How To Negotiate House Prices
Read our guide to find out the bargaining skills you’ll need to successfully negotiate a house price.
Asking prices have reached another record high following five consecutive rises this year.
The average home in the UK now comes with a price tag of £368,614, according to Rightmove. That’s why it’s never been more important to know how to negotiate house price discounts.
Read our guide to find out the bargaining skills you’ll need to successfully negotiate a house price lower.
Know your market
A buyers’ market happens when homes for sale outweigh the number of people interested in buying them. It happens in times of economic uncertainty and was seen in the run up to the Brexit vote and during the early phase of the pandemic. Households put off their decision to move until the dust settles. Homes up for sale linger for longer offering buyers an opportunity to low ball the vendor.
In a sellers’ market, multiple buyers are bidding for one home. Offers are generally made above the asking price to win a bidding war. It’s been a sellers’ market since the stamp duty holiday kick started the market after lockdown restrictions were lifted in July 2020.
When buyers and sellers are more evenly balanced, it’s typical to try and negotiate around 10 pc off the asking price but you could bargain harder. Your success will boil down to your powers of negotiation.
How to negotiate house price discounts
Do your research
You can wing it and go in with a cheeky, unsubstantiated offer. But unless the seller is desperate you risk souring negotiations or looking like you’re not serious. Instead, find out what similar houses have recently sold for so you can make a realistic offer. Ask the agent how long it’s been listed. The longer the house is up for sale, the more likely the seller will be to accept a lower offer.
Try using the government’s land register search, Rightmove’s sold prices or Prime Location’s house price tool to find out if the house is fairly priced.
Set your budget
Find out how much you can afford to borrow before you make an offer. The mortgage, plus your deposit, is the maximum purchase price you can afford to pay. Don’t tell the estate agent your maximum budget. They work for the seller, not you.
Exploit your strengths
Now you’ve arrived at an offer, you need to sell it to the vendor by selling yourself.
Being a first-time buyer is a big plus because you are chain-free. This means the seller can move quickly putting them in a strong bargaining position with their vendor.
Show the seller proof that you’ve instructed a solicitor and you have a mortgage agreed in principle to show you’re serious and can act swiftly.
Knocking down new-build prices
All new-build homes have a premium of between 5% and 10% attached to the price tag because of their ‘newness’. The moment you move in, the resale value drops by this amount. If the home is also overpriced you may struggle to sell it without losing money.
Research how many new-build developments are underway in your area. If there’s a glut of apartments under construction the developers will be in competition with each other for your cash.
Developers want quick sales so your chain-free status and mortgage-ready position is appealing.
If they won’t budge on the price, ask them to pay your stamp duty bill or reduce the cost of standard appliances instead.
How to negotiate a house price down after a survey
Defects picked up on a property survey give you leverage to knock down the price. You’ll need to pay for a homebuyer’s survey which costs around £400 but it could save you money in the long run. The valuation instructed by the mortgage lender is a superficial inspection and is for their eyes only.
If the problems aren’t too serious and you want to go ahead, get quotes for the work and use these to negotiate the price down.
How to put an offer in on a house
You must put your offer in writing (email is fine) to the estate agent who will pass it on to the vendor. Emphasise your strengths to sell your offer. List any caveats you have, such as the house must be taken off the market and the fixtures and fittings it must include.
Gazumping and gazundering
If you're wondering how to negotiate a house price before you exchange, unless it’s for a legitimate reason, this is called gazundering. You are banking on the seller accepting a lower offer because it’s so late in the process they won’t have time to find a new buyer.
It’s not illegal because you haven’t exchanged contracts but it’s not considered fair play. However, if house prices have dropped since you made your offer, or your own seller has gazundered you, then it may be necessary.
Gazumping happens when a seller accepts a higher offer from another buyer after accepting yours.