How do I negotiate on an asking price?
Anthony from East London
Buying a house questions and answers
We’ve found a house we like, but it seems very overpriced as it’s not in great condition, and to factor into our budget all the costs for the refurbishment it would need, we’d have to ask for a hefty discount… However, the estate agent seemed adamant that it’s priced correctly. It’s been on the market for a very long time now so it could be that the seller isn’t considering offers, but we have no idea how to go about negotiating. Do you have any advice on what we should do?
Deciding how much to pay for a home you like and want to buy is not easy and your dilemma is not unusual. Considering buying a property in need of refurbishment does require extra thought but key to this is trying to establish what the property will be worth once the work is completed – both its value in the market place and what it will be worth to you. For example, are houses similar to the one you are interested in, in good condition available and what price are they? – are they cheaper or more expensive than buying and doing the work? This will help you decide whether the estate agents opinion is right about it being correctly priced. If after this extra research you decide you are still interested then you need to make an offer.
Be careful when thinking about what work you want to do to the house as it normally falls into two categories – essential and your choice – repairs, installing heating, renewing electrics etc are essential, replacing a kitchen or bathroom because you do not like the perfectly good ones there is not, and you should not expect the seller to discount the price for your choices.
Arrange another visit to the house and take with you someone who can provide estimates for the work required and then, when submitting your offer, explain to the estate agent why it is at the level it is and offer them the written breakdown of the work involved so they can share it with the seller. This may help in the negotiations but it is by no means guaranteed.
You should also think about how much you want the house –
- How long have you been looking?
- How often does a house in this area in your price range become available?
- What happens if you miss this one?
- Are prices rising or falling in the area?
If you buy the house do you have to do all the work straightaway – would it be more affordable if you delayed doing some of the non-essential work? How would you feel, if in 3 months’ time you see that the house sold for price you would have been prepared to pay but did not offer – particularly if you have not found an alternative? If after answering all these questions you decide the house is out of budget and you can’t get an offer accepted then concentrate your efforts on finding an alternative property. It is also worth remembering that the estate agent acts for the seller to get the best price but the estate agent will want to help agree a sale for you.
if you are concerned about all of the costs involved, you can see whether this property falls within your budget by using our simple Moving Cost Calculator. It will tell you the stamp duty you will need to pay and other expenses involved in moving.
Have a look at our How to Negotiate Guide if you're worried about making the right offer and getting accepted.
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Erl on 12/01/2021