Mastering the Art of House Price Negotiation in the UK

Last Updated: July 2023

Picture this: You’ve found your dream home, but the price tag is just out of reach.

In the UK, nearly 70% of house buyers successfully negotiate house prices to secure their dream homes.

This guide will equip you with the strategies and insights to join their ranks and master the art of negotiating house prices in the UK both from a Buying and Selling point of view.

1. 1. 1. The Power of Pre-Planning: Your House Offer Strategy
      2. Making a House Offer: The Art of the First Move
      3. The House Offer Process: Navigating Negotiations
      4. Exploring Alternative Buying & Selling Scenarios
      5. Low Bids: Cheeky or Worth a Try?
      6. What Happens After a Home Offer is Accepted?
      7. The Art of Negotiation – Your Path to Home Ownership

Interesting Facts about House Negotiations

Source: Thisismoney

In the dynamic world of UK real estate, understanding how to negotiate house prices can make a significant difference to your pocket. Whether you’re a first-time buyer or a seasoned property investor, this comprehensive guide will equip you with the knowledge and strategies you need to navigate the negotiation process effectively. From pre-planning your house offer strategy to understanding the power of buyer appeal, we’ll walk you through each step of the journey.

1) The Power of Pre-Planning: Your House Offer Strategy

Meeting an Agent: The Initial Steps:

According to recent government figures, 83% of homes in the UK are sold via estate agents.  Agents traditionally work for the seller – a contract is drawn up between the two parties, and their job is to negotiate the best offer for their client.

For buyers, this means the home-buying offer strategy begins with that crucial first contact with an agent.

1. Meeting an agent: The first question agents understandably want to know is your budget. Downplaying this a little is vital, as agents are notorious for their ability to upsell, showing you properties that are a little over budget. If you’ve hinted that you could go higher than your original quota, this effectively lowers your bargaining power.
2. Do your research: Online resources such as Zoopla and Right Move make it easy to see what similar properties in any area have sold for and that of those on the market today. The Land Registry website is also reliable for searching average house prices in any area.
3. Have you got buyer appeal? Perhaps you’re a chain-free or cash buyer. If so, be sure to make this information known to the agent, as some vendors might be more open to accepting a house offer lower than the asking price for a hassle-free transaction.
4. Don’t use an agent for financial services: According to the Home Owner’s Alliance, a major source of complaints from buyers and vendors is the agent’s conflict of interest. This can occur when buyers use the seller’s agent as a mortgage broker. When this happens, the agent earns commission – and such a situation can lead both buyers and sellers to lose out financially. The Money Advice Service recommends shopping around to get the best mortgage advice, including that of your bank and independent mortgage brokers.

After the groundwork is in place, the next step is to find your dream property. When viewing, this should be considered the first step in your house buying negotiation strategy, so take care to ensure the following:

• Research the property carefully
• View more than once (different times of day, during inclement weather if possible, make notes of work that will need to be carried out, etc.)
• Get sight of the EPC
• Promote your buyer appeal (first-time buyer, chain free etc.)
• Even if you love the house, try not to appear too keen

The negotiation process begins with your first contact with an estate agent. It’s crucial to be cautious about revealing your budget as agents are known for their ability to upsell. By keeping your cards close to your chest, you maintain your bargaining power. Remember, the real estate agent also works for the seller directly, and their primary goal is to secure the best possible price for their client’s property.

Doing Your Research: The Importance of Market Knowledge

Knowledge is power when it comes to negotiating house prices. Online resources such as Zoopla and Rightmove are invaluable for understanding property prices and what similar properties in your area of interest have sold for. The Land Registry website also provides reliable data on average house prices in any area. Armed with this information, you can make an informed offer.

Buyer Appeal: Your Secret Weapon

If you’re a chain-free or cash buyer, make sure to communicate this to the agent. Some vendors might be more open to accepting a lower offer for a hassle-free transaction. Companies like Housebuyers4u offer a single offer price with no traditional property sale negotiation process, making the process even smoother for buyers.

