Buying a property is a nerve-wracking business at the best of times, but now we come to the crunch – pitching your offer.
By now, after weeks or months of gruelling house-hunting, you probably have a pretty shrewd idea how much you’re prepared to pay.
But the process of agreeing a sale price requires participation in a strange ritual – the negotiation game. British people, who as a rule dislike haggling over prices, generally expect to offer a bit below the stated asking price when buying property.
Everyone knows this game, not least estate agents, who will normally quote the seller two different prices – an asking price that’s pitched ‘to achieve’ a lower sale price.
What this boils down to is that buyers can normally expect to negotiate a reduction of anything up to about ten per cent off the asking price, depending on the market. The exception is in a booming sellers’ market, where demand and strong competition amongst buyers can sometimes push offers way above the asking prices.
Unless you’re buying from a private seller, it’s normally the estate agent’s job to negotiate the price, acting as a go-between, relaying the details of your offer to their client. The golden rule at this point is to remember that, however nice the estate agent is, they are acting in the interests of the other side. So if they volunteer any advice about how much you should offer, it sometimes needs to be treated with a degree of scepticism.
Negotiation is a skill. Some are born with it, some acquire it, but we all at some point have a go at it. The main objective is to achieve the best price, but the real skill is for both parties to come away feeling good about the deal. A seller who is left feeling browned off, smouldering away resentfully, is very likely to mess you about later or change their mind during the long weeks up to exchange.
It’s always possible that the price being asked is already very reasonable, perhaps pitched to achieve a ‘quick sale’, or has already been reduced. By checking other sold prices for similar properties in the area you can get a pretty good idea of whether this one is already fairly priced. In which case the negotiations may need to focus more on issues other than the price – such as how fast both sides can realistically move.
Many of those employed in the estate agency business seem to have job titles that in some capacity include the word ‘negotiator’. Indeed, some individuals are highly skilled in the art of negotiation, and many naturally radiate charm – an important attribute for successful negotiation. But others are simply full of wide-boy hot air banter that can actually hinder a deal, in which case it may sometimes be better to deal direct with the seller, on a straight one-to-one basis, especially if you’re reasonably businesslike, confident and friendly.
In some cases sellers may be willing to accept a ‘cheeky’ offer. So, before making your opening gambit, see if you can spot any ‘bargaining signs’ such as::
- Properties that have been on the market without attracting much interest, probably because they’re overpriced.
- A seller who needs to move quickly, having already found another property, and may be prepared to accept less for a quick sale.
- Properties that need a lot of work, which isn’t reflected in the price. If you’ve had a survey, getting estimates for the works can help justify a lower offer. Remember that when the agent valued the property they wouldn’t have been aware of anything more than the most obvious defects.
But as a rule, having a professional negotiator acting as intermediary between buyer and seller can help take the edge off any provocative issues, soothing and sympathising with each party in turn.
Negotiation is, by nature, a confrontational process, and if done badly can spark profound hatred between fellow human beings.
Don’t let this happen to you, negotiation, like sales, benefits from keeping a good rapport and wearing your ’empathetic hat’ when you need to.
We have a number of posts relating to selling properties as well as buying, check out our other posts for more info that will help you pay the right price for the right property.