Most properties in the UK are listed for sale by estate agents who quote an asking price. The time to negotiate on price is when you are bidding for property and it is also common that people, on a first bid offer below the market, the asking price.
‘When making a bid, you need to understand the value of the property – and what would be a sensible price to pay,’ says Dell at Black Brick. ‘That’s hard to do without a buying agent advising you. We collate comparable sales data and carry out due diligence on the seller before making offers. When negotiations fail, it’s usually because people assume properties should sell for a certain percentage below an asking price.
But there’s no rule of thumb, and every deal is different. It’s also worth noting that estate agents will soon get bored dealing with people who just bid far below an asking price.’
‘One of the biggest mistakes buyers can make is they fixate on the price per square foot comparisons,’ says McGivern at Mercury Home search. ‘While it can be a useful way to get a general value, you shouldn’t rely on it to determine the true value of a property – as it’s such a blunt instrument.
House price negotiations can be tricky at the best of times – especially knowing you could lose out on your ideal property. But there are far more important factors that you need to consider when negotiating otherwise you will not achieve the lowest price or best terms possible.’
There is no best way to bid, but buyers should be decisive and prepared to act quickly if they see a property they like.
Before even you start looking for properties, you need to make sure you’re able to move swiftly – otherwise, you risk missing out on opportunities,’ says Stephen Moroukian, Head of Product and Proposition for Real Estate Financing at Barclays Private Bank.
‘That means speaking to your tax advisors, instructing solicitors, and certainly having spoken to your financiers – whether you are a cash buyer, or looking to arrange leverage,’
‘it’s totally down to the discretion of the seller if the buyer is taking too long, or if they want to ‘change horse’ and accept a higher new bid,’ says Guttridge at Savills. ‘And while changing buyers so late in the process – or gazumping – is not the estate agent’s choice, if a seller is presented with an enormously higher offer, it’s their prerogative whether they accept it or not. I call it their house rules.
Practical approaches to making a successful bid.
Bidding on a house can be an exciting prospect process but avoid rashness when it comes to bidding. The best approach is to consider a potential offer and ask the agent whether any other buyers are interested in it or not. Agents have profound knowledge about the local property. Therefore, their advice will land you on realistic ground in terms of the actual worth of the property.
To establish yourself as a serious bidder, ask for a second viewing. This will give an idea to reassess your offer.
While you may feel tempted to offer a bid in round figures, for example, £300,000, an odd number is worth considering, such as £300,500.
You need to keep yourself in touch with the estate agents, as they mostly try to get the best price for their clients. Moreover, they possess significant and worthwhile knowledge that they will share with you.
Here are a few tips to keep in consideration when making bids to buy a property.
- Starting point is where you start negotiating the asking price.
- If the property has been on sale for a long time, don’t be shy about offering a lower price.
- Conduct research in the area to know about the prices in that region you are going to buy. This will give you an idea of the actual price.
- Speak with the estate agent to know if the seller is interested in moving quickly and if he will accept a lower offer.
- If you are a first-time buyer, it is advantageous for you because you are not involved in the chain. This will make you an attractive bidder.
- If your lower price is refused, it is time to haggle.
- Remember that when you start to haggle with the seller, you should move the price in thousands of pounds or by hundreds, not five or tens of thousands.
- Sometimes agents share disinformation with you for the purpose of the commission, such as other bidders offering higher money – ask for evidence.
- If the price goes too high, walk away.
How to bid on a property at auction?
These tips will help those who bid on a house at auction.
Generally, homes at an auction are sold cheaper because the seller is looking for a quicker sale for a variety of reasons.
This means the sale price of the property will be lower, but there will be a guide price to buy the property.
You will have to contact the auction houses, ask for their auction catalogue, and view the property that is at auction.
Here are a few tips that will help you a lot to buy a property at auction.
In the real estate industry, research makes a huge difference. Decide on the area you are interested in buying a property in and then contact property auction houses. They will share with you the details of the houses; tell you about the upcoming auctions and add your name to the mailing list for catalogues.
If there is a property that looks like you liked, then arrange a viewing by contacting the auction house.
Take assistance from a professional
It is also worth taking a professional builder or surveyor to see what might be wrong with the home – and how much will be its rectifying cost.
To get the property’s particulars, you will need a separate legal pack. This process will include legal documents, including searches. You can also ask your conveyancing solicitor to do these before the auction takes place.
It is important to remember that properties at auction are for those who can act quickly because the owner wants to sell the property quickly. So, to get the best possible deal you will have to move fast from the publication of the catalogue to the auction date. This may be just for four weeks.
Set your budget and have a maximum amount to bid for when bidding at an auction for the property. Bid within the range of your budget, don’t be tempted to exceed it.
Guide and Reserve Price
You will know what the auction price is when you attend the auction. Some properties have a reserve price too. The difference between the two is that the reserve price is the minimum price that a seller will accept, while the guide price is the starting offer for bidding.
Clarity of a bid
You need to be very clear when making a bid so that the auctioneer can easily identify you.
You will need to sign a contract and pay a deposit when the auctioneer’s hammer falls. Organizing property insurance is also very important for you and be mindful that if you pulled out of the sale, it could be a costly exercise for you.
As we mentioned earlier, the auctioneer is often in a hurry to quickly finalize the deal and receive cash. You will need to pay the balance between 14 days up to 6 weeks. Before finalizing a deal, check the terms and conditions of the auction of the sale of terms.
Bidding on a council house
For those who are interested to bid on a council house, you need to start the process with the local council.
Apply for council housing, each council has its own rules.
There is a council housing waiting list, but there is no surety that you will get a property.
However, the council house will give an idea that how long you will have to wait.
Council House Waiting Lists
When you bid on council properties, make sure to bid on the properties that you have enough points.
That’s because the council uses a banding or points system which is based on housing needs.
The varies from person to person depending on your current circumstances if you are, for example:
- Living in a sparse condition
- Currently homeless
- Your current home is creating medical issues
Once you move up the council house waiting list, the council house will keep you updated about any available properties.
Therefore, it is important to give special preference to bidding as like any other art or skill, it is also an area that requires special training and knowledge to make sure the best deal out of appropriate bidding.