When you’ve found your dream home, it can be difficult to accept if it is out of your price range. Or perhaps you’ve looked around the suspect that it might be a little overpriced. When there are things that need to be fixed in the property, you might be wondering if you can get the seller to knock a little bit off the asking price.
This is a fairly common tactic in the property market. But negotiating on the price of a property is delicate ground and needs to be approached with caution. Move in too aggressively, and you could annoy the seller and make them less inclined to accept your offer. But remember, most sellers will put their home on the market for a little more than they are hoping to acheive. This leaves some room for negotiations.
In this guide, we will look at some of the most popular ways to ask the seller to lower the price. We’ll explore how to establish the groundwork and what you need to do to close the sale. We’ll also look at how you can rescue a sale that has gone south due to poor negotiating. If you’re buying a home and want to secure a great deal, consider this essential reading!
The first step to securing a better price is to do your research. You need to find out everything you can about the home, the seller and the circumstances of the sale. When you’re armed with all of the information, you can approach the seller with the right attitude and proposal.
Inspect the interior of the house thoroughly and identify any areas that will need to be fixed or renovated. If everything is in order, get picky. Have similarly priced houses in the area offering more living space? A landscaped garden? If this is the priciest home in the surrounding area, you could state your case that the price could be lower.
How long has the home been on the market, and has it been listed previously? This can give you clues about the mindset of the seller. If the home has been on the market for a while, it could be that they have priced it too high because they aren’t in a real rush to sell. When the right buyer comes along, they assume that they’ll be willing to pay the full asking price.
If the seller and the agent know that you are utterly smitten with a property, they’ll know that you are willing to part with more money to secure it. Keep your emotions in check and don’t give anything away.
Take the time to point out the flaws in the property so that they both know you are taking your search seriously. When we act from an emotional position, we’re more likely to overlook things like an ageing boiler or uneven flooring. By showing that you’re actively looking for the flaws of the property, you can show the seller that you’re not letting your emotions cloud your judgement.
The agent showing you the home doesn’t work for you so they might not have your best interests at heart. They might have multiple people looking at the property and more viewings lined up. So when you float the idea of a lower offer, they might use delay tactics to get more viewings arranged.
By law, the agent has to let the seller know about every offer made on the home, no matter how low it may be. To be sure that your offers get through, always follow up in writing and ask the agent to confirm receipt. If you are worried about managing the negotiating process, you can appoint a buyer’s agent to act on your behalf.
When you’ve settled on a number, it’s time to kick off the negotiations. Let the selling agent know that you would like to put in an offer and then follow this up in writing. They will let the seller know where you would like to start the negotiations.
If the seller isn’t interested in negotiating the price, they will reject your offer. Repeat increases in your offer will simply let the seller know that you were always willing to pay the asking price. If another buyer comes along in the meantime, you could lose the property to a counter offer.
If the seller is interested, then the negotiations can begin. Think about the ways you can sweeten the deal to make the sales process easier. If you’re in no rush to move, this can take the pressure off the seller while they find another home. But some sellers appreciate a speedy transaction and sale so they can move on.
How you bid on the property will depend largely on the bidding process. It will either be an open bidding process or a sealed bidding process.
An open bidding process takes place between the buyer, agent and seller. The buyer instructs the agent to tell the seller how much they are willing to pay. When multiple people are bidding, it is down to the agent to pass these across, but they might only share the highest bid.
With open bidding, you have a chance to sell yourself. The seller might feel better knowing that their home is going to a young family, for example. If another bid is higher than yours, the agent will typically let you know so that you can decide if you want to increase your bid.
In a sealed bidding structure, the buyer writes down their bid and seals it in an envelope. The agent then delivers all bids to the seller without seeing them. The seller will then typically select the highest bid. This method is popular in high demand areas.
With sealed bidding, you have to be careful not to go over your budget. You can still submit a low bid, but if the area is in high demand and lots of other people are bidding at the same time, you’re unlikely to be successful. In a sealed bid, always add a little extra to a round number, so if someone submits the same bid, yours will be a little higher. For example, instead of bidding £195,000 try bidding £195,050.
Buying a property with a low bidding strategy leaves you at risk of something known as “gazumping”. This is when another buyer comes along later in the process and offers a higher price. This can cost you hundreds of pounds if you have already started the process of surveying the property.
Once a seller has accepted your bid, ask them to take it off the market. The majority will do this anyway, but if they are reluctant to do so, ask why they are still marketing the property. There is a chance they will allow the sale to go through, but only if a better deal doesn’t come along in the meantime. There isn’t much you can do about this, other than be prepared to outbid anyone who comes along at a later date.
In some volatile housing markets such as London, buyers might ask you to hand over something known as a holding deposit. This is a sum of money that shows the seller you are serious about your bid. Some will be refundable if the seller pulls out of the sale, but others are not.
Agents will typically discourage buyers from asking for a holding deposit as it can delay the process. If the seller is insistent, make sure it is refundable if the seller pulls out and that it is paid into an escrow account rather than directly to the seller. This will prevent you from losing money unnecessarily.