Bidding on a house: how does it work?
Whether you have already bid on a house before, or you are about to place your first bid: it remains exciting! Especially in an overly tight housing market where demand still outweighs supply. In this article, we tell you everything about making a bid, determining the right bid and the importance of a purchase real estate agent. We also provide tips for bidding on a house, so you can find - and get - your dream house as quickly as possible. We're keeping our fingers crossed for you!
Go directly to:
- How do you place a bid on a house?
- How do you determine the right bid?
- General tips for bidding on a house
- A purchase real estate agent to speed up the buying process
How do you place a bid on a house?
To stand a good chance of your bid being accepted, it's important that you know how the ‘game’ works. Below we discuss the different bidding forms you may encounter.
What types of bidding are there?
Have you found a house that you want to bid on? Then first check the bidding form that the seller uses. This can be:
Negotiating
With negotiating, the most common bidding form, you place an opening bid. This can be verbal or written. It is wise to always confirm a verbal bid in writing, so it's in black and white. When you receive a counteroffer, you're in negotiations. Put down a serious opening bid, but always leave room for negotiation. So never put down your maximum bid immediately.
You can also choose to place a final bid immediately, for which you want a response from the seller by a certain date and time. Clearly state that it is a final bid and that there is no room for negotiation. This way, the seller knows what to expect. Read our 7 tips for a higher chance of an accepted bid.
Sale by registration
With a sale by registration, all bidders make a final bid once. So there is no room for negotiation in this bidding form. You must submit your bid in a sealed envelope to the sales real estate agent or notary by a certain deadline. Increasingly, you also have the option to submit your bid by email.
Sale by registration may seem simple, but various guidelines, rules and conditions may apply. It's good to know this in advance, so you're not already one step behind the ‘competition’. A purchase real estate agent can give you valuable advice in this respect.
Bidding online
Sometimes it's possible to bid on a house online via digital sales platforms. Here you can see exactly what is being bid and adjust your bid during the process, including the conditions for withdrawal. You can even choose to have your bid automatically increased if you're outbid, of course setting your maximum amount.
Auction
Finally, there's the auction, where the house is sold via a public sale. This can be voluntary, but also involuntary. An execution sale is when a property is sold to pay off outstanding debts.
What is the legal cooling-off period?
After signing the purchase agreement, as a buyer, you have three days to withdraw from the purchase without giving a reason. This legal cooling-off period gives you as a buyer a moment to reconsider your decision.
Good to know: if you buy your house via an auction, the cooling-off period does not apply.
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How do you determine the right bid?
You must have noticed: there is currently a lot of demand for homes. You are probably not the only one who wants to bid on the house you have in your sights. Therefore, it is extra important that the bid you place is better than the competition. Therefore, map out the following in advance:
- Know your maximum budget
- Make a good estimate of the value of the home
- Determine the right bidding strategy
Know your maximum budget
First things first: make sure you know your maximum budget, so you know what you can bid at most. Have a mortgage advisor calculate what mortgage amount you can get at most. And/or map out your options with your own money/equity with a financial advisor.
Also determine what monthly payments you can and want to carry per month. Include future plans, such as family expansion or a distant trip. In addition, it is nice if you can continue your normal lifestyle.
Determine a realistic maximum budget that fits your monthly charges (for now and the future).
Make a good estimate of the value of the home
In addition, determining the value of the home is crucial when making the right bid. After all, you do not want to pay more than the house is worth. Overbidding happens a lot, and that's not a problem when the value of the home rises with the market. But if overbidding causes your house to go underwater, this can cause problems with future sales. You can then be left with a residual debt.
Therefore, ask yourself the following questions in advance:
- What are the selling prices of comparable homes in the neighborhood? You can request the selling prices of comparable houses in the neighborhood at the Land Registry. Very handy, because you can see exactly how much they went for and what the average percentages of overbidding are (if applicable).
- What is the WOZ value of the house? You can request the WOZ value of the house via wozwaardeloket.nl. Be aware that the WOZ value is determined based on the reference date of January 1 of the previous year. The WOZ value of a house you view in 2023 is therefore calculated based on the reference date of January 1, 2022. If the market has changed in the meantime, the WOZ value may have increased or decreased.
- How long has the house been for sale? Check the date on Funda and/or ask the selling real estate agent. If the house has been on sale for a long time, there is probably more room to negotiate. In the case of a short period, you probably have less room for negotiation.
