Can you make an offer on a house that is under offer?

Understanding the Concept of ‘Under Offer’ in the UK Property Market

When browsing through the property listings in the UK, you may come across homes labelled as ‘under offer’. This phrase could create a bit of confusion, especially for those new to the home-buying process. So, what does it mean when a house is under offer? Does it completely shut out any chances of potential buyers making their own offers?

To put it simply, ‘under offer’ signifies that a seller has accepted an offer on the property, but the final sale contract is yet to be signed. This condition usually arises during the period when conveyancing, surveys, and potentially further negotiation are being carried out. Despite a property being under offer, it does not mean that the process of home buying for that particular house has completely ended.

Is It Possible to Make an Offer on a House Under Offer?

Yes, it is possible to make an offer on a property that is under offer. While the seller has already accepted an offer, until contracts have been exchanged, the transaction isn’t legally binding. It’s worth understanding the competitive aspect of the UK housing market to make the most of such opportunities.

 

The table below shows some considerations to take into account when thinking about making an offer on a house that’s under offer.

Considerations	Description
Gazumping	This is when a seller accepts a higher offer from a new buyer after already accepting another offer. It’s legal but generally considered unethical in the UK.
Competitive Market	When demand for houses is high, the chances of a seller considering another offer, especially a higher one, increase.
Conveyancing Delays	Delays in the conveyancing process can leave the seller open to considering other offers.

How to Make an Offer on a House That’s Under Offer?

Just like making an offer on any other property, you need to contact the estate agent and communicate your interest in the house. Once you’ve made your offer, it is up to the seller to decide whether they want to accept your offer, or stick with the one they’ve already accepted. Here is an example of how it could work:

John finds a beautiful Victorian terraced house in London but learns from the estate agent that it is already under offer. Despite this, John decides to make an offer because he believes the house is perfect for his needs. The seller, intrigued by the new offer, decides to consider it since it’s higher than the existing offer and provides a faster completion date.

The Role of Estate Agents in the Process

Estate agents in the UK play a crucial role in the entire process. They act as mediators between the seller and potential buyers. It is the estate agent’s responsibility to pass on every offer they receive to the seller, regardless of the status of the property.

However, they must act in the best interest of the seller, who is their client, and ensure that they provide accurate and timely information about all offers. It is also part of their professional ethics to advise sellers about the risks associated with accepting a

The Implications of Making an Offer on a Property Under Offer

While it is perfectly legal and possible to make an offer on a house under offer, potential buyers should be aware of certain implications of this practice. This includes an understanding of the emotional and financial risks associated with ‘gazumping’.

The risk of wasting time and money on a property purchase that may not go ahead should be taken into consideration. These could be expenses related to solicitor’s fees, surveys, mortgage application costs, and more. A seller who has accepted an offer is under no legal obligation to stick with the initial buyer until contracts are exchanged. This means you could go through the early stages of the buying process, only to be disappointed later on.

Moreover, when you decide to make an offer on a house under offer, you might be participating in a practice that many consider to be unethical. Gazumping can lead to disappointment and financial loss for the initial buyer, which can be a source of stress and tension.

The Legal Aspect of Making an Offer on a House Under Offer

Despite the ethical debates surrounding gazumping, it is still legal in England and Wales. The transaction is not legally binding until contracts have been exchanged. Thus, until that point, anyone can make an offer on a property, and a seller is within their rights to consider these offers.

However, in Scotland, the situation is different. Once an offer is accepted, a legal contract is formed immediately, making gazumping a rare occurrence.

Reducing the Risks When Buying a Property Under Offer

If you’ve decided to proceed with making an offer on a property under offer, there are certain steps you can take to reduce your risk.

Strategies	Description
Securing a Mortgage in Principle	Having a mortgage in principle can show you’re a serious buyer and able to proceed quickly.
Express Your Interest	Inform the estate agent of your interest in the property, so if anything changes, they’ll be more likely to contact you.
Get a Survey Done Quickly	If you do make an offer and it’s accepted, try to get a survey done promptly to reduce the risk of the seller pulling out.

Housing market jargon

While there are various descriptions which relate to different stages of the selling process, there is some confusion surrounding the way these are used by some estate agents. Some of the terms you will see include:-

Under offer

This is a very vague term which can on occasion be used by estate agents to prompt interest in a property. Technically speaking even if an offer was rejected for a property then it could in theory still be described as “under offer”. However, from the seller’s point of view they would probably prefer not to have the “under offer” description added to their home because it gives the impression a deal has been done – or is being discussed.

