As a property investor I don’t think twice about putting in a cheeky offer on a house. But this is different if you’re buying a house for yourself when it’s an emotional purchase.
So what % is a cheeky offer on a house and is it OK to offer less than asking price on a house? It’s arguable that any offer of more than 10% discount off the asking price could be considered a cheeky offer. The level of ‘cheek’ depends on who the vendor is and how long their home has been on the market. But so long as you’re prepared for them to say no to your offer, it’s worth taking a punt with a cheeky offer.
How much should you offer on a house below asking price and when does it become cheeky?
When you’re buying a house for yourself and the purchase is an emotional buy, it’s much more difficult to be cheeky with your offer. But probably the biggest factor in the negotiation game is the seller (or vendor) and the estate agent acting for the seller.
At the end of the day, the estate agent is working for the seller. Which means that they shouldn’t really reveal to you how low the vendor is prepared to drop on price.
But many estate agents break this golden rule (see below on how you make an offer).
Whilst I have said that an offer of up to 10% below list price is a cheeky offer, there’s nothing stopping you from offering anything you like.
The offer you make boils down to how much the property is worth to you. But it is also down to how much the vendor wants or is prepared to take.
Whether you come to an agreement on price is about a willing buyer meeting in the middle with a willing seller.
So in reality a cheeky offer could be 20% or 30%, or more. It just depends on how the offer that’s made is interpreted by the vendor.
When is a cheeky offer rude or disrespectful?
When you look at the meaning behind the term ‘cheeky‘, according to the Cambridge Dictionary, it means “slightly rude or showing no respect.”
Which if you take this definition to is literal meaning, you can understand why often times cheeky offers can be met with an unhappy seller. It’s all down to interpretation.
The level of unhappiness as a result of a cheeky offer can extend to having sellers even refusing to deal with you after making what they could refer to as a disrespectful offer.
This is why I would advise caution on this point. If you’ve just spent the best part of a few months looking for your perfect new home.
If this is your dream home, to the extent that if you were not able to proceed to buy it that you’d very very disappointed. Then I suggest that a cheeky offer of 10% or more could risk rejection.
It could result in the seller reacting badly. This could result in them telling the agent they are not prepared to negotiate with you any more. It just depends on the person selling.
But a good saying to keep in mind is “Cheeky is a few quid above no.” The problem is how to find that level. The only true way to find out, is to start low and work your way up. But only up to a level you are happy to pay for the house.
But another saying you should consider is “if you don’t ask, you don’t get“.
The negotiation is in the hands of the estate agent
However, having said that this process is often in the hands of the estate agent. It can be about how the offer is put forward. If the agent considers your offer to be cheeky or disrespectful, then they’re not going to be putting it forward in the best light.
In my opinion it’s a part of the estate agent’s role to manage the negotiation process carefully and sympathetically. It is their job to explain offers to sellers and to coach them through any low-ball offers.
Estate agents are by law required to put all offers forward. No matter how low the offer is. So there’s nothing to prevent you from being as cheeky as you like. Which means you can put forward a very cheeky offer of 25% or more discount.
If the property you’re purchasing is not so special to you. Or if it’s an investment purchase that it doesn’t matter to you if don’t buy it, then I’d say be as cheeky as you like.
So long as you’re prepared for the rejection and happy to walk away from the deal. In this case the amount by which you low-ball the offer is less important.
What about direct to vendor cheeky offers
If you are dealing directly with the vendor (i.e. the person selling the house), you won’t have the estate agent as your buffer. For some this is more of a difficult negotiation process.
Often times people find it much harder to put in cheeky offers when they are speaking face-to-face with the seller. With all of our property deals, it’s me that does the negotiations. My wife hates this side of our property business.
The question is; are you happy with rejection?
If you are dealing direct to vendor with your property negotiation, the same rules apply.
If this is an emotional purchase and you really want the property, this will govern how much of a cheeky offer you might make. Whereas on the opposite side to this is if this property is less of an emotional purchase, you’ll be more likely to put in a cheeky offer.
What can affect the % level of a cheeky offer on a house?
There are a number of factors that will affect the % level of a cheeky offer on a house.
The level of ‘cheek’ is governed by:
- Who is selling the house. For example it’s more likely that a property investor will understand cheeky offers. But having said that, they are not necessarily going to accept a low offer.
- How desperate the vendor for a quick sale. The more desperate they are, the greater the discount they’ll accept.
- The state of repair of the house. The more repairs are required the more chance there is of a lower cheeky offer.
- The state of the property market and whereabouts the property is on the market. The higher the demand in the area, the less chance of cheeky offers being accepted. Versus, the lower the demand, the more chance of cheeky offers.
- The level of emotion attached to the purchase. The higher the amount of emotion attached to the purchase, the less of a chance of a cheeky offer. Compared to a non-emotional purchase, which would result in cheekier offers.
