Discover some of the best tactics to help you get a great deal on your dream home
Buying a home at a favourable price starts before you even find the property that you aim to purchase. Once you have found an area that you like, with homes within your budget, contact the local estate agents. Do not reveal to them the absolute limits of what you are willing to pay, as they are likely to try to get you interested in properties that are for sale at a higher amount in order to boost their commission. By not giving away your maximum budget, you may be in a better position to negotiate on a home that really is in your price range.
What not to do?
Let us imagine that you have found the perfect property for you and that you really want to buy it. Whatever you do, keep your cards close to your chest and do not let the owner or the estate agent realise just how keen you are. This is because if you make it obvious just how badly you want it, they will know that you are likely to be prepared to pay more for it. Instead, be polite, but do not appear overly enthusiastic.
What to ask when you view a property?
Without sounding excited, ask relevant questions about the home and the area, which could lead to answers that may help you negotiate a better price, such as:
“Why are the owners selling this home?” If you are lucky, the estate agent might reveal that the owner is desperate for a sale, for example, because they have to urgently relocate for work. If this is the case, they may be open to a relatively low offer. On the other hand, if they let slip that the owner dislikes the home or neighbourhood, perhaps it is best to keep looking.
“What is included in the sale of this property?” Determine if the fixtures and fittings are included. Items such as curtains may not be to your taste, but they can be expensive and may be fine whilst you settle in. Are there any contents included in the sale? Again, even if they are not ideal, they could be useful to get you started and you could always sell them at a later date.
“How long have the current owners lived here?” It is usually a good sign if they have been there for years. But, if they have been there for just a year or two, it may be that there issues with the home, neighbours or the local area.
“How long as it been up for sale?” If the country is not in the middle of a recession or the housing market is not generally subdued, if the home has been on the market for over three months there may be problem with it that you have not spotted. Or, it could be just over-priced, which could be your opportunity to make a more realistic offer.
“When do the sellers have to move out?” It may be that they do not have to relocate by a certain date, but if they do, they are likely to be highly motivated sellers and may therefore be open to a lower price.
“Has it had frequent new owners?” If it has rapidly been bought and sold a number of times, there may well be a serious issue and that could mean a big bargain, or walking away from any deal.
“Is there anything in particular about this property that you would want to know about it if you were considering buying it?” For example, is that nice, winding country road going to become a motorway any time soon? Or, are excellent schools about to merge with not-so-good ones? Then there is perhaps the most important question of all: Are the neighbours a noisy nightmare? It may be a good idea to knock on doors and ask the neighbours and shopkeepers about how thing are in the area. If there are issues that most people would not put up with, but would not represent a problem to you, this could be a valuable bargaining point.
“Have you had any offers and if so, which was the best?” The estate agents are not forced to reveal this information, but it is very useful to know as it may give you an indication of what price you might have to go up to for your offer to be accepted.
“What is the lowest amount the seller will accept?” It may be that the estate agent does not know how low a seller is prepared to go, but they may be prepared to give you a rough idea. After all, they usually only get paid if they sell the property, so it is in their best interests to stimulate reasonable, viable offers.
Along with the above questions that are designed to help you to probe for opportunities to negotiate the price down, it is worth investigating the local crime rate, how the local schools are performing and whether there are any plans to improve or reduce the transport links, as all these factors will impact on the desirability of the area the home is situated in.
Things to look out for when viewing a property
Take your time. This could be one of your biggest and most important investments you ever make. If you forget to check something that is important to you, do not be embarrassed about arranging to view the property again. Here are a few things to make a point of checking:
- Is the building structurally sound?
Look out for deep or large cracks, especially around windows and where an extension has been added. If there are any, if you still like the home, ask a surveyor to make a point of investigating them.
- Look for signs of damp
Flaky plaster, a smell of damp walls and ceilings with watermarks are all signs of a property that has a ‘damp problem’. Be especially wary of any rooms that have been freshly decorated, as the owner may have been making a hasty attempt at covering up the problem.
- See if the rooms are big enough
It is not unknown for developers to stage a home with smaller than standard furniture to give the illusion that rooms are bigger than they actually are. Will your existing furniture fit, or will it mean buying new items?
- Is there enough storage space for your needs?
Check there is enough room for your clothes, towels, the ironing board, and even the vacuum cleaner. Space can be particularly scarce in new builds.