Avoiding Financial Services from Agents: A Word of Caution

The Home Owner’s Alliance warns against using the seller’s agent as a mortgage broker due to potential conflicts of interest. It’s advisable to shop around for the best mortgage advice, including consulting your bank and independent mortgage brokers. The Money Advice Service recommends this approach to ensure you get the best possible deal on your mortgage.

2) Making a House Offer: The Art of the First Move

Viewing the Property: More Than Just a Visit

Viewing a property is more than just a casual visit; it’s your first step in the negotiation process. It’s your opportunity to assess the property’s condition, the neighbourhood, and any potential issues that could impact your offer. Take note of any repairs or renovations that might be needed and consider the costs involved. This information can be a valuable bargaining chip when you start negotiating house prices.

Making Your Offer: The Start of Negotiations

Can you negotiate on a house offer? The short answer is yes, and here’s how.

According to Which?, in the UK, the average property sells for about 96% of the asking price, so keep this in mind when making your offer.

As a buyer, your opening gambit (AKA your first offer) should be considered the start of an exploratory process. The key factor here is to determine how flexible the seller is. To this end, the following tips will help you understand what your first house offer should be.

Can you negotiate on a house offer? The short answer is yes, and here’s how.

As a buyer, your opening gambit (AKA your first offer) should be considered the start of an exploratory process. The key factor here is to determine how flexible the seller is. To this end, the following tips will help you understand what your first house offer should be.

 The first offer should be below what you’re willing to pay: This gives you the flexibility to increase it, should it be necessary. This is a critical psychological aspect of the house offer negotiation, as upping your offer will appear attractive to the vendor.

Give the reasons for your offer: Mention any work that needs doing (installing double glazing, roof maintenance, new boiler, etc.) and state estimated costs.

Use other properties as examples: If similar properties in the area have sold for less, this is a valuable bargaining tool.

Imply interest elsewhere: Even if this property is ‘the one’, there’s no harm in implying that there’s another property you’re interested in. Estate agents routinely use the ‘there’s lots of interest in this house’ trick to get you to make or up an offer. Telling them, you’ve got options is a cheeky way to stop this tactic in its track.

Even if a seller refuses to discount their asking price, all is not lost. Asking for extras is another strategic way to win a house negotiation. Such requests could include the following:

• Asking the seller to contribute towards purchasing fees
• Requesting that certain items are included in the sale (curtains, appliances etc.)

Did you know: UK house buyers like Housebuyers4u give you a single offer price with no traditional property sale negotiation process?

3) The House Offer Process: Navigating Negotiations

Your Opening Gambit: Setting the Stage

As a buyer, your opening offer is more than just a number—it’s a strategic move designed to set the stage for negotiations. The key is to determine how flexible the seller is. Your first offer should be below what you’re willing to pay, giving you the flexibility to increase it, should it be necessary. This is a critical psychological aspect of negotiating house prices, as upping your offer can appear attractive to the seller.

Justifying Your Offer: The Power of Reasoning

When making your offer, it’s important to justify your proposed price. If the property needs work—such as installing double glazing, roof maintenance, or a new boiler—mention these factors and state the estimated costs. This can help justify a much lower price for you to offer and open up the negotiation.

Using Other Properties as Examples: A Comparative Approach

If similar properties in the local area have sold for less, use this as a bargaining tool. It can help you justify your offer and potentially sway the seller in your favour. According to Zoopla, house prices can vary significantly within the same area, so it’s important to do your own research and use it to your advantage when negotiating house prices.

Implying Interest Elsewhere: A Strategic Move

Even if this property is ‘the one’, there’s no harm in implying that there’s another property you’re interested in. This can help keep the estate agent on their toes and potentially work in your favour. Estate agents routinely use the ‘there’s lots of interest in this house’ trick to get you to make or up an offer on a house already. Telling them you’ve got options is a cheeky way to stop this tactic in its track.

