2022

Regarding the asking price and offers under/over, the standard is that the buyer will offer lower than the asking price. When you're arranging the sale, the estate agent will likely say something like "We recommend listing at £X and accepting offers of £Yk.

Some properties will be listed as "offers in excess of £Xk considered". This signals a hard minimum, as well as suggesting they expect to be picking and choosing amongst multiple offers.

Your estate agent should also be helping you out a lot during the offer stage, whether buying or selling. You're paying them for a reason. They'll have local knowledge on property prices (obviously) and also the local conventions for wiggle room. They'll suggest how much lower than the asking price you can offer without being insulting, and how much of a compromise you should accept, and when a counter-offer is appropriate.

If you feel awkward about the whole prospect, bear in mind that buyers and sellers don't usually discuss prices with each other - your respective estate agents will do it by proxy. And if you don't have strong feelings about valuations, it's entirely possible to do the whole thing on autopilot by just nodding "yes" to everything they suggest.
posted by Lorc at 7:21 AM on May 9, 2022 [2 favorites]

Best answer: If we find a house we love, how much should we offer for it? Do we offer at asking price? Under? Over?
Realistically, how much of a bidding war should we expect to get into?

This is just one random internet stranger's opinion, but I have found it better for my peace of mind to stay out of bidding wars and mind games. Estate agents may pressure you and make you feel like you need to offer above asking price to be considered; it's best to listen to their advice but only follow it in as much as it makes sense to you.

I found it much less stressful, personally, to make an offer based on how much I sincerely felt willing and able to pay for a property and using the asking price as a guide. E.g. one time, I saw a flat that needed a lot of work done to it that was not immediately apparent but became clear upon a second viewing, so I offered like £25k below the asking price, with a clear explanation as to why, and it got accepted. Another time, I saw a flat I LOVED, so I offered above asking price because I loved it so much and I still got rejected because I was in a chain. Both flats were in London.

I found it more straightforward to in each case offer up a 'best and final offer', reiterate my financial position (which was strong as my deposit was fairly big), and my seriousness, and then let go and let God. (I didn't end up moving at all, because of Reasons, but either way, the process offered up some good learnings, and this was one of them.)

If you were at our stage in the buying process, with a D-I-P lined up, a budget, and a deposit ready to go, what else would you do before looking at a house you thought you might want to offer on, just to make sure you could move as quickly as possible

Another learning:
- Ask many questions upfront. It can be before looking at the property. These can be questions about the lease (if it's a leasehold property), buildings insurance, major worked planned, permission to make changes, whether the place comes with parking, whether the current owners have ever been burgled or had trouble with the neighbours etc.
- Look at where the property is situated, map your commute, identify other important amenities like shops and schools; it's no good going to look at a place and becoming attached only to find you're stuck with a terrible commute for the next few years.
posted by unicorn chaser at 7:27 AM on May 9, 2022 [5 favorites]

If we find a house we love, how much should we offer for it? Do we offer at asking price? Under? Over?

This is location specific. You can see what prices people actually paid on Rightmove, Zoopla etc but those will inevitably be a few months out of date. You can ask estate agents whether it's a strong market or not, or acquaintances that have bought or sold recently about their experiences. If you follow Rightmove for a couple of weeks you should be able to see whether properties are sticking around or going on and off very quickly. (Use the "Include Under Offer, Sold STC" filter as needed.)

On preview. In England a normal opening offer will be between 90% and 100% of the asking price, but a few £k above or below asking is normally what it settles on. In a very hot market it will be 100%+ or sealed bids.

Locationx3 is not a wildly unrealistic tv show if you watch enough episodes, particularly that the actual negotiation is really all about price.

Realistically, how much of a bidding war should we expect to get into?

If you are in England, a bidding war is unusual except in very hot markets so people won't have too much experience of it. Make sure you understand the maximum you are prepared to pay.

Is there anything we can do to help sweeten the idea of selling to us for a vendor

Not really. You already have no chain. Maybe make sure you have a conveyancer lined up. Otherwise generally biggest offer wins.

If you were at our stage in the buying process, with a D-I-P lined up, a budget, and a deposit ready to go, what else would you do before looking at a house you thought you might want to offer on, just to make sure you could move as quickly as possible (in terms of buying, not actually moving)?

