Negotiating a price reduction
By Jo Eccles
Q. I want to buy and I’ve heard that a lot of sellers are accepting price reductions because of the state of the market at the moment. What’s the best way to approach this?
A: Uncertainty in the property market often brings opportunity and what we’re currently facing is no different. At the moment, we are securing more properties for clients where sellers are open to accepting lower offers. This is because some of our buying clients have seen Brexit uncertainty as an opportunity to secure properties at prices they wouldn’t otherwise be able to.
In an unclear market, those who don’t need to sell will typically withdraw their property and either hang on to it or rent it out for the short-term. Over the past month, we’ve seen a lot of these types of sellers hold back or withdraw their properties. However, the sellers whose properties are still for sale, tend to either genuinely need to sell for financial or lifestyle reasons or have decided that now is the right time for them to move, regardless of what else is happening.
Of those vendors who are simply moving on, now can be a great time to do so if they’re upsizing. For example, if they accept a 10% reduction on their existing cheaper home and they’re able to agree a 10% reduction on the more expensive property they’re buying, they are better off financially. The saving they’re making on their onward purchase will be much more than the hit they’ll take on the property they’re selling.
As a buyer, if you have found the right property, the way you handle your negotiations will depend on who the seller is and their situation. A developer, for example, tends to be much more commercial and less likely to take offence to a low offer so you can often be fairly hard-nosed. If your vendor is an individual, you should find out what their motivation is. Are they looking to upsize and tie in the sale of their property into a chain? If so, they will most likely value flexibility on time scales and, if you can offer to be flexible and fit in with their timings, they may well sell to you at a lower price than they would to an inflexible higher bidder. We have just done exactly this with a client of ours. Alternatively, a seller may need a quick sale so if you are chain free and can exchange contracts and complete very quickly, you may secure the property for a bigger discount.
Of course, when you’re negotiating a property purchase, you do want to make sure that the discount you’re receiving is genuine, rather than you simply agreeing 10% off an inflated purchase price. Pricing information therefore becomes more important than ever and I’ve found that as a buying agent demand for our services increases in times of uncertainty.
If you have a question you’d like Jo to answer please email email@example.com or tweet her @joeccles.