Sold subject to contract

The term sold subject to contract (sometimes referred to as sold STC or SSTC) means that an offer has been accepted for a property but contracts have not yet been exchanged. Again, when looking at the seller’s point of view and the buyer’s point of view they will have different agendas. Until contracts have been exchanged most sellers would prefer the “sold subject to contract” description not to be added to their property sale page/sale sign. Flipping the coin, from a buyer’s point of view they would prefer this to be added as soon as possible to give the impression the sale is done and dusted – and to ward off additional interest.

Contracts exchanged

Once contracts have been exchanged between representatives of the buyer/seller it is still technically possible for other third parties to make an offer (although probably unlikely). There will be a period between the exchange of contracts and transfer of funds but this tends to be a very short window of opportunity. In reality, any counteroffer would need to be significantly higher than the previously agreed offer to make it worthwhile with regards to legal fees, etc. There may also be penalty clauses which oblige those pulling out of a deal to pay compensation to the other party. However, you will find that some people are determined to buy specific properties and will on occasion make offers which simply cannot be refused.

Gazumping

Back in the 1980s gazumping was a regular occurrence more in England than Scotland – where contracts tend to be exchanged more quickly. The 1980s was the housing boom era of the UK and many investors and first-time buyers were clambering over each other to buy properties. Promising to pay over the odds this placed sellers in a very strong position and many took advantage. Legally, although very different from a moral point of view, until contracts have been exchanged and funds received the buyer can consider other offers.

The role of estate agents

When you strip away the jargon and get down to the basics, the role of an estate agent is simply to obtain the best price for their client and ensure that contracts are exchanged/funds transferred as soon as possible. Therefore, even if a property has been described as sold subject to contract they are still legally obliged to pass on any further interest in the property. This is very clear and for one simple reason, if they were to turn down additional interest in a property and the original offer was to fall through, this could leave the seller in a precarious situation. The estate agent industry does not necessarily have the best reputation in the world, gazumping in the 80s was a prime example, but they do have legal obligations to their clients.

The process of buying a property

There are various well-defined stages of the property purchase process which are as follows:-

• Viewings
• Negotiations
• Make an offer
• Offer acceptance
• Legal checks
• Survey, etc
• Securing funds
• Signing of contracts
• Exchange of contracts
• Payment of monies

Right up until the exchange of contracts/receipt of monies it is perfectly acceptable to make a counteroffer for a property. You will probably have heard that gazumping has not been an issue in Scotland and may even be under the impression that this is illegal. This would appear to be a general misconception because gazumping is not illegal in Scotland – although instances of gazumping are far less than in England. This is simply because the gap between the signing of contracts, exchange of contracts and receipt of funds is much shorter in Scotland.

How to make a counteroffer

If you are considering making a counteroffer for a property which is “under offer” then you should contact the estate agent directly and inform them of your interest. Ask them directly if they will pass on your interest to the seller. At this stage it is probably best to give some kind of indicative offer to show that you are serious about the property. There will be occasions where estate agents are reluctant to pass on your interests at which point it may be worth considering a direct approach to the seller.

As time can be of the essence with regards to counteroffers, often prompting buyers to speed up the purchase process, it is not a time to sit on your laurels. In reality, once you express an interest through the estate agent this should be passed on to the seller immediately and any response conveyed back to you hopefully the same day. If you are a cash buyer this could also work in your favour because it would remove the requirement for a mortgage which can sometimes slow down the purchase process.

Conclusion

When looking at a potential property purchases you should always remember that nothing has been sold until contracts have been exchanged. Indeed even after contracts have been exchanged, often including conditions on payment, we have seen occasions where transactions have not been concluded. In reality, if either party was to pull out after the exchange of contracts there would likely be some kind of penalty clause.

We live in a world where cash is king, money talks and while morals and ethics are great in principle they don’t pay the bills. Therefore, there is nothing wrong in making a counteroffer for a property but you will often find that time is of the essence and just a few hundred pounds over the previously agreed price won’t cut it. You would need to make it worth the sellers while or if you were in a position to offer cash this may well tip it in your favour.

While a property being ‘under offer’ is not an absolute barrier to making an offer yourself, it is crucial to tread carefully. It’s essential to understand the potential financial and emotional costs associated with gazumping. An experienced estate agent can provide guidance on how to navigate this complex and competitive landscape. By weighing the risks and benefits, you can make an informed decision on whether making an offer on a house under offer is the right path for you.