I spent quite a bit of effort understanding the market where I lived. What properties are available, where kind of work did they typically need, what prices were they selling for. Then, when we saw a house we were able to put an offer on pretty much immediately. Otherwise, understand the house buying process and realise that until exchange it really can all fall through.

Also on preview, if you are buying a flat have a general understanding of how leasehold properties work.

What am I inevitably forgetting to account for — financially, logistically, and emotionally — in all of this?

It will take much longer than it should, and one cares as much about this as you. Keep on top of everything and be prepared to do at least one piece of irritating legwork that you think should really be someone else's responsibility.
posted by plonkee at 7:28 AM on May 9, 2022

Best answer: But to be a bit more reassuring, if what you want exists in the area you are looking and you have the budget to buy it, you will be able to do so even if it's stressful getting there. The people that really struggle are those who want things that do not exist in the location they want to live or that they cannot currently afford.
posted by plonkee at 7:31 AM on May 9, 2022

Best answer: This will be hugely location specific. The best thing you can do is monitor the local market and properties in your price range/that meet your location and other specifics.

How long are they listed? A day, a week, a month? That will give you an indication. If they are snapped up very quickly they are unlikely to go for less than the asking price.

For properties that meet your specs that were sold in the last few months you can also go and check what they really did sell for.

By all means talk to the estate agents that look after properties you are interested in. But never lose sight of the fact that they work for the seller, not the buyer. And their commission depends on the selling price so in a market where things move fairly quickly they have no incentive to help you and persuade a seller to accept an offer below asking price - unless the asking price was completely unreasonable to start out with and in that case the seller may simply not care how long they have to wait for an offer.

Have you got a good firm lined up to do the conveyancing? That can make a huge difference in how fast things move once you have had an offer accepted.
posted by koahiatamadl at 7:31 AM on May 9, 2022 [1 favorite]

Just to clarify - it takes no time to appoint somebody to do conveyancing. But not all firms are equal and some will make the process much more painful than others. I ended up calling my firm daily for three weeks to get things done in the end.......
posted by koahiatamadl at 7:36 AM on May 9, 2022

Best answer: If you’re shopping at the fancy end of the market, you’re much more likely to be bidding against people who can afford to / are prepared to throw money at it. Less fancy areas or less superficially attractive properties - probably not so much chance of bids over the asking price.

Sorry if this is too obvious to need saying. But, it’s not just one property market - it’s a whole bunch of overlapping mini-markets. You don’t need to get involved at the irrationally exuberant end if you don’t want to.
posted by rd45 at 7:48 AM on May 9, 2022

If we find a house we love, how much should we offer for it? Do we offer at asking price? Under? Over?

This is totally location dependent, and even within an area will depend on the specifics of the house you are looking at. Around here, the listing strategy has shifted to listing houses a bit low but with the expectation that the sales will be for more than the asking (like in your example of asking price plus 50k). So if that is what is happening where you are, you need to look at houses that are priced about that much below your budget. Here, if you have a budget of 500k and you look at houses that are priced at 500k, it is just a recipe for frustration since those will sell for more than that.
posted by Dip Flash at 7:49 AM on May 9, 2022 [3 favorites]

With regard to protecting yourselves emotionally:

Especially if you're towards the lower end of the market, it's a good idea to track down appealing properties on Google Streetview before actually going to see them. My experience (a few years ago) was that anything that seemed too good to be true, was, and I wasted a lot of time and hope on viewing properties that could be ruled out before I'd even stepped through the door. Google can tell you, admittedly in a slightly out-of-date way, if the house is next to something noisy or smelly (level crossing, petrol station, clay pigeon shooting range, busy dual carriageway), or if it's weirdly short, as if it's been built for hobbits, or if it's literally in a cemetery. I got my hopes up about examples of all of the above, including *two* surprise cemetery properties.
posted by ManyLeggedCreature at 8:14 AM on May 9, 2022 [5 favorites]

I am not in the UK but am in the process of looking for a new home. I think it pays to get your financial house in order so you can make a rapid offer if you see something you really want. You may have to act much more quickly than you are used to, as it sounds from your post that you are more comfortable with paced, deliberate decisions.

