Four Industry Secrets to Negotiating Property Purchases and Saving Tens of Thousands of Pounds in The Process

We Brits love a bargain. This is especially true when purchasing a property, where a lack of negotiation skills can leave tens of thousands of pounds on the table. If you are buying your first home or investment property, it is easy to take the asking price as a given, which you should never do. Especially since, on average, UK properties sell for 10% less than their listed price.

So, if you want to broker your property purchase with the skill of a professional negotiator (and save yourself up to five figures in the process), this is the guide for you. In this article, we will break down how properties are valued, why they can be overvalued, and the tricks you can use to get a better price on your purchase.

Why houses are expensive – A national epidemic

For many people, their home is the most expensive purchase of their life. Therefore, negotiating is essential. And, in case you were wondering why houses are so expensive, there is a straightforward (and quite worrying) explanation.

Houses in the UK are rising in price yearly because of the UK Housing Crisis. The crisis is weakening the UK housing market because we are not building enough houses to meet our ever-growing population.

To give you some context, we are estimated to need 300,000-340,000 new homes annually to meet the rising demand. But, in 2023, we only managed to build 173,000 homes. That means we are at least 42.33% behind our target.

The good news is that if you own a property already, it is likely to increase in value each year. This is why people invest in property, where the saying ‘you make your money on the purchase’ comes from.

How properties are valued (and why they are overvalued)

Typically, this is how estate agents value properties: First, they look at comparable properties within a ¼-1 mile radius that have sold within the past 2-5 years. They then use the average sold price of comparable properties in this radius to determine your home’s value.

Then, they will add things that increase the value of your property, like if you have a new kitchen or bathroom, if you have converted the loft, added double glazing, or refurbished the property in any way.

This is called a ‘desktop valuation’. However, estate agents only get paid if you list and sell your property with them, so it is in their best interest to impress you. Agents also know that if someone is selling their house, they are speaking to at least one other agent, which means they have competition.

Because of this, some unscrupulous estate agencies will deliberately overvalue the price of a property. They figure that if they tell a homeowner their house is worth £10,000 more than any other agent is quoting, they are more likely to get the sale.

This is why many houses on the market are overvalued, and you should always be bold and negotiate. There is also the fact that people apply sentimental value to their home, so they believe it is worth more. It is essential that when you buy a property, you do not pay above market value. If you do, you are putting yourself at risk of entering negative equity if the market drops.

How to negotiate house prices

Step #1- Know your area

The good news is that you can access the same information as estate agents. Sites like Rightmove allow you to check which properties have sold in a specific area. So, if you are looking to buy a property, but you can see that four houses in the same area have sold for £30,000 less in the past two years, you know there is room for negotiation.

Be bold and show comparable sold prices to estate agents. If you make an offer below the asking price, you need to explain why you are doing so. If you ask for £10,000 off the asking price just because you can, you will annoy both the agent and the vendor, ruining your chance for further negotiations.

Also, pay careful attention to the state of properties sold in the area. If they were all run down and required work or smaller than the property you wish to purchase, then this can explain why your targeted property is priced slightly higher.

How to negotiate house prices Step #2- Refurb work

Most houses require at least a small amount of work after purchase. This can be as simple as a lick of paint and new carpets to complete ‘flips,’ which require new kitchens, doors, and a rewire.

The point is that any money you expect to put into the property after purchase must be knocked off the front end. However, this must be necessary work, like repairing or improving something; it cannot be personal interior design choices.

If the carpets are rugged and you see dampness in the property, you need to get a rough cost for this work and use it in your negotiations. You can find out your expected investment and request it be knocked off the purchase price. In some cases, the vendor might need to realise the extent of work that needs to be done and the cost of it.

The best thing to do is bring a builder on a viewing with you. This way, you have concrete proof in a builder’s quote of the work that needs undertaking rather than your words and some guessing figures.

How to negotiate house prices Step #3- Meet the homeowner

This is a potent negotiating trick, but it is not for everyone, and it is not the only way to get the best price. We recommend using this if you are dealing with a problematic estate agent or suspect the agent is not acting in the vendor’s best interests.

It is the homeowner who decides their sales price. Agents can advise, and they can negotiate on their behalf, but the final decision is always the homeowners.

You speak directly with the decision-maker by getting in front of the owner. Your message is clear in translation, and you can begin to build a genuine relationship. By creating a rapport with the homeowner, you move on to the next step.

How to speak directly to homeowners

Before we continue, you should never cut an agent out of a deal. It is unethical and a surefire way of ruining your relationship with that agent and ensuring you can never buy a property through them again.

Even if you negotiate with a homeowner, the agent should still be paid their fee, providing that the agent is the reason you came across the property in the first place. We stand for ethics and transparency and never recommend anyone act outside these values.

So, with that aside, here is our most potent tip: When you request to view properties, tell the agent that you can only view them in the evenings and on Sundays. These are hours that most agents do not operate in, meaning that the only way you can view their properties is if the homeowner shows you around personally.

This is not always possible, but most vendors will not object to conducting the odd viewing themselves if they think it will help them secure a sale, especially if they are motivated.

Once you are in front of the homeowner, it is all about building a genuine relationship. Listen with empathy to their story and figure out what you can do to help them. If you want to buy at a discount, you must demonstrate that their property is not worth what they think or add value in another area, like offering a faster or guaranteed purchase.

How to negotiate house prices Step #4- Discover what the owner NEEDS

Regarding negotiation, two types of people sell their homes: Motivated sellers and unmotivated ones. A motivated seller is someone who needs to move, and they need to move fast. This could be due to financial difficulties, a job opportunity further away, needing to be in a school catchment area, or various other reasons.

Unmotivated sellers are what they say on the tin: They are unmotivated and, therefore, are in no rush to move. They may test the market or move house only if they achieve a specific sales price.

But here is the secret: If you find a motivated seller and discover what they NEED, you are in the most potent negotiating position possible.

For example, you talk directly with the homeowner on a viewing and discover they need to sell due to a job opportunity. They are stuck in a chain and can only move once they sell their house. They are understandably desperate, and if they cannot sell their home in the next month, they will lose the job opportunity and take their home off the market. They need £230,000 to buy their new home, and their property is on the market for £250,000.

In this situation, you could offer a lower price, like £235,000, but promise you can complete the purchase within the next month. Sure, they get less for their home, but you are giving them what they need: the ability to move quickly and secure their new role.

When you are in front of a homeowner, ask open-ended questions like “Where are you looking to move to?” and “This is a beautiful home. What has made you decide to move?”

Signs that a seller is motivated

If you want to spot a motivated seller, here are a few quick tips that will give you an indication that someone is keen to sell fast:

They have recently reduced their asking price.
They have been on the market for longer than three months. Six months or longer is an even stronger indication.
They have changed the agent that they are selling with.
The property description says the homeowner is looking for investors, cash buyers, or first-time buyers.
The property has come off the market and then gone back on again a few weeks/months later. This usually means that the sale has fallen through.

30% of sales fall through in the UK, so keep track of Sold Subject to Contract (SSC) properties. If these sales fall through, you will find yourself with a disgruntled homeowner who is sick of the open market and wants their property taken off their hands.

How to find properties without using an agent

Some people do not want to use estate agents. This can be because they want to avoid paying their fee or want a discreet sale. These people occasionally use alternate means to market their properties, like Facebook Marketplace and Gumtree.

The good news is that these platforms allow you to speak with homeowners directly, and if they are using these platforms to sell their property, they are typically motivated. Many people do not think to search these platforms for properties, so you also have less competition.

We highly recommend checking these platforms regularly if you want to speak directly to a motivated seller.

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