Negotiating Property Prices – Top Tips
You've finally found the home that you have been searching for. This could you be dream home to live in or a cracking property investment deal. However, before you place your offer and sign on the dotted line, have you studied the numbers in enough detail so that you are confident your offer is exactly where it needs to be?
It is important to understand that vendors far more often than not, will list their property for higher than they expect it so sell for. This is simply because you can always drop the price and come down, but you can’t increase it.
It is essential to understand a number of factors that can effect the offer you make before you place it with the vendors. Understanding these points will ensure that you make the most sensible offer that works for you.
1. Age of the property
“You should never judge a book by its cover.” This is a fantastic mantra to live by, however, in the property world, we don’t think it Is a mantra you should pay much attention to. What a property looks like is very important, before you’ve even stepped inside you can analyse the property from the exterior and just by knowing the age of the property too, you can make some fair assessments.
If the property is old and hasn’t been updated or maintained well, this should be reflected in the price. If it isn’t, these should be taken into consideration before you offer.
Old doesn’t always mean unloved or in need of a refurbishment, this is totally dependent on how the house has been cared for and the type of Landlord looking after it. However, old can often mean that there are issues in the property which you want to understand fully before taking them on. If the property needs work because rooms haven’t been updated in a long time, this is something you should consider before offering and ensure the cost of those works are reflected in your offer.
2. Refurbishment
A property that needs a large-scale refurbishments and repairs is one to pay attention to before offering. Refurbishment types and costs will vary massively depending on the size of the house and the works that need doing.
We would always suggest you take your builder to view the property with you before offering if you can. This way they can advise on the costs of the works to bring the property up to scratch. Your builder might also spot issues that you can’t see. This could be wall cracks or other structural defects, or simply that the house needs a full rewire or is without running water.
Each issue has a cost associated. These are not costs and issues that you want to learn about once you have purchased the house. If you know before hand, you can asses the deal and place your offer accordingly.
It helps to place your offer accompanied with the list of works required to get the house up to scratch. This way, the estate agent or vendor can see you are serious, you have spent time on reviewing the deal and you know what you are talking about. This puts you in good stead when offering and allows them to understand you aren’t asking for a discount for no reason; you have reasons and you have presented them clearly to the vendor.
3. The Location and Accessibility
The location of the property is one of the key considerations of any property purchase. Listed below are some characteristics of an area that should be considered when it comes to property value:
· Amenities – proximity to shops, restaurants, hospitals, schools and parks will add value to a property
· Safety – people often want to live in a safe environment and neighbourhood and where crime is low
· Transportation – an easy commute to the city, town or village is important whether by car or public transport
· Infrastructure – a property that is close to well-developed infrastructure like roads, motorways, airports, and shopping centres make an area more advantageous and does impact the value of a property
These factors will certainly have a big impact on a home price. Homebuyers usually prefer a property in a well-maintained area, accessible and close to where they work. You can often reference these points when placing your offer for example, if the house is in an obscure area in the middle of nowhere, your offer should reflect this. Equally, you would need to know exactly who your buyer is for a property in a location like this because it will not be a good investment if you can’t resell or rent because nobody wants to live there.
4. Supply and demand
If demand exceeds supply within the property market and in the area you are buying in, this will inevitably drive house prices up. More people viewing and wanting to buy one property will mean the seller is in the stronger position in the negotiation process and will have their pick of several serious buyers to choose from.
It is currently March 2021 and the property market is extremely buoyant, with properties in Liverpool selling for well over asking price on the open market. This is something you must remember and take into consideration before placing your offer. While you might consider your offer to be fair based on works required, this does not mean the vendor will consider it. If the market is strong and it is a seller’s market, they may have many other higher offers to chose from. While this should not influence your offer because yours will be based on numbers and careful due diligence, it is something that is just worth bearing in mind.
5. Marketing
A property with an effective marketing strategy is far more likely to attract more viewings, receive more offers and sell for closer to what the vendor hopes to achieve. You might have found a property that isn’t marketed well at all which will naturally increase your chances of having your offer accepted, simply because less people have seen the advert or viewed the house.
Here are some simple tips to help you negotiate:
· Do your research beforehand
· Consider costs of any repairs
· Calculate the cost of the refurbishment required
· Present the vendor with a discounted price to consider or you could suggest to them to fix the issues before the sale proceed
· Understand the area
· Understand local comparables to be sure your offer is fair
The ability to negotiate is crucial to getting the right price, but the right price is just one of the many things that are negotiable when buying a house. As you can see, there are a lot of variables that you need to be mindful of. Therefore, being aware of these can help you decide whether prices being quoted for properties are appropriate and whether to negotiate or not.