Buying guide

Buying guide: How much to offer on a house

Some tips on finding that sweet spot.

So, you’ve found a property and you’re ready to make an offer. Ka pai – trudging through all those open homes has paid off, and getting this far is something to be proud of.

But the work isn’t done, and deciding how much to offer on a house is an art in itself. On one hand, you don’t want to feel like you’ve paid too much, you’ve been ripped off. On the other, you want the seller to know you’re serious, especially if you’re competing with other hungry buyers. 

I’m buying a house, how much should I offer?

We can’t give you a dollar figure for your unique situation but these golden rules will set you up well for making your winning offer.

1. Knowledge is power

A clued-up buyer is in a much better position than someone pulling a number out of thin air or attempting a lowball offer which will only serve to put the vendor’s back up. Make sure you are well-informed before you make your offer and you’ll have no regrets. There are ways to help you value a home. Here are a few suggestions:

Free property research tool's property research tool allows you to view records, rateable values (RVs), estimates, and recent sales for over 1.5 million NZ properties. Even if the specific home you’re hoping to buy isn’t on there, you’ll be able to check out what properties on the same street or in the surrounding neighbourhood have sold for, giving you a good basis for comparison. In the current changing market, we highly recommend doing your research on price as early as possible and staying up to date with recent sales in your search area.

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Trade Me Property Insights is a free tool that allows you to research and track home values.

Property valuations

As part of your due diligence, you could have a professional valuer give you their appraisal on what the property is worth. Your lender may want a valuation done on the property before approving the loan. These valuations are the most accurate figure you’ll get, as they’ll take into account even the most recent upgrades or changes to the home, which might not have been added to other reports you’ve read.

While some people make these professional appraisals a condition of their offer, if you’re really set on the home, it might be worth getting this done ahead of time. You may still offer more on the property but it’s a good base to have and you won’t feel you’re paying too much.

2. Think hard about what you’re willing to spend

This home is likely to be your biggest investment, until you buy your next one! Have a clear idea of what you’re prepared to spend. It’s crucial that you draw up a realistic budget when house hunting. This needs to be sustainable, even if your personal financial position changes – so speaking to a financial advisor is highly recommended. Your mortgage adviser might well ask what would be your top price, without taking you into dangerous territory, if a dream property came up. This is useful if you plan on attending an auction when sometimes a $2000 bid will win you the home. A good tip when making an offer on a house, or negotiating with a seller after an initial offer is made, is to make it an odd number. For example, rather than a round of $810,000, make it something like $812,750. This might mean you just pip a competitor to the post and also gives the seller the impression you’re using all your resources to secure their home.

Think hard about what the maximum amount you can spend, without getting yourself into financial difficulty.

3. Know when to call it quits

Something you’ll learn as you go through the home buying process is knowing what your walk-away price is. This is relevant when you’re in competition with other buyers, or in a negotiation situation with the seller.

No matter how much you love a home, that happy feeling will soon sour if you start to struggle to keep up with the ongoing costs of homeownership like mortgage repayments, insurance and rates. You need to draw a line in the sand that you will never cross, regardless of how perfect the property may be. There will be others, we promise.