How to negotiate a better deal if youre buying during a property downturn
08 December 2023
In recent months, house prices in the UK have come under pressure. Rising interest rates and the cost of living crisis have dampened demand for homes, with Halifax reporting that the average UK house price fell by 4.7% in the 12 months to September 2023.
This lack of demand has led to many sellers reducing the asking price of a property to generate interest.
Indeed, a report in the Guardian reveals that more than a third (36%) of properties on the market have had their asking price reduced at least once.
If you’re looking to buy a property, you’re currently in a strong position to negotiate with sellers. So, here are five tips that could help you to secure a great deal in the current market.
1. Be prepared
Vendors and estate agents will want to know that you are a serious and credible buyer before accepting your offer. So, if you can demonstrate that you are in a strong position to buy, this could help you to negotiate the price.
For example, if you’re a first-time buyer with no upward chain, or you’re a cash buyer, this can make you very attractive to a seller. So, make sure the agent and vendor know about your unique position.
If you need a mortgage to buy, arranging this in advance of searching for properties can also put you in pole position.
Obtaining an “agreement in principle” that you can show a seller, demonstrates that you are ready to proceed. While this is not legally binding, it shows that you’re serious and that your finance is lined up.
2. Research the market
Before you make an offer, research the local market to establish a reasonable price for the property you’re considering.
Sites such as Rightmove and Zoopla can show you historic house prices on the same street – and even for the same property – so you can check you’re not overpaying.
Additionally, establish how long the property has been on the market. If it’s been for sale for weeks or even months, it’s a sign that it may be overpriced. You’re more likely to negotiate a deal if a property has been for sale for some time, especially if the vendor is keen to sell.
3. Stay calm during negotiations
A home is likely to be the biggest asset you ever buy, so negotiating can be stressful. This can be amplified if you’ve fallen in love with your dream home!
It’s important to stay calm and polite through any negotiations, as becoming angry or irritated may alienate the estate agent or vendor.
It can also pay to play your cards close to your chest. If the seller knows you have fallen in love with the property, they are more likely to hold out for a higher offer. Don’t appear too keen!
Moreover, try not to be persuaded by counter-offers. If the vendor refuses to lower the price but offers to include things like white goods, the truth is that these may be worth very little so it may not materially benefit you to accept this offer.
4. Don’t go in too high or low
Buying a house will often end up in a negotiation. Sellers put properties on the market at a higher price than they will accept as they know the buyer will negotiate.
Similarly, a buyer will make an offer below the asking price to not overpay for a home.
Finding this balance is key. If your offer is too high, the vendor might know that you’re keen to proceed and squeeze more money out of you.
If you make an offer that is too low, you risk annoying the vendor who will then refuse to engage.
Offers are often around 5% to 10% less than the asking price – bid what you feel is a realistic price and be prepared to be patient during negotiations.
5. Be prepared to walk away
Buying a home is often an emotional decision, and falling in love with your dream house can affect your approach to negotiations.
However, it’s important to try and remain dispassionate, otherwise you could end up paying more than you need to. Here are some tips:
· Try to avoid setting your heart on a single property, as this could lead you to overbid.
· Don’t let the seller or estate agent know what your maximum budget is. If you do, they know you’re capable of paying more than your offer.
· Don’t give up if you don’t succeed with a negotiation. House prices are likely to remain uncertain for some time so there may well be other suitable properties on which you can negotiate a great price.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Your property may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.