Making an offer on a house: 10 tips for a perfect bid
Picture this: you have viewed several properties and finally found your dream home. Now it’s time for the next step: placing a bid. But how do you do that in The Netherlands? With the following 10 tips we’ll explain to you how to place that perfect bid.
10 tips for a perfect bid
1) Consider hiring a real estate agent (realtor)
This is perhaps the most important tip: working with a realtor. If you doubt your knowledge of the real-estate market and have nobody to fall back on, a realtor can help you with many facets of the transaction – including the bidding process – and can provide valuable insight into the rules and regulations surrounding property in the Netherlands.
2) Calculate your monthly payments
When it comes to choosing a mortgage, you might already have calculated what the maximum monthly amount you can afford is. Keep in mind that going for the highest possible amount might saddle you with too high a monthly payment and cut into your standard of living. Just because a lender will lend you that amount doesn’t mean you have to go for it. For instance, higher monthly payments might mean cutting down on those all-important family holidays.
Therefore, make sure you know how much your monthly charges will be, and what you are comfortable with, and base your offer on that. If you want to make sure that all your calculations are correct and that you haven’t forgotten any essentials, request a free consultation with a mortgage-adviser at Knab Mortgages or Expat Mortgages, who can go through the numbers with you.
3) Have some cash of your own
When you buy a house with the help of a mortgage, it’s important to have some extra cash of your own on hand. Some of this cash will go towards the mortgage, because as of 2018 you’ll only be able to borrow up to 100% of the market value of the property. (Don’t forget the costs associated with making the purchase – Kosten Koper – K.K, notary, taxes etc.. which we will cover in a different article)
Furthermore, bear in mind that some of this cash will go towards things like buying furniture or replacing that washing machine that just broke. It is in your own best interest to make sure that you always have some cash as backup for eventualities. If you’re bringing in money from abroad, make sure to get the best foreign exchange rate.
4) Is the asking price in line with market value?
The current owner’s asking price might not be realistic given the present-day market conditions. Therefore, it’s worth exploring what the going rate is for similar properties in that specific area. You can ask the municipality’s land registry for their current valuation of that particular house; this is a service you can request online.
If you wish to go for the gold standard, consider hiring – for a small fee – an independent surveyor. They will actually survey the property for you and provide a realistic price estimate. Various websites offer this service.
5) Evaluate the situation
When hunting for properties, you are likely to come across many different situations. For instance, you might find that the seller has been living somewhere else while the property you are interested in has been on the market for a long time. In such a case, it’s quite realistic to place a bid that is well below the asking price, as the current owner is likely to be keen on selling. On the other hand, you are also likely to find situations where a property has just come onto the market, with several people interested in it. In this latter case, you could consider bidding slightly over the asking price to try and secure the property.
6) Decide the maximum price you are comfortable with
The highest price you are willing to pay for a property is directly related to the payments you are comfortable with. Also directly linked to this point is, of course, the maximum mortgage you are willing and able to pay. Make sure you are not exceeding an amount you can comfortably service on a monthly basis, otherwise you might find yourself in the unpleasant position of not being able to keep up your house payments.
7) Substantiate your bid
While this may sound like an intimidating point, substantiating your bid simply means that you should be ready to explain to the current owner why your bid is lower than the asking price.
Is your lower offer linked to the value of the property? Or is it related to the fact you need to change the windows and revamp the kitchen? Is the layout an issue or are there other items which need to be addressed? Make sure you are ready to give a clear explanation to the seller.
8) Incorporate non-binding clauses in the pre-sale agreement
It is in your best interest to incorporate non-binding clauses into your bid; these normally are made known to the buyer already whilst bidding. A typical example of such a clause would be that the final sale will take place only subject to a financial institution making a mortgage available to you. Another important clause is one which says you have the right to request a new price if the building inspection (bouwkundige keuring) reveals that there are other alterations or repairs which need to be done.
9) Written confirmation of your offer
You have placed your bid over the phone or on the website of the realtor. Now it’s time to follow up by sending an e-mail to confirm it. Conversely, make sure you get an e-mail with the counter-offer. That way you create a solid trail of evidence as to what has been agreed. Remember to keep in mind to have clauses in there that allow you to get out of the offer in the event that you don’t get the right amount of financing or if there are extensive repairs needed following the inspection.
10) Preparing for a counter-offer
If you place a bid for a property, chances are that the seller will come back with a counter-offer. Making sure you know how to react to this is really important. For example, what do you do if the counter-offer is much higher than you had hoped for? Or perhaps it will be substantially lower than you thought. The key here is: be well prepared for all these eventualities.
Mark Mensink is mortgage adviser with Knab. In Knab’s University videos, Mark gives extensive answers to questions on housing and mortgages. In this video, Mortgage adviser Mark tells us how to place that perfect bid for a property.
Please note this video was translated