Many investors and homebuyers find negotiating their ideal property price to be quite daunting, and considering that the market is the busiest it has been in years, it’s important that buyers get this right to avoid paying over the odds or losing out on a property.
Negotiating property prices is always a tricky thing to approach for any buyer, whether you’re an experienced investor or you’re buying your first home. There are so many things to consider – when is it the right time to start negotiating? How low is too low of an offer? Many buyers are even too afraid to attempt to negotiate a price in fear of insulting the vendor or being outbid, and ultimately, losing out on the property.
So, if you’re feeling a bit hesitant about haggling down the price of your ideal property, don’t worry! yieldit’s very own professor has some insight into perfecting the art of negotiation:
1. Show the seller that you’re serious
Nothing says ‘I mean business’ more to a vendor than when a buyer comes forward with an offer and they’re prepared to progress with the sale. Before you make an offer on a property, make sure you have an idea of timescales and most importantly, make sure you have the funds in place to progress. If you’re a cash buyer, you need to have a proof of funds to hand, and if you’re buying with a mortgage, you will need to have the agreement in principle from your lender. If you have all these things in place, the chance of a vendor seriously considering your offer will increase dramatically.
2. Do your research
As the saying goes, ‘knowledge is power’ and this is particularly the case when it comes to buying and investing in property. Before you consider what you’re going to offer and what your highest bid will be, get as much information as possible. First of all, find out about the property itself and the area that it’s in – a quick search on Rightmove or Zoopla will tell you how much similar properties in the area are going for, which will give you a feel of what you should be expecting to pay. It’s also wise to utilise the Estate Agent for information – ask about the vendor’s motivation to sell, how quickly they want to progress and vague reasons why offers were previously rejected. If the property is tenanted, ask what kind of tenants they are and how long they are likely to stay in the property for.
3. Now, what do you offer?
The big question – what offer do you start with? If your offer is too high then you could be paying over the odds and if you go in too low, then you risk insulting the vendor and have them walk away from the deal. As a general rule of thumb, it’s best to start with an offer that is around 10-15% lower than the asking price, anything lower than that may seem a bit cheeky and make you seem less credible to the seller. On the other end of the scale, stand firm with what your budget is – the sooner you tell the seller what your limit is, the sooner they will come down to your level.
4. Finally, don’t get carried away by the haggling
Ultimately, purchasing a property is about yourself and your investment, so you need to have the best interest of yourself and your portfolio at heart. There will always be a select number of vendors who, no matter what you offer, will always want more. At the end of the day, negotiating is a psychological game and both parties want to feel like they have come out on top. Be clear about what your limit is and be prepared to walk away if you’ve been outbid over your budget or the vendor is persistent in asking above what you’re willing to pay. Otherwise, you might find yourself out of pocket.
So, there we have it, the professor’s top negotiating tips! If you have any further questions about buying an investment property, get in touch with one of our consultants today!
