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Finding the right house can take weeks or months, but as soon as you find ‘the one’, you need to know the exact steps to follow to secure your dream house. One of these steps is knowing how to negotiate on price.
If similar properties in the area aren’t selling quickly, or if they’re selling below the guide price, you know you can offer less.
Check Rightmove and Zoopla for any recent property listings. They’ll give you the last sale price, as well as the most recent prices paid for houses on the same street.
This means if next door sold last year for £25,000 less than your vendor is asking for today, you can use this to help negotiate in your favour.
Knowing what your vendor bought the house for can be useful information. If they bought the house over 15 years ago, it’s likely they’re sitting on huge gains with a much smaller mortgage. As a result, they’re likely to be more flexible over what they’d accept. If your vendor has only recently bought the house, they might need to accept a certain offer to cover their existing borrowings.
Try to find out about your vendor’s situation. Why are they moving and where to? What you want to uncover is how urgently the vendor needs to sell.
For example, if they’re trying to move to a better school catchment area, they’re likely to be keen for a quick sale, compared to an older couple who are downsizing.
It’s also great news for you if they’ve already agreed a sale on their next home - they won’t want to lose out for the sake of negotiating too hard.
Being upfront and asking the vendor or the estate agent what the minimum price they would take can shift the goalposts, hopefully in your favour. You may feel uncomfortable asking them, but if you don’t ask, you’ll never know!
Tell the vendor the position you’re in i.e. if you’re a mortgage approved first time buyer, or if you’re a cash buyer who doesn’t need a mortgage.
Also, don’t be afraid to tell the vendor about the emotional attachment you have to the house (if you do, that is). People are often sentimental about their home, and it doesn’t hurt to tell them how much you love it too - go ahead, tug on those heart strings rather than loosening the purse strings.
Most vendors will expect lower initial offers, but having done your homework, you’ll have a good idea how much you can afford. If you know there are rival bids for your dream home, be prepared to lose out if you’re adamant on offering a lower than asking price bid.
If you get turned down, ask for a counter offer and hopefully this will be under your maximum price. Now pick a figure somewhere in between your initial offer and their counter offer.
Go for something specific i.e £154,650 rather than £155,000. This implies it’s your maximum limit and can sway some vendors.
At this point, you can ask for things like white goods to be included with the sale. This can save you money, and often helps the vendor out too as they have less to move on moving day.
If your vendor isn’t moving their asking price, and you don’t feel the house is worth what they’re asking, change your offer but explain that this is a final offer. If it has gotten to this stage, it’s likely you’re the only person currently bidding.
At this point, you must be prepared to walk away. If the vendor comes back to you in a few days then they’re selling to you, rather than you buying from them. This gives you the go ahead to be confident in any further bids.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.