Let’s face, Haggling sucks! Too high? Too low? Am I being taken for a ride? When it comes to negotiation on house price, most of us have woefully little experience.
That’s where we can help. We share our industry expertise on our top tips for negotiation – applicable for buyers and sellers – to ensure you hold all the cards when it comes to settling on the final house offer.
Let’s get started.
In this section we’ll look at 3 key areas:
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.
After the groundwork is in place, the next step is to find your dream property. When viewing this should be considered as the first step in your house buying negotiation strategy, so take care to ensure the following:
Once you’ve found the right property the next step is to make your offer. This is where those all-important house negotiation tactics begin to come into play. You put in the offer through the estate agent who then communicates this to the vendor.
It’s recommended that you put the offer in writing to the agent (an email following a phone call will suffice, and you can easily set up a house offer letter template prior to the time, filling in the relevant details). Doing this negates the risk of any confusion further down the line.
The seller then has three choices:
If your initial offer is in the right ballpark, the latter is the most likely scenario. The haggling process takes place through the agent. For buyers this might represents a disadvantage, because the seller has a professional working on their behalf. It’s possible to appoint a buyer’s agent, if you’re really concerned, but this isn’t necessary (plus it adds further costs to the house buying process).
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 direct you towards understanding what your first house offer should be.
The first offer should be below what you’re willing to pay: This gives you flexibility to increase it, should it be necessary. This is a key psychological aspect of 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.
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 vital part of how to get your house offer accepted as well as 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.
According to This Is Money houses in the UK sell for an average 3.5% less than the original asking price. The image below shows the percentages for a number of the UK’s largest cities.
This, naturally, varies around the country.
From the above image we can learn that the lowest average properties are sold in Bristol and Manchester (2.2%) and the highest average property is Edinburgh (8.3%).
Houses in London on average are 4.8% lower than the asking price.
A rule of thumb would be to go in at around 10% below the asking price. There’s a fine line between negotiation 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. Take into account the reason 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.
If you’re the seller, receiving a low offer can bring about many reactions – most of them emotional. Of course, you’re perfectly within your right to refuse. But before you do so, consider the following:
In this section we’ll take a look at a couple of alternative buying and selling scenarios and they are:
While estate agents remain the more common sales route, other alternatives don’t necessarily mean you can’t negotiate a better deal.
Regular house auctions, as in where bidders (either in a room or online) bid until the hammer falls, are only open to negotiation if the property fails to sell. In such cases there might be a case for the vendor accepting a reasonable house offer post-sale.
More common scenarios are that of open and sealed bids.
The key approach with both open and sealed bids is to carry out the same due diligence as when buying in a more conventional manner.
Many people mistakenly believe that there’s no room for negotiation on the house price of a new build. Nothing could be further from the truth, and buyers often have more wiggle room in such a case.
The following are our top house buying negotiation tips for purchasing not only new builds but also standard properties too.
Agents are legally obliged to pass on any offers right up until contracts are exchanged, the point at which an offer becomes legally binding in England and Wales (different rules apply in Scotland). Up until that point either party can pull out. However, according to Co-op legal services, doing so may still leave buyers and/or sellers liable to various fees.
When this occurs due to the vendor accepting a higher offer, it’s known as ‘gazumping’. If you’ve managed to negotiate a particularly low sale price the chances of this happening are, naturally, higher.
No and being gazumped can be extremely costly, with the potential risk of losing large amounts of money in solicitor’s fees, search fees and survey costs. If it happens to you, the only choice you have is to increase your offer over and above that of the gazumper.
One way to lower the risk is to request that the vendor removes 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.
The majority of house buying negotiations take place through an estate agent, removing the need for awkward face-to-face haggling. Research is the most crucial aspect of the negotiation process, providing you with the necessary knowledge as to how to make the best house offer.
Despite your best efforts, a vendor might not accept your final offer on a house. If this is the case, and it’s the maximum you can afford, then it’s time to look elsewhere. However, by following our key tips for house negotiation, we’re confident you’ll be well-placed for securing your chosen property at a truly realistic price.