I don't know how the process works in the UK, but in a popular area be prepared to be outbid by cash buyers. It's hard for a seller to turn down a cash offer instead of a bidder who still needs to secure a mortgage and will want to delay taking possession (for example, you might want to push back your date of possession to avoid paying both rent and mortgage. Cash offers with 30 day possession will win the house!) Make sure your mortgage prep is up to date, and if you should need to take money out of your businesses that this process can be rapid. Good luck!
posted by citygirl at 9:12 AM on May 9, 2022

Lots of good advice above, however I was a bit confused by lorc's comment about consulting with the estate agent on offer strategy. I think this might be advice that applies in a different country, such as in the US, where the buyer employs a realtor to help them hunt down a property.

I'd very much agree with koahiatamadl's post. You've not marked theirs as a best answer (yet!) but there's a lot of good points there.

Just to chime in on leasehold property, in case this is relevant.

Be certain of the home's freehold status, especially with houses built within the last decade. Lots of people have been stung by the trend for developers to make more money by retaining the freehold for terraced, semis and detached homes. See here for more details on 'fleecehold' properties:

Also be very wary with leasehold flats with short leases. If there's less than 90 years left on the lease, you might get the flat at a lower price, but you'll need to factor in the cost of a lease extension. Depending on the property, you may be looking at more than £25,000 plus costs.

Generally, you'll be safer / happier if you can find a legally bog-standard freehold house. No wrangling with neighbours over share of freehold, weird boundary issues, flying freeholds and other horrors!

Good luck!
posted by doornoise at 9:23 AM on May 9, 2022 [1 favorite]

Never lose sight of the fact that the estate agent is acting only for the seller, and not for you. They'll behave as if they're your best mate, but all they're interested in is that commission.

I would strongly recommend, once you find the property you want, to have more than just the basic mortgage valuation. You don't need the expense of a full structural survey (unless you're buying somewhere very old), but there's a middle option - the RICS Home Buyer's Report. It costs more than the basic valuation (which is only for the lender, you can't rely on it as anything other than a basic opinion on whether the property is suitable for mortgage purposes). But spending a few hundred quid on the Home Buyer's Report now might save you thousands if there are defects the basic valuation won't identify but which you might have found out about if you'd opted for the slightly dearer report.

Affordability checks for mortgages are tightening due to rises in the cost of living and energy bills, so don't be tempted to overspend on your day-to-day budget. Lenders will look closely at things like how much you spend on eBay, ASOS, PayPal, Nando's, Starbucks, cinema, etc., not just loans and credit cards. They'll scrutinise your last few bank statements, so if you can, rein in your discretionary spending a little.
posted by essexjan at 9:24 AM on May 9, 2022

Oop sorry. I meant to cite this article on the issue with leasehold houses, not the guardian one above:

The guardian article relates to a different type of pitfall related to living on a new-build estate: charges to manage communal areas. Also worth keeping an eye open for!
posted by doornoise at 9:35 AM on May 9, 2022

In general, this is a really excellent resource for UK home buyers, especially if you're facing something like sealed bids:

You can also get useful advice on the Money Saving Expert forum, though you'll potentially have to deal with some irritating souls who have nothing better to do than pour scorn on first time buyers.
posted by doornoise at 9:39 AM on May 9, 2022

Note Scotland is different from the rest of the UK in this matter - when an offer is made and accepted, and a date set, that is contractual obligation and the buyer must go through with it (nice because it more or less stops gazumping). Choose your offer amount and completion date accordingly.
posted by Ardnamurchan at 9:46 AM on May 9, 2022

Best answer: One small thing - pretty much every home-buying experience I’ve ever heard of, including those which have turned out well, go through at least one point when the complications and unexpected issues cause the buyer to throw their hands up in the air and seriously wonder if it’s all worth it. If/when that happens to you, it’s not necessarily a sign that your planned purchase is a unique disaster, it might just be because the process of buying a house is always complex and expensive and likely to throw up snags, and that’s just the way it is. Forewarned is forearmed!
posted by penguin pie at 9:59 AM on May 9, 2022 [3 favorites]

Go to a few open houses before you start searching in earnest just to get some practice. That was very illuminating for me in terms of what I actually did and did not care about, how places can look different in person than in pictures, etc. (For instance, if there's a room with no pictures of windows, there probably aren't windows in the actual room) I think it's especially important to have a solid understanding of what's important to you in an overheated market like this.

