I got this response to my latest weekly update and thought this would be a great excuse to blog again about making offers. It didn’t make me a cent but it’s lovely to know someone actually reads what I write!
To get the best response however you have to do things the right way. We get an awful lot of offers that in today’s market are discounted by sellers. They fail because they don’t get the juices flowing or the pound/dollar/euro signs whirling in the sellers mind;
You might think that in a depressed market buyers would be more amenable but the difference is that whereas in a boom market interested buyers really will sell their house in their home country quickly or you really will get a mortgage, now no one believes in these things. Put simply it’s a case of “I’ll believe it when I see it”!
Hello Bill
I receive your emails on a regular basis and find them very informative, and full of common sense(a rare commodity these days).
I bought a property last year which followed the advice in your previous email and made a ridiculous offer, with the money in place to proceed and even the estate agent could not believe they accepted the offer it was that low.
I think what people fail to realise is that the majority of property is built with cement, of which the price is based on energy price. Energy prices will only continue to rise, no matter what the state of the economy. When new property eventually starts to get built new build costs will be so much higher, people will then realise how cheap some of these properties have been.
I am sorry I did not purchase a property through you, but I eventually bought in the Algarve.
Houses are selling in Spain! And not before time! Bargain hunters and investments are picking off the bargains; the must sell properties at unrepeatable prices where people NEED to sell NOW. So how do you get one of these bargains? The secret is to watch the market for the obvious deals and then move quickly. If you look a gift horse in the mouth someone else will beat you to it! So you need to have your finances in place, you need to be able to move quickly and you need to put your offer in the best way to make a seller accept it. After all when you get a bargain the seller may be grateful but it will also hurt!
I always say that we never know a sellers bottom line until he can smell the money! When a seller knows that an offer is serious and that a “yes” means he gets a deposit and a completion date, then we get his bottom line! It’s amazing how often people accept offers that they have assured us in advance are out of the question. So how do you get to this point? The answer, quite simply, is to make offers; nothing ventured, nothing gained and if you don’t ask you don’t get.
a. Offers in principal; “I’m curious, would he take x”. Sorry, no one takes these seriously.
b. “I have to sell my house in the UK, Germany, wherever”. No matter how you dress it up this doesn’t work either. Property markets are bad everywhere and if you are so sure your house will sell fast, then sell it and come back when you have the cash.
c. “I need a mortgage”. This is the most depressing one of all. The banks in Spain just don’t want to lend so unless it’s a very low percentage loan don’t expect any seller to get too excited. There is a huge gap between an offer in principal and an offer of money.
d. Subject to viewing. What’s the point?
You might think that in a depressed market buyers would be more amenable but the difference is that whereas in a boom market interested buyers really will sell their house in their home country quickly or you really will get a mortgage, now no one believes in these things. Put simply it’s a case of “I’ll believe it when I see it”!
This might seem a bit off putting; no one wants to get on a plane to view houses if they don’t think sellers will match their valuation. This I understand and we do try and prepare the way.
1. If we know that a seller will consider offers in your price range, even if the asking price is much higher, we will suggest a viewing. On the site I do try and identify these houses by saying things like “open to offers” or “try an offer”.
2. I will circulate all sellers with properties meeting your specification but out of your price range with details of your budget and ability to buy and ask if it is worth bringing you to view their property. In other words I am telling them you are serious and tempting them! If they say yes to a viewing it is an indication that there is some flexibility in their thinking and the chance that an offer will be accepted.
3. We will talk to sellers in advance of a viewing to prepare them for the likely offer. They won’t like it but it gets them thinking.
OK, to the offer. In the United States all offers are written and are binding on the party that makes them until they are rejected by the other party. Personally I think this is an excellent system because part of preparing the offer is confirming the terms and conditions. It is the terms can often decide whether an offer is acceptable. So how do you make an offer to give you the best chance of it being accepted?
A. You should ideally have viewed the property. If you don't want to view make it clear that this is not important to you.
B. It must obviously include the price you are prepared to pay
C. Include your timescale; when can you pay the holding deposit to get the property out of the market, the balance of the formal 10% deposit and complete? These dates will of course be subject to your lawyer confirming that title is perfect. A quick 10% is always welcome because that means the deal is done, but some sellers might prefer a longer completion time so they can arrange a new home etc. Being flexible on this can help get the best deal.
D. Include your financial situation (the money is in your savings account, bank in Spain etc). The seller therefore knows you can perform.
E. Confirm what your offer covers such as furniture etc.
F. Less important, but if you have a Spanish bank account, lawyer and /or an NIE already drop them into the equation; it again shows how serious and organised you are.
G. Let the seller know you are interested in other properties and set a time limit for a response.
Get it right and there has never been a better time to buy a home abroad. And remember that the best deals always involve sellers that NEED to sell, so when you are stealing that house and getting the deal of the century it’s good to know the other party is just as happy as you!
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