How much should I offer for a home?

Buying a home (and selling one) can be a complicated process. The majority of us aren’t top-notch negotiators experienced in the art of striking a deal. This can make buying a house tricky, especially as the figures involved are so high. If you’re spending hundreds and thousands of pounds, you want to get it right. It’s why most people ask themselves, ‘how much should I offer on a home?’. 

In this guide, we’re helping to answer the all-important question about how much you should offer to give you more confidence when buying a home.

Can’t I offer the asking price and be done with it?

If you’re new to buying a house, you might wonder why homebuyers don’t simply offer the asking price. After all, the property is listed on the market for a certain amount. Why not just pay what the owner wants and avoid complications, like negotiating, and make life easier for everyone involved? 

The truth is that most buyers don’t go straight in at the asking price unless there are already multiple offers on the table. In this case, you might need to offer over the home's listed price (more on that in a moment). But as a general rule of thumb, a buyer’s first offer tends to be under the asking price.

Got it. But why do buyers offer less? 

You might go in under the asking price with your first offer for several reasons. The situation mostly depends on the seller. One who isn't in a rush to sell may list their home at a slightly higher price and sit back to see if there's high demand. However, you won't necessarily know the seller's situation. Therefore, you may feel the home's value is too high and go in lower with the first offer. 

Alternatively, the seller might be in a rush to sell, and you try to capitalise with a lower offer. Sometimes the estate agent can give you an idea of the seller's situation, but in many cases, the buyer won't know. That's why most homebuyers test the waters with their initial offer to see if they can get the best deal. 

So how much should I offer?

5% below

As far as an opening offer goes, there's no set rule regarding the amount. Many buyers, however, open with a bid around 5% below the asking price. So if you're interested in a property listed at £350,000, you might offer £332,500 in the hope the seller deems this an acceptable amount. 

10% below

If you're feeling particularly confident, you might go in even lower with your first offer. Indeed, many buyers try their luck by offering around 10% of the asking price. So if we take that home valued at £350,000, the opening offer would be £315,000.

Will a 5% or 10% offer below the asking price get accepted? 

Short of gazing into a crystal ball (or a super-smart AI algorithm), it's difficult to predict if the seller will accept a lower offer. Again, it all comes down to the seller and their situation. But offering 5% or 10% below the asking price will, at the very least, show you're a serious buyer and get you a seat at the negotiating table. 

What if the property says OIEO?

All this talk about going below the asking price assumes your first bid will always be lower. That's not the case, though. Some properties are listed with 'OIEO', which means 'offers in excess of'. If you see this acronym, the seller expects you to offer higher than the listed amount. 

One reason might be that they've already received an offer at the asking price but are waiting to see if anyone comes in with a higher bid. Or the seller may simply use it to tell potential buyers they expect offers over the asking price, regardless of whether anyone else has made an offer. 

What happens in the negotiating phase? 

If the seller rejects your first offer, but you're not far off their asking price, they may tell the estate agent they're willing to negotiate. At this point, you can decide whether or not to increase the offer, raising it to the asking price or a figure higher than the initial bid. It's good to keep calm in this situation and be aware of your cut-off point in terms of how much you're willing to pay for the house. 

There isn’t much transparency, is there? 

The offer and negotiation stage can be frustrating. You're unaware of other offers (or whether they're genuine) and have to mediatemediate everything through the agent. Thus, the back and forth often becomes time-consuming for everyone involved.

There isn't much transparency. Or, at least, there wasn't. A growing number of estate agents now implement an offer button on their website, where buyers, sellers, and agents can make and see the latest offers on a property. 

You can use the button to submit an offer and see the latest updates in real-time. If someone offers higher than your amount, you can decide if you want to up your offer. It provides clarity to the offer offering process, giving buyers more confidence and control over their offers. 

Final thoughts: an offer you can’t refuse

Making an offer is a big deal, but you don't need to let it get the better of you. Go with your gut instincts and make an offer you believe is good. The rest will happen naturally. And who knows? It might just be enough to land your dream home.