Six Principles for Negotiating a Reduction in the Price of a Property
In a housing market where uncertainty is fuelling some of the biggest spreads between initial asking prices and prices actually paid, it’s more important than ever to understand the fundamentals of negotiating the price of a house down while remaining attractive as a buyer.
When you do find a property that you want to call home, remember these six negotiating principles to help guide you on how to talk down a sale price in a way which will reinforce your buyer credentials.
1. Secure finances ahead of any negotiation
Have your finances in place and be prepared to move quickly when you find a house you want to buy. You wouldn’t go high street shopping without cash or a credit card so similarly don’t make an offer without cash in the bank or a mortgage offer in place. Most buying agents will only take on clients who are in a position to proceed so it’s important to be realistic. If you offer on a house and need to sell yours first, it doesn’t put you in a strong negotiating position and a low offer won’t be taken seriously. Buying agents often advise clients to take a chance by selling their property first and renting if necessary when a sale is needed prior to purchase.
2. Investigate the circumstances of the sale
A good buying agent will usually know the seller’s circumstances. For example, ask whether it is a forced sale due to a divorce or redundancy? This is where a smaller, more local buying agent comes into their own. Unlike bigger regional property search agencies, they generally know the houses and who owns them long before they come to market. This is especially true of the larger more interesting country and coastal houses which have been in families for years. If you’re really lucky, a local buying agent may have previously worked in estate agency and have sold that property in the past.
3. Don’t underestimate the power of local networks
Your network can be your most powerful tool in uncovering the hidden gems which rarely come to market before selling. Most experienced buying agents have relationships going back years and also keep an eye on the obituaries to predict when a good property may be coming to market. If you have school age children, the parent network at the school gate is particularly useful. Outside London there are far less than 6 degrees of separation and local news about divorce, death and employment status are inevitable subjects for discussion at dinner party tables! If you don’t have this network or are relatively new to an area, work with a local buying agent who will ideally have grown up in the area, put their children through local schools and will not only have their own network but can access that of their parents’ generation too.
4. What should you compromise on when buying a house?
Keep your head when you set out to find your dream house. The perfect house which ticks all of the boxes rarely exists even when money is no object. Accept that an 8 out of 10 house can be the right home and don’t chase the impossible. If buying with a partner be prepared for tough discussions about what you are both prepared to compromise on. For example, you might find a beautiful house in a fabulous setting, but it may be within earshot of a major A road and you can hear the traffic noise from the garden. Consider how these issues might impact you on a day to day basis and whether the traffic is likely to become something you no longer hear or whether it will become a constant reminder that you should have bought a house in a quieter spot. The most common compromise is on the size of a house versus its location.
5. Investigate previous offers and current interest
If a property is brought to your attention by an estate agent, it is important to establish the history of the house. Has it been on the market in the recent past and then removed? If there was a previous offer, why did it fall through? This is where a buying agent who has long standing relationships with all local estate agents can be of real value. Relationships built over years result in honest information about a property which is unlikely to be revealed to a buyer, who is new to the area. Do remember that estate agents are acting on behalf of vendors and while they need to match buyers appropriately, they will only reveal as much information as they are legally obliged to. Valuable more detailed information can usually be uncovered by a search agent.
6. Don’t get hung up on facts and figures
While there is a need to understand at what price similar houses have sold for in the area or the same road, there are no absolute values when it comes to the upper end of the market. Price per square foot is irrelevant if that property happens to have a unique selling point. How can you possibly put a metric on a view over the sea or a downland valley?
Ready, Steady, Negotiate
Once you have established these six areas you will be armed with the tools you need to negotiate the best price for your desired property. Above all, it is essential to be personally prepared both financially and emotionally before entering any property negotiation. Buying agents are usually best placed to negotiate your offer and frequently cover their finder’s fee by the saving they manage to secure.