- How prepared are you to walk away from the deal? The more you are prepared to walk away, the higher the offer discount is likely to be.
- The length of time a property has been on the market. The longer a house has been on the market, the more chance of high % cheeky offers being accepted.
- Your bargaining position. In other words are you a cash buyer and proceedable or are you in a chain-sale. If you are a cash buyer and you’re not reliant on a sale, this puts you in a stronger position. Cash buyers are much more likely to get away with cheeky offers.
- How much are you liked by the vendor. This is especially true if you’re direct to vendor. But can be equally as true via an estate agent, as you will have met the vendors when you viewed the house. Whether your offer is accepted can turn on a coin and on how the offer is put. Plus on your rapport with the vendor.
- If there have already been price drops beforehand. This will be shown on Rightmove or you can ask the agent.
- Your level of preparedness to accept rejection. If you are happy to take no for an answer, you’ll be more prepared to be more cheeky.
How do you make an offer on a house?
Before you make your offer, do your homework on the area and on the type of house you’re looking to buy. Get a feel for valuations in this area before you offer.
On the assumption you are making your offer via the estate agent, it’s worth asking the question “how much is the vendor willing to take as an offer on their house?” If the estate agent is doing their job correctly they should avoid answering this question.
But as I’ve found on many occasions, estate agents can’t resist answering this question. They are simply after the sales commission.
So for example, if the house is on the market for £265,000. Then let’s say the estate agent answers with £255,000. You have already saved yourself £10,000.
The other important question to ask the agent is whether or not other offers have been made. They may tell you there have been other offers. But they are not obliged to tell you the amount.
However, if they are open about the previous offers that have already been rejected, this will give you an indication of where your opening offer should begin. But this may depend on the length of time since these previous offers.
See if you can get from the estate agent whether or not the seller is prepared to do a deal.
My suggestion is you go in lower than what the agent has suggested. I say this for two reasons:
- The first is that whilst the agent has broken this rule, it’s unlikely they will reveal the true lowest offer the seller will accept.
- Secondly, if the agent is telling the truth about how low the seller will go. Plus if the seller is willing to take £255,000. They may be prepared to take less.
I recommend that you always begin negotiations with an offer of less than you are willing to pay. How much lower is up to you. It’s about how comforatable you feel about putting in very low-ball offers. But it’s also governed by what I’ve already explained.
It’s on a bit of a sliding scale; the higher your desirability and ‘want‘ for the house, the less you will feel comfortable about being cheeky vs the lower the desirability and ‘want‘ for the house, the more cheeky you can be.
With all property negotiations treat the vendor with respect. That means you should be looking to create a good rapport with the vendors when you visit their home. The more the sellers like you, the more chances there are of them accepting your offer vs someone else’s.
What should you do if your cheeky offer is rejected?
Assuming your cheeky offer is rejected, what should you do next? The answer to this question depends. And once again this ‘depends’ is on the level of emotion attached the deal. But also on your level of desirability for the house.
If you really want this property, you will probably need and want to go in with a higher offer. You may need to keep increasing your offer until such time as you meet the sellers lowest asking price point.
However, if you are not fussed either way whether you get this property, you may wish to increase your offer. Or better still say to the estate agent (or to the vendor if you’re dealing direct to vendor), that your offer is left on the table.
You may find than in a few weeks or months if the house doesn’t sell, they may come back to you and accept your low offer.
When should you offer asking price on a house?
The time when you may have to offer full asking price on a house is for two reasons:
- If you are in competition with another buyer and you want this house, which means you are prepared to go to full asking price rather than stopping at a cheeky low offer.
- If you really don’t want to lose the property and you really want the property.
When should you offer more than asking price on a house?
There are times when properties sell for more than asking price. This usually only happens in a seller’s market, which is when the are more buyers than there are sellers.
It’s when there’s more competition in the market and you find that buyers are almost fighting over each other to buy houses.
This has the effect of putting house prices up and is what often drives house price increases across the country.
I’d also suggest that you would only ever offer more than asking price if it’s a property you truly want. Otherwise you may as well wait for the next property to come along.
What conditions affect the level of cheeky offer you make?
The reality is that if you’re in a buyer’s market, you have much more of an opportunity to put in cheekier offers. Or certainly if the property you are making an offer on has been on the market for some time, this would indicate three things:
- Firstly, it could indication that the property is over-priced and ripe for a cheeky offer.
- Secondly, the seller may be more keen to sell and might be more open to cheeky offers.
But at the end of the day most vendors accept that offers will be made. The worst that happens for the most part is the vendor says no. If this is the case and you want the property, offer more and continue your negotiation.
But on the other-hand, if you’re not too fussed, leave the offer on the table and keep looking.
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