If escalation clauses are a thing where you are, you can use those to your advantage by not locking yourself into paying, say 75K over the next highest offer.
posted by lunasol at 11:19 AM on May 9, 2022

I'm not sure if things work quite the same way in the UK as in the US, but your questions make it sound like you would benefit greatly from having a realtor. My wife and I were a huge confused mess of anxiety when we were buying our first place, and that was in the Before Times. There's going to be a ton of nuance and complexity to every market you're looking in, and a lot of sellers will try to game the system in ways that you probably won't be able to recognize the first time you encounter it. (For example: a place selling for 50K over list doesn't actually mean anything, if it was intentionally underpriced by the seller in the hopes of sparking a bidding war)

Again my experience is only American, so apologies if this is not the case for you, but realtors work on commission, and the seller pays both the buyer's agent and the seller's agent, so unless you have a handshake deal with the seller, you don't actually incur any extra costs by retaining your own realtor for the duration of the search. For us, it saved a huge amount of time and stress, and our realtor's advice ended up saving us quite a bit of money.
posted by Mayor West at 1:03 PM on May 9, 2022

Best answer: UK based, early 40s, did this in 2019, everything you've written is very familiar. I want to offer a note of emotional support.

From our experience and from friends we've spoken to, it seems to be (increasingly?) the case that estate agents have converged on racket called 'sealed bids', a fake auction where they encourage every party who wants to make an offer to make it as large as possible, by a specified date, for the sellers to select between. It's an inflationary tactic, very much designed to create a one-shot bidding war. There's no second round, the idea is that everyone makes the biggest single offer they can on one occasion.

We found it daunting, but here's something that helped us enormously. We were encouraged (by our very sensible solicitor, and by many sensible friends) to make sure that we were looking at lots of things, and to try to make a trial offer early in our search, while we still had more viewings lined up. So once we'd seen only around 6 properties we decided to put in an offer for the 6th one, and were told we would need to submit a 'sealed bid'. With a fair bit of agonising we made up and offered a figure that we would have been happy to pay, call it +n over the asking price, and it wasn't successful; we heard from the estate agents that the winning bid was actually +2n beyond the asking price (zoopla seems to back this up). We think that we could have afforded +2n, but it was a figure that we definitely weren't going to put forward straight off-the-bat, and that we wouldn't do casually at all, particularly while we were still unsure about everything about the process, and so it was no surprise that we weren't successful, but also, in many respects, it was a big relief not to have been successful. The house was nice, sure we could have been happy there, but we hadn't been searching that long, it didn't feel like a great loss, we weren't running out of time or patience. We kept looking, but in a more reassured way – not getting the first offer accepted helped us to understand a bit better what it was that we cared about, how much it would bother us if we were successful or unsuccessful in a bid. It also helped us to realise that it really wasn't going to be devastating if we missed out on a chance to buy a particular property, and to refocus and refine our search around slightly clearer priorities.

So although this isn't direct, specific and actionable advice, e.g. "increase your offer by precisely m% of y" or whatever, I guess I want to suggest that you think about making an early, exploratory, and non-extravagant offer on a property you like, while you're still a little bit in the dark and where you admit to yourselves that it probably won't be successful but where you'd be happy enough if it was. It'll help you to calibrate all sorts of things (including what 'happy enough' means).
posted by Joeruckus at 3:16 PM on May 9, 2022 [1 favorite]

I'm not sure if things work quite the same way in the UK as in the US, but your questions make it sound like you would benefit greatly from having a realtor.

Unfortunately, this isn't a thing in the UK, except at the higher end of the market. But effectively it's what Kirsty and Phil (or more realistically their researchers) do on Location, Location, Location. In terms of what to look for in a house, and the process of putting in an offer, you can learn a lot from watching back episodes of the show. The main difference between when I offered on a house and what I saw on tv is that it took more than 30s for the estate agent to speak to the seller about whether they would accept my offer. But unless you're trying to buy in the multi-million £ bracket you'll need to do the legwork yourself.

