Buyer Advice...Offers "in Principle" and why they are a bad idea!
So you've seen the property of your dreams but you havent got your house on the market! Aaaaghhh! Panic Stations.....
In these situations, it's easy to get over emotional and try to secure the property with an "offer in principle" or an "offer of interest". For those of you who haven't got a clue what I'm talking about - this is when someone tries to place an offer on a property when they are not in a position to buy. The offer they put forward is dependent on them selling their property but they either haven't even put their house on the market or have got their house on the market but they haven't had any offers.
Firstly, despite what other Agents may tell you, these offers are never taken seriously and agents can often string people along with the intention of trying to secure the instruction to sell your house. They may put your offer forward but I can guarantee that if somebody else comes along that is in a position to buy they won't be advising their vendor client to wait for you to sell!
At Keystone we try to discourage this practise as the offer is dependent on you selling your house it's simply not an offer...Once you have an offer that's acceptable, that is the time to place your offer.
So why is an offer in principle a bad idea from a buying perspective? Let’s take a hypothetical situation - you've seen your dream home and it's £400,000. You go to see it, fall in love and place an offer in principle in of £400k. The vendor agrees to this once you've sold yours. You then ring your chosen agent to get your house on the market ASAP. Then it doesn't sell as quickly as you anticipated and you get 2-3 months down the line. The dream property at this stage is still on the market. Maybe that vendor would have considered reducing it, but your offer is still on the table. You finally receive an offer 10-15k less than you anticipated BUT you've already told the agent selling your dream home you'd offer £400k. This obviously then leaves you in a no-win situation!
This is why you should just inform the agent you are interested but you will need to sell yours before placing any offer. You can always ask that agent to keep you informed of progress or any offers and as long as it's a good competent agent they should then ring you if they receive any offers.
I hope that helps you to understand these types of situations better.
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Ben Roberts
Managing Director