Asking for Extras: An Alternative Negotiation Tactic

Sometimes, the negotiation process isn’t just about the purchase price. If a seller is firm on their asking price, you might be able to negotiate in other ways. For instance, you could ask the seller to include certain extras in the sale, such as appliances, furniture, or even covering some of the closing costs.

This can be an effective way to add value to your purchase without increasing your offer. It’s a tactic that’s often overlooked but can make a significant difference in the overall cost of buying a home.

Remember, everything is potentially negotiable when buying a property. So, don’t be afraid to ask for what you want. The worst that can happen is the seller says no, but you might just find that they’re willing to agree to your requests to secure the sale.

Below are some additional negotiation tips for you to learn:

4) Exploring Alternative Buying & Selling Scenarios

Auctions and Negotiations: A Different Arena

While traditional estate agent sales are common, auctions present a unique opportunity for buyers. Properties at auction can often be secured at below market value, especially if there’s less competition. However, it’s crucial for home buyers to remember that once the hammer falls, the sale is legally binding. If the property doesn’t sell at auction, there may be room for negotiation post-sale.

Open Negotiations: A Transparent Approach

Open negotiations are another alternative to traditional estate agent sales. In this scenario, all interested parties are aware of each other’s offers, creating a transparent and competitive environment. This can be a double-edged sword, as it can drive up prices, but it also allows you to gauge your competition and adjust your strategy accordingly.

Sealed Bids: A Game of Chance

In a sealed bid process, all interested parties submit their best and final offer in a sealed envelope. The seller then reviews all bids and chooses the most appealing one. This can be a nerve-wracking process, as you only have one shot to make your best offer. However, it can also level the playing field, as all buyers have an equal chance of securing the property.

New Builds: A Unique Opportunity

New builds offer a unique opportunity for negotiation. Developers are often keen to sell quickly, especially if the development is nearing completion. This can give buyers leverage to negotiate not only on price but also on extras such as fixtures, fittings, and even upgrades.

According to HomeOwners Alliance, it’s not uncommon for buyers to secure significant discounts or extras when buying new build properties.

Remember, no matter the buying scenario, it’s important to do your research, understand the process, and be prepared to negotiate. With the right approach, you can secure your dream home at a price that fits your budget.

5) Low Bids: Cheeky or Worth a Try?

Clues that a Lower Offer Might be Accepted

There are many reasons a vendor might accept an offer lower than the guide price; the key is to be aware of what they are. Spotting the signs is a vital part of getting your house offer accepted and knowing how much less you should offer to maximise your savings – the following are clues to whether or not the seller might be, to put it bluntly, pretty damn desperate to sell.

• The house has been on the market for a long time: Reasons for this include being overpriced or an issue with the property, such as needing major structural work).
• The house has been reduced in price multiple times: Apart from probably having too high of an asking price in the first place, constant reductions in price show a desire to sell ASAP.
• The seller is stuck in a long chain: Property chains are a necessary evil when selling a property. However, they can cause indeterminable delays. If the seller has found their next property and is keen not to lose it, they may be open to a lower offer for a quick sale.
• The house is advertised with multiple agents: In such a case, the estate agent will be keen to clinch the sale in order to get their commission.

Why your house isn’t selling & how to fix it step by step

How Low Can You Go on a House Offer?

The amount you can reduce your offer by will depend on a variety of factors, including the local market conditions, the property survey, the current market value, the property’s condition, and the seller’s circumstances.

According to This Is Money, houses in the UK sell for an average of 3.5% less than the original asking price.

This, naturally, varies around the country.

A rule of thumb would be to go in at around 10% below the asking price. There’s a fine line between negotiation of property price and insulting a vendor. What is a cheeky offer on a house that’s worth consideration to one person could completely undermine your credibility as a genuine buyer to another. Consider why the house is on the market – the owners of a treasured family home that’s just been offered for sale are not likely to be impressed by a derogatory offer.