Also, to manage your expectations, 6 weeks is about the quickest time to get from offer to completion but it would be very unusual to achieve that. From offer to exchange is normally 2 or more months, and it's not wildly unusual to take 6 or more months. You can always ask more questions here if you're concerned about something specific. People in England and Wales who have previously bought flats and houses usually know about both their own experiences and large numbers of their friends and acquaintances too.
posted by plonkee at 2:11 AM on May 10, 2022

I have an acquaintance currently looking for a place in Bristol (a very hot market) at the low end of value of places, and they are tending to be agreed within a day or so of being listed, at significant amounts over the asking prices. Right now, in that area, the asking price is an absolute minimum, which is completely different to my experience of this sort of thing a decade ago.

At present (again, in that specific, desirable area), I think the only way to approach this is to make peace with a certain amount of money that #house is worth, as long as it meets your criteria, and offer that amount, regardless of the asking price. That is your market value on a house that is good for you, and if it goes for more than that, you know it was never available.

This has ended up being the case, because when everything is going for absurdly different amounts to the asking price, there is no point worrying about whether it is worth £3k more or less than that amount, or really in getting too attached to any property.

I feel like this is the best way to protect your sanity!

As a fairly frustrating example, this acquaintance recently saw a place advertised which seemed below market value. She put in an offer for 15% above what she thought of as market value (and 30% above the nominal asking price). It went for around 10% more than that! Essentially they are running blind auctions, but not letting you know...
posted by fizban at 4:31 AM on May 10, 2022 [1 favorite]

Response by poster: Thanks for your answers everyone. This is such an incredibly fraught process — we just today looked at a house that went on the market on Friday, is moving to best and final offers today, and looks to be going (based on what the vendor intimated) for ~20% over asking price.

And this was a house on the lower end of what we'd been looking at, price-wise, because it was underpriced for what it is. We liked it, but didn't love it, so we're not likely not going to offer (we'd have to make that decision in the next hour anyway, and that doesn't look like it's going to happen), but obviously it has implications for the houses that we had been hoping to view, which are more like £25k under our max budget. If they show the same kind of price inflation on offer, we haven't a hope in hell of buying.

That's a scary thought, and we're starting to wonder if we have to look at homes which are in areas that we wouldn't really like to live, just to be able to adjust for that.
posted by gmb at 6:35 AM on May 11, 2022

More to the 'anything else' part of your question; and with a bit of background for the Americans on the thread, because the process in the UK differs in a few other ways beyond what's been mentioned. (Sorry, that bit is not actually an answer to you, but I thought it might help people answer you.)

First, your offer is not binding. You can change your mind at any point up till you sign a contract - and so can they, which is why gazumping was such a thing at one point. It's not super-common, and you won't win friends, but you can walk away; and you can adjust your offer if the survey sucks, the market value changes or anything else.(+) If you do get involved in a sealed auction I would check whether it adds obligations, though, I've never done that.

Second, there will be what feels like a looong time from that moment of terror where you put in an offer to when you fork over the cash. It very much depends on external factors - like how fast the council respond to the searches your conveyancer/solicitor asks(*) - but when I did this in the not terribly distant past we were talking 5 months. Solicitors will usually arbitrarily promise 6-8 weeks and a typical average seems to be more like 10-12. I have no idea why my process sucked, so I can't tell you what to avoid doing. It might be worth testing the waters with a couple of solicitors and seeing what you think of them - proactive solicitors that beat on sellers and estate agents to get their shit done will certainly get the job done faster than ones that don't.

Use that slack time productively. Perhaps go on holiday or something, because otherwise you seriously can't stop thinking about it. Also go poke banks and building societies to see if you can get a better mortgage offer; there's plenty of time to get the paperwork done if you find something. Hyper-local building societies often only do local mortgages and can be a surprisingly good place to check.

US-UK footnotes:

+ Yes, this is important. American offers are mostly 'I swear to pay you for this house in 30 days unless something is terribly wrong with it'. UK offers are mostly 'I am quite interested, shall we see if we can make this work?'

Typically the sellers will take the house off the market while the paperwork happens, because buyers would not otherwise take them seriously, and normally everything goes through as both sides invest their time and effort; but I have seen friends' purchases and sales fall through for complete non-reasons, and that is perfectly above board and has no financial consequences.

* The whole search thing is part of a very different setup to any house buying you might have done. In the US you pay for title insurance to guarantee the title is clear. In the UK, you effectively confirm the title is clear with the government and ask them pointed questions about the local situation. No insurance is required, but you have to wait for the answers.

posted by How much is that froggie in the window at 6:07 PM on October 22, 2022

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