If you’ve never bought a property before (and even if you have), the buying process can seem very strange.
Prices on property portals may look set, but there’s lots of ways to find wriggle room. Knowing all you can about the property, the area and getting a detailed survey to give you the right information will ensure you pay the right amount.
Here’s how to keep an eye out for a bargain, and how to approach it.
When researching
Know what you’re getting for the money
If you’ve been searching online for a property, or browsing in estate agent windows, hopefully you’ve only been looking within your price bracket. Make sure you test affordability before visiting anything, as you may find you wouldn’t be approved for a mortgage.
When it comes to valuing a property online, it’s really hard to tell if the price is reasonable until you visit. However, some portals have a handy ‘history’ section that will tell you the price of the property the last time it was sold. Compare these to other ones in the area. If the property you’re considering is a lot more expensive, try to see why. Has it had a conversion, or has a bigger garden, or is it in better condition?
If you can’t see why it’s more expensive, (politely) ask!
Know the market
You don’t need to spend hours trying to solve the housing crisis when researching the property market. You really just want to know if the market is in the buyers’ or sellers’ favour. A buyer’s market generally means that properties are taking a while to sell, and the buyer will benefit from a good deal. A seller’s market suggests properties are selling quickly and the seller can get a great sale out of it. You can check whether the postcode you’re interested in is a buyer/seller market by using this
handy site from Propcast.
Don’t forget to consider impacts on the market from other elements – political changes and rules, the increased popularity of certain areas, or stagnation in the market. If there are lots of properties up for sale in that area, but none of them seem to be selling, you’re in a position to negotiate.
Know the seller
Finding out why the seller wants to move, and what their plans are can give you an insight as to whether they will negotiate on price. When you know the owner is eager to sell promptly, they may be willing to accept a lower asking price for the convenience of a quick sale. Perhaps they are in a quick-moving chain, are moving abroad or the property has been on the market for quite a while. If the seller is eager to sell, they are more likely to make a deal.
Be aware of the impact of Stamp Duty
Be sure of the price thresholds of properties, as it can make a big difference to the amount of
Stamp Duty you’ll pay. Negotiating under a threshold can save you thousands – so be aware of what price is ideal for you.
Talk to the estate agent
The estate agent will likely be able to give you a feel for whether or not the seller is open to negotiation, but also how many viewings and offers there have been. The estate agent wants a sale, so trust that they will attempt to get as much for their client whilst trying to secure a sale if no one else is making an offer.
Going back and forth on an offer
Now you’ve assessed how much you think the property is worth and how much you can afford, it’s time to make your offer.
Asking prices are guidelines, so don’t feel you have to meet it on your first offer. It’s important to remember that whilst you want to get a good deal, the seller may need to receive a certain sum in order to buy their new property. Also, value can be a personal thing – by offering much lower than the asking price, you may offend the seller. Try and settle something in the middle that doesn’t feel like a huge discount to the seller, but is significant to you.
Justify your pricing
If you can explain how you came to your offer price, you’re in a stronger position. Obviously, the seller wants to get as much as possible for their property, and to them, it’s priceless, full of memories, choices and personality.
If you have looked at the pricing on similar housing in the area, and know the ‘extras’ that impact price (garden, extra room, parking) you can explain how you came to that figure. This makes you seem much more reasonable and open to discussion, rather than simply plucking a number from the air and hoping for a good deal.
What are you offering?
As part of your negotiation, you need to know what you’re bringing to the table beyond the money. Are you a first time buyer, or chain free? Are you able to be flexible on the timing in line with what the buyer wants? Are you able to move quickly? Are you a cash buyer?
Know your strengths and use them
The back and forth of negotiation on price can be awkward – you have three people (you, the seller and the estate agent) who are all invested in the outcome. Don’t be down-hearted if an offer is refused, and don’t feel it means you can’t make another, higher offer.
Just remember that what you can comfortably afford always matters more – if the seller won’t budge and you have no bargaining power, then putting yourself at risk by getting too high a mortgage and struggling every month is not worth it. Know when to say no and walk away.
Try not to rush the negotiating process, be aware that you might be competing with other potential buyers and remain polite throughout. Always be prepared to walk away if the price isn’t right.
