13 March 2015, The Times
A recent survey of homes sold in Greater London showed that 20 per cent achieve the asking price, with 29 per cent selling for more and 51 per cent for less. One lucky buyer negotiated paying just 43 per cent of the asking price while a seller gained 48 per cent over the asking price, according to the analysis of almost 33,000 sales by the estate agency comparison website getagent.co.uk. Here, we outline the tactics you can employ to secure the best deal for you. Poker faces at the ready:
If you are buying
• Know your market: “The most important thing is to research prices and look at plenty of properties to get a feel for the market,” says Stuart Patterson, the director of the Knightsbridge boutique estate agency Patterson Bowe.
Trevor Abrahmsohn, the director of Glentree Estates, agrees: “Take soundings from various local agents who understand the values in the road that you are looking at and preferably make your offer with the sellers themselves at a meeting that you should ask your agents to set up. There is nothing better than direct dialogue between you and them.”
• Know your price: “Bear in mind that in a buyers’ market there are usually too many properties to sell and too few buyers; that gives you enormous purchasing power. Always offer at least 20 per cent below the asking price. Often an opportunistic agent will tell you that there are other bids in order to accelerate your interest. Ignore this completely, it is probably hogwash,” Abrahmsohn says.
“However in a sellers’ market the vendor has all the power and very often you will have to bid up to the asking price. Then it is absolutely crucial that you agree a lock-out period during which you carry out due diligence of the survey and solicitors. Gazumping is rife in this type of market,” he says.
“You have to be a good poker player during these meetings and try to curb your enthusiasm. The last thing that you want is to give the game away since this will cost you dear.”
Patterson says: “Don’t insult the seller with a derisory offer. Be reasonable and back up your offer — whether you are a cash buyer, your finance is in place, you are chain-free, etc Make yourself attractive to the seller, you need to appear genuine, prepared to commit. Come across as confident.”
Rayhan Rafiq Omar, cofounder of getagent.co.uk, says: “Remember estate agents represent sellers and are there to get the best price for the seller. If an agent comes back saying the owner wants a higher offer, stay firm. You’ll want to eventually meet the seller halfway, but don’t let the agent know you can be pushed around in the negotiation. The people who act desperate are the ones that get gazumped or pushed into a higher price just before exchange.”
• Know your seller: Camilla Dell, a managing partner at buying agency Black Brick Property Solutions, says: “Find out about the motivation to sell. Is it a developer who just wants to get it sold and move on, is it a divorcing couple or a probate sale? You need to determine whether the seller is motivated because there are people who will put their property on sale to test out the market and are not sure they really want to sell. You don’t want to end up negotiating with someone who isn’t a committed seller.”
• Know your competitors Dell adds: “If you are the only game in town and the asking price is reasonable, I probably wouldn’t go in at the asking price but 5-10 per cent below, depending on the market. If I suspected there were more people interested, I might go in more aggressively, especially if it is a competitive market with rising prices. Then I might go in at the asking price, or even above. Then it is less about saving money and more about securing the property and getting it off the market.”
If you are selling
• Know your buyers: Patterson says: “Play it cool. If they come to you with a serious offer, you can assume they have done their due diligence. Find out everything about the buyer. Build up a rapport, even before negotiating. Keep everything open and chatty.
“You will see the most interest in the first fortnight to three weeks, when the property is fresh to the market. If you don’t take an offer then, you might be waiting three to six months. So many deals fall through because sellers just get greedy,” he says.
• Know your worth: “You’ve done the hard work of marketing your property, having people traipse through on viewings and now you have an offer. The first thing to do is say ‘no’. It doesn’t matter how good the first offer is, the first offer is never the best one,” Omar says.
“If this is the only offer you have received, ask for an increased offer. And wait. You have the property they want to call home. Even if they refuse to increase their offer, be patient. They will come back with a better offer. When the buyer comes back with a higher offer that you are happy with, again don’t be hasty to accept. Behave as if you aren’t desperate,” he adds.
“If the buyer is in a rush, use this to get the very best offer for your home. This is where a good agent really steps up. They will have a handle on how many people are in the market for your property, and how long you should wait to get the best price. Whatever you think about estate agents, they see and experience more of your local property market than you do.”
Omar adds: “If you received multiple offers: you have achieved the holy grail and will likely achieve above asking price. Many agents use a process called ‘sealed bids’ to make buyers compete. It is a horrible process and you certainly don’t get the best result. While sealed bids are easy for an agent to administer, their true skill is with someone in your home, putting on the pressure to seal the best deal. There’s no reason why they couldn’t run an informal auction in your home.
“A good agent will negotiate the best offer with each of the buyers and present them to you, along with how confident they are each buyer will complete.”