- Has the asking price been adjusted since the start of the sale? Price changes are often tracked on housing sites, such as Funda. Go to the sales history of the house and see if any changes have been made. If the asking price has been lowered, this could indicate sellers who want to sell quickly. This of course strengthens your negotiating position.
- How much interest is there in the property? Are there, for example, many other people present at an open house, was it difficult to schedule a viewing or do you know that several bids have already been submitted? With a lot of interest, you will have to come up with a higher bid and/or with rock-solid conditions.
Do you have a purchase real estate agent? He or she helps and advises you regarding determining the property value. Real estate agents are experts in their field and are well aware of local market prices, forecasts and developments. Moreover, they often get more information from the selling real estate agent than you as a private individual. This can be a great advantage.
Determine the right bidding strategy (together with your buying real estate agent)
There are various bidding strategies possible. Consult with your buying real estate agent which strategy you can best adopt.
In negotiations, you can make a strategic opening bid that is interesting enough to make the seller make a counter offer, but not so high that there is no room to negotiate further. Another strategy is to make a final bid at once if you do not want or can negotiate the price. You then leave it up to the seller to accept or reject the bid.
It is wise to attach a validity period to your bid, for example by stating that you expect a response within 3 days. This prompts a quick response and prevents the seller from calmly waiting for other bids. It's take it or leave it!
In addition to the price, other conditions can also play a role, such as the desired transfer date. If you can indicate that the transfer can take place on a date that the seller wishes, this can strengthen your negotiating position. In addition, the resolutive conditions are important, which are discussed more below.
You can submit a bid in writing, verbally or by email. If you make a verbal bid, it is always wise to confirm this in writing, stating the price you are bidding, explaining the bid and any resolutive conditions.
Overbidding in 2023
As you know, overbidding has become more the norm than exception. In 2023, this is still the case, although we did see a decrease in the percentage that was overbid earlier this year (due to higher interest rates).
What is good to know is that the maximum amount you can borrow has been limited to 100% of the property value since 2018. If you bid above the appraisal value (overbid), then you will have to pay the difference out of your own pocket. You cannot borrow this amount. In practice, you often see that the appraisal value is set approximately equal to the purchase amount, but this is not always the case.
Also take into account the costs you incur when buying a house. You also have to pay these costs yourself and you cannot borrow them. The amount you pay depends on whether you buy costs buyer or free on name. So always make sure you have enough own money left for paying the extra costs and the part you overbid above the appraisal value.
Although overbidding happens a lot and seems to be 'normal', it is good to be aware of the risks. Overbidding can cause you to end up with a residual debt later. Therefore, we always advise working with a buying real estate agent, who gives you insight into the potential risk and the expected value development of your house or apartment.
Dissolving conditions
Dissolving conditions give you the opportunity to withdraw from the purchase free of charge if certain conditions are met. These conditions can make you as a buyer attractive to the seller, or not. Below we discuss the following dissolving conditions:
The dissolving conditions you demand are part of your bid and can play a crucial role in concluding the contract of sale. For example, an offer without reservation (at the same bid level) is generally accepted faster than an offer with reservation. Discuss with your buying real estate agent and/or financial advisor whether and which dissolving conditions you want to include in the bid.
Reservation of financing
The reservation of financing means that the purchase only proceeds if you can arrange the financing for the property within a certain period, usually at least six weeks. You must have done your best to arrange the financing. If you are unable (despite your efforts) to arrange the financing, the purchase will be dissolved.
Reservation of a structural inspection
With the reservation of a structural inspection, you can dissolve the purchase if the structural inspection reveals higher maintenance costs than expected.
Reservation of NHG
With the reservation of NHG, you set the condition that you want to be eligible for a mortgage with National Mortgage Guarantee. This guarantee offers protection to both the buyer and the lender and is intended to limit any financial risks when taking out a mortgage.
Bidding on a house without dissolving conditions
It is also possible to bid on a house without dissolving conditions. But beware: this is a binding and risky step for you as a buyer. The only time you can still withdraw from the purchase is during the three days legal reflection period. If you make a bid without dissolving conditions, the purchase goes through - even if unforeseen circumstances occur. The reason people make bids without dissolving conditions is that such a bid is more attractive to the seller. There are fewer ways the purchase can still be broken off. So you have a better chance that your bid will be accepted.
It is important that you carefully consider in advance whether a bid without dissolving conditions is wise. Can you buy the property without a mortgage? And can you make a sufficient estimate of the condition of the property? Before making such a decision, we always recommend seeking advice from a financial advisor and purchase real estate agent.
