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Question: Mortgage rates are far higher than they were a few months ago, which affects expectations when buying a house or flat. It doesn’t seem that a lot of sellers have factored that in to their prices yet, so when making offers, is it reasonable to offer well under asking price, citing mortgage costs as the reason? And what is a reasonable amount to underbid – £10,000? £20,000? It seems hard to know what to do without insulting the seller?
Answer: The property market is rarely well-balanced and right now, buyers are back in control. After years of booming growth during Covid-19 and the years prior, prices have stayed relatively flat since 2023 as interest rates have risen. The recent rise in mortgage rates is unlikely to do much to change that.
Many are waiting for the floor to fall out of the market, while plenty of sellers and quite a few estate agents are still pricing like it’s the good old days of 2022.
The result? A classic market stand-off.
Problems across the globe mean the chance of interest rate cuts from the Bank of England has been replaced by fears of an increase, which could make mortgages more expensive.
This means the market is looking much more favourable for buyers looking to negotiate with serious and motivated sellers.
I’ve been on both sides of the fence hundreds of times as a property buyer and seller – I’ve also been slap-bang in the middle as an estate agent. I know what works and what doesn’t.
The first rule if you are looking to offer significantly less than the asking price for a home is to stop haggling and start negotiating.
What I mean by this is: sellers and agents who get the feeling a potential buyer is just trying their luck won’t get far.
So when making an offer, set out your case clearly, using comparable properties – sale prices, not asking prices – and make an appropriate adjustment since those sales were agreed.
People assume the highest offer always wins.
It doesn’t. I’ve agreed many sales at a much lower price than another buyer because, in property, reliability is as important as the agreed price. Let’s take your case, and assume that the property is listed for £215,000.
Agents and sellers know that a surefire £200,000 is better than a flaky £215,000, so offering £15,000 less than the asking price does not rule you out.
There are simple ways to show good intent, be reasonable and avoid upsetting anyone. Get to viewings on time, act confident and don’t think that pointing out every flaw will get the price down.
Make life easy for everyone by getting things ready in advance. A mortgage agreement in principle (AiP), a solicitor already lined up and ready to go, proof of funds and ID ready too.
If you’re a cash buyer, shout it from the rooftops. Speed and certainty are powerful.
Be flexible if you can. A seller may take less if it means they move when it suits them.
If you’re coming in low, back it up. Make it a rational conversation about values and condition, not a fight. Buying is a long, drawn-out process so start a dialogue, not a war. Explain that mortgage rates are up and an offer simply makes the figures stack up in this new reality.
There’s no standard formula to work out what to bid – if the price is already fair, perhaps there’ll be just 2 or 3 per cent off, but if it’s a dinosaur that’s been on the market forever, something more like 5 to 7 per cent is a good starting point.
In the end, it’s about being the most prepared, the most credible and the easiest person to say “yes” to.
Because if you’re offering the asking price in this market, chances are, you’re overpaying.
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