- Is the roof in good shape?
Fixing or replacing a roof can be expensive, so take time to take a careful look. Flat roofs in particular can be prone to leaks.
- Are the windows and window frames in good condition?
The state of the windows can be a good indicator of the condition of the rest of the home. If they are in a state of disrepair, be especially cautious when checking the rest of the property.
- Is the plumbing fine?
Try the taps and see if the water pressure is good. Do the radiators work properly? Find out how old the boiler is and whether it has been regularly serviced.
- Check the attic
Is it easy to access it and can it be used for storage? Could it be converted into valuable extra rooms at a later date? Is there adequate insulation?
- Be sure that you like the area
Are you near businesses that are likely to be noisy, such as pubs and takeaway outlets? Can you walk to the shops to get the essentials?
Is the area well-served by public transport? Are there busy roads, airports or train tracks nearby? Are you near good schools, and if so will the schools create a parking nuisance at school run time?
If the property is so far ticking your boxes, see what the area is like at different times of the day and on different days. It might be quiet during the week but noisy at weekends and vice-versa.
Does the property and area still look good to you and worth purchasing? Before parting with any money or taking out a mortgage make sure that you have a survey carried out.
Making an offer
- Check the prices that similar homes in the area have achieved. If the asking price is about right, offering somewhere between 5% and 10% below the asking price will usually be reasonable. But, note that most sellers will be aware of this tactic and may have already added 5% or 10% to their price.
- Offer to pay the asking price if you think this a brilliant deal, or if there are lots of other buyers likely to make an offer.
- If you believe the seller is keen to sell, do not appear too keen, but be realistic about the offer you make. The seller might be unable to accept your offer if it is so low it would make their plans impossible to carry out.
- Although it may be tempting to negotiate directly with the seller, you may be better off dealing with the estate agent as they will be dispassionate about the property and may be best-placed to ‘sell’ your offer to the owners.
Making an offer that is lower that the asking price
It is more likely for a seller to accept an offer that is below the asking price if you are the only one who is interested. However, there may be other circumstances when a low offer might work for you, such as:
- You can suggest a completion date that is convenient for the seller. If the seller needs to urgently relocate or if they are in a property chain, they may be highly motivated to sell, even if that means accepting a lower price.
- You can demonstrate that you can raise the funds quickly. In fact, some buyers find it is best to sell their existing home before attempting to buy the new property, or take out a bridging loan as it makes them a more attractive buyer. However, please note that you will be charged interest each month until the loan is paid back, which will be added to repayment total.
- You are not in a chain. This could be because you are a first time buyer, you have already sold your home, or you are willing to take out a bridging loan.
- The seller is using more than one estate agent. Using multiple estate agents can be a sign that the seller is keen to sell. The estate agent you approach may be more likely to want to persuade the seller to accept a lower price as they will want to be the one who receives the commission.
What about sealed bids?
Sometimes, the seller will ask for sealed bids as they believe this will encourage you to make your best offer for fear of missing out to another, rival bidder. Just as it sounds, this works by having all potential buyers put their offer in writing and then seal it in an envelope. The estate agent then reveals the winning/highest bid.
Do not be tempted to offer more than you think the property is truly worth and be sure to stick to your budget. Remember, if you need a mortgage to buy the property, the lender will still need to approve your loan and, even if you can afford the loan, they are unlikely to extend a mortgage if they do not think the place is worth the money.
Finally, add a few odd pounds to you offer just in case another bidder offers almost the same amount. For example, if you were going to make a bid of £250,000, you could make it £250,051 instead, as that £51 might be just enough to make your offer the highest.
Putting in your offer
Simply tell the estate agent that you would like to make an offer via phone and confirm it in an email or letter. No matter if they think your offer is too low, they have to pass it on to the seller.
The chances are that the seller will not accept your offer, and will come back with a counter offer. You do not need to accept this, in fact it is best to haggle a little (within reason).
Once the seller has accepted your offer, ask them to take the property off the market to prevent other potential buyers making a better offer (known as gazumping). If they refuse to take it off the market, be wary of investing in a survey, spending money on solicitors and arranging a mortgage.
We wish you luck with your property search and hope that you secure a great deal. Now you will need to secure a competitive mortgage, so why not see how Loan.co.uk can help you find the best deal for you?