How to Respond to a Low Offer

If you’re a seller and you receive a low offer, it’s important not to react impulsively. Take some time to consider the offer and the potential buyer’s circumstances. Remember, the first offer is often just a starting point for negotiations. If the initial offer is too low, you can always counter with a higher price. If the buyer is serious, they’ll likely come back with a more reasonable offer.

Receiving a low offer can bring many emotional reactions if you’re the seller. Of course, you’re perfectly within your right to refuse a low bid. But before you do so, consider the following:

No matter what, always remember that as a seller, you’re the one in control. If you don’t like an offer, you don’t have to accept it.

6) What Happens After a Home Offer is Accepted

When is an Offer Legally Binding?

In the UK, an offer becomes legally binding once contracts have been exchanged. Until that point, either party can withdraw from the agreement without legal repercussions. However, it’s important to note that withdrawing from a property purchase after the offer has been accepted can still result in financial losses, such as survey costs and solicitor’s fees.

It’s also worth noting that in Scotland, the process is different. An offer becomes legally binding much earlier in the process, once the seller’s solicitor accepts the buyer’s offer in writing. Therefore, it’s crucial to be certain about your decision before making an offer on a property in Scotland.

For more information on the legal aspects of buying a property, you can visit Housebuyers4u, which offers a wealth of resources and advice for homebuyers.

Gazumping: A Potential Hurdle

Gazumping occurs when a seller accepts a higher offer from another buyer after having already accepted your offer. While it’s not illegal in England and Wales, it can be incredibly frustrating and costly for the buyer who has been gazumped.

Is Gazumping Illegal?

No it is not, and being gazumped can be extremely costly, with the potential risk of losing significant amounts of money in solicitor’s fees, search fees and building survey’ costs. If it happens to you, your only choice is to increase your offer over and above that of the gazumper.One way to lower the risk is by requesting the vendor remove the property from the market. If they refuse, consider whether or not it’s worth the risk of losing out should another buyer make a higher offer than yours.

To protect yourself from gazumping, you can ask the seller to take the property off the market as a condition of your offer. You can also consider taking out home buyer’s insurance, which can cover some of the costs if you’re gazumped.

Another way is to try and move the home buying process along as quickly as possible. The less time there is between your offer being accepted and contracts being exchanged, the less opportunity there is for another buyer to swoop in with a higher offer.

Final Thoughts: The Art of Negotiation – Your Path to Home Ownership

Mastering the art of house price negotiation is more than just about getting a good deal. It’s about understanding the property market, recognising the value, and making informed decisions that lead you to your dream home.

Key Takeaways:

1. The Power of Preparation: Understanding your budget and the market landscape is your secret weapon. It’s not just about the price, but the value you’re getting for it.
2. Strategic First Moves: Making your first offer is more than just quoting a price. It’s a chess move in the game of negotiation, setting the tone for the discussions to follow.
3. Exploring New Frontiers: Don’t limit yourself to traditional estate agent sales. From auctions to new builds, there’s a world of opportunities waiting to be discovered.
4. Navigating Post-Offer Terrain: An accepted offer is just the beginning. Stay vigilant, understand the legalities, and be prepared for potential hurdles like gazumping.
5. Creating Win-Win Situations: Successful negotiation isn’t about winning or losing. It’s about finding a common ground where both you and the seller feel satisfied.

Remember, negotiation is a two-way street. It’s not just about driving the price down, but creating a win-win situation for both you and the seller.

In your journey, you’ll encounter various scenarios – from traditional estate agent sales to auctions and new builds. Each presents unique opportunities and challenges. But with the right strategies, you can navigate these with confidence.

And finally, remember that the process doesn’t end with an accepted offer. Stay informed, be prepared for potential hurdles, and keep your eyes on the prize – a place you can call home.