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Top tips for negotiation
Whether you are buying your first home, upscaling or downsizing, you should always bear in mind that most house prices have built-in wriggle room. We all like to think we have bagged a bargain, so estate agents and sellers tend to advertise at slightly higher prices with a view to achieving a few percentage points lower. The size of the discount you are likely to achieve depends on local conditions. In a buyers’ market, with plenty of stock on agents’ books, sellers will likely agree to a heftier discount, but if the market is competitive, houses are selling quickly and there is very little to choose from, they will either hang out for something closer to the asking price or – in a worst-case scenario – you may end up in a bidding war with a rival purchaser. That can push the price above, rather than below the ticket in the agent’s window.
The exception to this rule is Scotland, where houses are often marketed at a fixed price, or ‘offers over’. Fixed price sales work much like those south of the border, but ‘offers over’ will frequently be made using sealed bids. You won’t know what rival buyers are bidding, so you need to gauge how far over the advertised price you are willing to go. Although there is no hard and fast rule, Edinburgh-based Warners solicitors and estate agent recorded ‘offers over’ properties selling at an average 11.6% premium above the marketed price. An extreme example may be a Fife property that sold this year for £200,000 over the asking price.
Bidding south of the border
In England, Wales and Northern Ireland, therefore, it is worth considering the maximum you are prepared to pay for a property and the negotiating strategy you will use to get there.
First, check how long a house has been on the market. If it has just appeared, don’t expect to be able to cut too deep into the asking price. The agent should be prepared to tell you when a house was first advertised but, if they don’t, you can see when it was added to Rightmove, where it is detailed on the bottom of the overview card for each home on the search results list. If the property has already been reduced at least once, you will see the date it was reduced instead, which is an indication that it is not selling as quickly as the vendor might have hoped for.
Another indication that the sale isn’t proceeding as quickly as the vendor would like, is multiple listings with several different agents. As each agent will only earn their commission if they seal the deal, they may be keen to promote your offer to their client. So, look out for multi-agent listings, as you could end up with an ally on your side.
Set realistic expectations
This works both ways. You are unlikely to secure a property advertised at twice your budget so don’t get carried away. Equally, though, negotiator Marc Lockley recommends you temper agents’ expectations by giving them a tighter budget to work towards. “Inform the estate agent you have a budget of £300,000 [if you are looking to spend £325,000],” he writes. “He or she is likely to show you properties costing more than that, but stating a lower price at this stage will often help during your negotiations.”
Immediately, this will suggest that the sellers of the properties you are shown, are likely to accept a lower offer. If not, the agent is wasting their time even suggesting them.
Check nearby selling prices over the last 12 to 24 months but make sure you are comparing like with like. If you are bidding on the only four-bed detached home in a road full of studio flats and one-bed terraces, don’t expect to be paying anything like the average. However, if your next dream home is much like its neighbours, and it is a lot more expensive, use this knowledge to your advantage, and suggest – politely – that a considerably higher price is unrealistic.
Show them you are serious
Finally, show that your offer is underpinned by sound research and reasoning – and that it is therefore fair. If you have ever watched Location Location Location, you will have noticed that Phil and Kirsty explain the reason behind discounted offers when contacting agents. More often than not, they secure the sale at a discount.
And, if that doesn’t work, make it clear that you are prepared to walk away. Demonstrating good knowledge of the local market, dropping hints that you are considering another property, and laying out your willingness and ability to move are all attractive prospects that could help sweeten that under-priced offer in the vendor’s eyes.
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