After too many property viewings, you’ve finally found the place that you’re excited to live in.
But finding your ideal property is only half of the work. The next step is to negotiate a great price for your new home. How can you make sure you’re getting a good deal when you make an offer? The asking price may be within your budget, but you still want to make sure you’re getting the best price possible. How do you go about bidding for it?
It can be stressful deciding whether to clinch your ideal home immediately with a full price offer – or to put in a lower offer and potentially save thousands of pounds but risk losing the property to a more enthusiastic buyer.
To purchase your desired property at the best price – even if you’re not a natural negotiator – consider the following tactics:
Acquire a mortgage in principle
When you’ve shown interest in a property, estate agents and sellers will take your offer more seriously if you have a mortgage in principle, as this proves you can afford the property.
What is a mortgage in principle? This is when you’ve been accepted for a mortgage before finding a property. Once your application is accepted by a lender, they will inform you how much they propose to lend you. This boosts your negotiating position, as sellers are more likely to accept offers from buyers with a mortgage in principle.
Remember to compare mortgage deals before you choose to apply for one, so that you’re confident you’re receiving the best rate for your personal circumstances:
- Compare residential mortgages if you are buying a home to live in yourself
- Compare buy to let mortgages if you are buying an investment property
- A mortgage broker can help you choose which is best-suited for you and speed up the application process
Research, research, research
To enhance your negotiating position, it is important to learn how long a property has been on the market and if there have been many other viewings and offers. You can find out when a property was first listed on an estate agents website, or on Zoopla or Rightmove. If you gauge that interest has been low, you can take greater comfort in offering a lower price when you start the negotiations – if a property has sat on the market for several months, the seller may be more willing to lower their asking price.
Another way to feel more at ease with the price of a property is to get property valuation from a chartered surveyor or valuer. Although this service comes with a fee (varying from £300 to £600), if a surveyor evaluates the property as less than its offer price, you will have greater bargaining power.
Research other properties in the area
Knowing the asking price of similar properties in the same area is vital for your negotiations. You can learn about current average property prices through your estate agent’s website, but also easily through property websites such as Zoopla and Rightmove.
If properties for sale in the same area with similar features are asking for a higher price, the owners may be in a hurry to get the property off their hands. On the other hand, if similar properties in the area are asking for less than your chosen property, you may have a strong case for a lower offer. (And if nicer or bigger properties in the same area are being offered at the same price, consider whether they will make better investments than your chosen property.)
If you think the property is overpriced mention it to the estate agent – they may feed this back to the owners, who may decide to drop the price.
Thoroughly assess the property
Often people view a property and immediately know it is just right for them. However, try not to let the excitement of finding your perfect property cloud your judgement and weaken your negotiation power.
By conducting an in-depth inspection of a property – inside and out, you may find many opportunities to reduce the offer price. It’s important find out whether you are likely to incur any major expenses in the future due to the current state of the property. When was the boiler last serviced? When was the roof last repaired? Do parts of the property need to be decorated?
If costly work is needed, you have a solid reason to put in a lower bid. One way of doing this is to estimate the cost of any work needed and subtract this value from your offer price.
Endorse yourself
In the eyes of sellers and estate agents, some buyers are more attractive than others. First time buyers, those paying in cash and buyers who have already sold their home are more appealing than another buyer who may have made a higher offer, but is stuck waiting in a property chain.
Show your estate agent you are a desirable buyer and you will find yourself in a better position to haggle over the asking price.
Look out for energy efficiency
All landlords and sellers must issue an Energy Performance Certificate (EPC) to inform buyers and tenants of the energy efficiency levels of a property. This will enable your determine and compare the relative financial running costs of renting your property.
EPCs can be useful bargaining chips. If a property has an old boiler, single glazed windows, electric heaters in the bedrooms, and is only half as energy efficient as it could be, you could ask for the costs of improving energy efficiency to be factored into the sale price.
Indicate interest in another property
Estate agents often exaggerate the market’s interest in a property in attempt to create a sense of urgency in the buyer, and put in a higher offer more quickly. Indicating that you are deciding between a couple of other potential properties may make the seller/estate agent more amenable to reducing their asking price.
Start with a low offer
You may need to put in a lower offer in order to deduce a seller’s bottom line. Put in an offer below what you are actually willing to pay. You can increase your offer at a later date, which will seem more attractive to the seller. Explain your offer: state exactly what work the house needs and how much it will cost
Consider these extra costs
Before you put in your offer, find out how much buying your house will cost you. Costs can surmount tens of thousands when taking into account legal and valuation fees, surveys and stamp duty. You could also ask the seller to include curtains, appliances and furniture to be included in the offer, to bring down your set up costs after the purchase.
For information about buying a property through bridging loans in London, check out more of our blog posts and guides.