It’s not usually going to be a case of who the seller likes more, but if they can see how passionate you are about their home and they can feel good about selling it to you (perhaps they are selling their family home and you are moving in with children) you are likely to edge in higher against the competition. The person less likely to have their negotiation accepted is the one who talks loudly about the changes they’ll make, or criticises and diminishes the property in the hopes of getting a lower price.
It’s not always about getting a deal. If it’s your dream home, it’s fairly priced and you love it, (and you can afford it) – go for it.
Changes after you’ve agreed a price
Consider the survey
Great – you’ve come to an agreement with the seller! Now you’re on your way to owning your dream home. However, before you move onto the paperwork side of it, the best thing you can do is
get a survey to assess the property.
Either a
HomeBuyer Report or a more thorough
Building Survey will identify any concerns with the property. From simple things like drainage or minor damages, right through to things like damp, subsidence or
Japanese knotweed.
Your survey is your best negotiating tool, because it will highlight issues that would either cost you money in the long run or would need fixing immediately.
If your surveyor can tell you that the roof will need replacing and it will cost you £5000, asking for a reduction by that amount to pay for the work done just makes good sense. It stops you being left out of pocket and makes you aware of any downsides to the property.
If some of the problems uncovered are deal breakers, then you’ve saved yourself thousands of pounds and a big commitment, so be sure you know what you’re getting into.
Consider the mortgage valuation
We’ve always been very clear on the fact that
a mortgage valuation is very different to a surveyor’s valuation. If you are getting a mortgage, your mortgage valuation will determine whether or not you are given the full amount you need to buy the property. If the lender feels the property is overpriced and values it much lower, you won’t get the full amount you need.
If this happens, you may need to take it back to the seller and negotiate. If neither the seller nor the lender are willing to budge, you may have to try to find another lender who has a differing opinion, or make up the shortfall yourself.
Market value, inconvenience and everything else
Generally, it’s not good manners to try and renegotiate after agreeing a price. We certainly would never encourage
gazundering,
gazumping or anything else – it’s unfair and often leaves people with a gap in the chain or buyers who were in love with the property heartbroken.
However, alongside the survey highlighting issues, there are a few times when it might be prudent to renegotiate.
If you are being required to accommodate the seller unexpectedly (moving earlier or later than expected, meaning you pay extra rent for example) then you can try to cover those costs. Similarly, if you are stuck in a long chain and have been forced to spend more on rental or storage costs, then consider negotiating.
We’re not saying the seller is responsible for all your costs, but if you have had to pay out more due to issues with the seller, then trying to get some of that back through a price reduction is prudent. However, often sales take longer than expected and that’s not necessarily the seller’s fault. Try to remain empathetic throughout and always remain polite.
If you’ve been stuck in a chain for a long time, the market can change, and you may find that other properties are cheaper, or feel that comparatively you are overpaying. Many people would want to stick to the offer they have made, but if there is a significant difference, and you feel you’ll be buying into negative equity, it’s worth having a conversation about price.
Noticing last minute issues
Your home is likely to be the biggest purchase you ever make, and yet often you commit to it without spending a significant amount of time in it. That’s the nature of the industry – you visit the property a few times, and decide it’s the one for you. Even if you’ve visited a few times, it’s unlikely you’ve experienced it in different weather or times of day.
After your seller has submitted forms to say which fixtures and fittings will be included, and you have agreed, they are meant to supply the property to you in that manner. If when you visited, the ground floor had carpet, and you arrive to find it had been ripped up, you’d be understandably upset. Sellers in this instance are meant to replace what they take. If you saw it with a carpeted floor, they should ensure this is how you receive it.
Try to visit a few weeks before completion to confirm the state of the property. Hopefully, your surveyor will have noticed any issues in good time, but in some cases sellers can become lackadaisical about the state of the property when they move out. Any white goods that were included in the sale should be in good condition (or in the same condition as when you viewed the property).
Noticing this in advance of completing on the property gives you negotiating power. Just like a surveyor finding issues, if you’d have to pay more to replace items, it’s better to know sooner rather than later.
After you have completed, it will be much harder to make anything happen, as the transaction has already gone through.
In summary
When it comes to negotiating always remember that the correct price is the one you can afford and the seller is willing to accept – quoting facts about square footage or the price of other properties in the area will do you no good if the seller won’t accept less.
The golden rule of property pricing is that the home is worth what someone will pay for it, so if you’re the only one in the running, you have the upper hand, but if there are others eager to buy you may find yourself needing to up your price.