General tips for bidding on a property:
We are also happy to give you some general tips for bidding on your dream house:
- Determine your maximum budget and stick to it. Easier said than done, but very important - especially because a lot of emotions come into play. Don't get carried away in a bidding war and be sensible with overbidding.
- Always put your bid in writing, even if you made the original bid by phone. Confirm the details and any conditions by email.
- Don't forget to consider additional costs such as transfer tax, notary fees and possible real estate agent costs in addition to the purchase price. Read more about the costs of buying a house.
- Take into account possible costs for renovations or overdue maintenance, especially with older properties. A structural inspection is a must in that case!
- If you have a structural inspection done before you place a bid, you can discover any hidden defects. You can include these in your bidding strategy. Overdue maintenance can be a good argument for a lower bid, for example.
- If you really want a property, consider adding certain flexible conditions to your bid, such as taking over items.
- If you include a reservation of financing, state which part of your bid is being paid with your own money (i.e. without a mortgage). This gives sellers more confidence that you will get the financing.
- A buying real estate agent can be of great value. He or she helps you determine the right price and devise the right bidding strategy. Read more about the benefits of a buying real estate agent below.
A purchase real estate agent to speed up the buying process
A purchase real estate agent helps you place the right bid and use the best strategy. He or she has extensive knowledge of the local housing market and is experienced in negotiations. With access to relevant information, they can advise you on a realistic bidding strategy and any defects in the property. They also help include the correct dissolving conditions and guide you through the legal process.
The price for the real estate agent is quickly recovered, because his/her years of experience help you place a sharp bid faster. And it's not fair, but the (hard) truth is that a buying real estate agent often gets more information from a selling real estate agent than a private individual, so you really have a better chance that your bid will be accepted with a buying real estate agent.
Of course, you can also make the purchase without a real estate agent, that's up to you. If you are still looking for a good buying real estate agent in your area, we are here for you.
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Frequently asked questions about bidding on a property
What is a reasonable offer on a house?
A reasonable offer on a house depends entirely on various factors, such as the asking price, the condition of the property, the housing market, and your budget. It's wise to make an offer that aligns with similar properties in the area. A purchase real estate agent is happy to help you determine a reasonable offer.
What is normal to offer on a house?
What a common offer is, is entirely dependent on various factors, such as the (local) housing market, the condition of the house, the asking price, the interest in the house and your budget. In 2023, there is generally quicker overbidding than underbidding. Are you unsure about the amount of an offer? Engage a purchase real estate agent and get advised.
How much can you underbid on a house?
You can always bid under, but in 2023, underbidding is not common. Under certain circumstances, it may certainly be possible. Think of sellers who are under pressure to sell their house quickly. Or the case where a property has been for sale for a long time due to certain defects.
How much you can underbid in such cases depends entirely on the circumstances and your negotiation position. Would you like advice on making an offer? Then hire a purchase real estate agent.
How much to overbid on a house in 2023?
In 2023, overbidding is still more the rule than the exception, although there is less overbidding than in previous years. This is due to the interest rate increases. Do you want to know what percentage is typically overbid in the neighborhood where you are looking for a property? Your purchase real estate agent is aware of the latest developments in the neighborhood and can certainly inform you about this.
In addition, you can also look for information yourself: the Land Registry registers all real estate transactions in the Netherlands, including the selling prices. Look up similar properties in the neighborhood and compare the asking and selling prices.
Often, you don't even have to go to so much trouble and simply Googling for the figures in your neighborhood is sufficient. Local news media and online real estate platforms provide a lot of information about the market and selling prices of properties. This way, you quickly find out how much it is usual to bid (over).
Can you make an offer on a house without a viewing?
Yes, it is possible to bid on a house without viewing it. However, we strongly recommend viewing the property first, so you can get a good impression of the condition and the neighborhood. This is to avoid surprises. Do not underestimate how important it is to have a good feeling about the house. Only when you step inside, do you know if you can really see yourself living there.
Is a verbal offer on a house binding?
A verbal offer on a house is generally not binding. An offer only becomes binding when it is recorded in writing and signed by both parties, such as in a purchase agreement.
What happens when your bid is accepted?
If your bid on a property is accepted, a purchase agreement is drawn up and signed. As a buyer, you still have three days of reflection time in which you can withdraw from the purchase without giving a reason.
Any suspensive conditions are adhered to, and after the reflection period and any conditions have expired, the transfer takes place at the notary. Here the purchase price is paid and as a buyer, you receive the keys to the property. Congratulations!