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’re buying your first home or your first investment property, then it’s easy to take the asking price as a given, which is something 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 are often 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. This is why negotiating is so important. And, in case you were wondering why houses are so expensive, there’s a rather simple (and quite worrying) explanation.

The reason why houses in the UK are rising in price each year is because of the UK Housing Crisis. The crisis is currently crippling the UK housing market because we are not building enough houses to meet our ever-growing population.

To give you some context, it is estimated that we need 300,000-340,000 new homes per year 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’s likely that it is increasing in value each year. This is why people invest in property, and it’s 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 similar properties in this radius to work out the value of your home.

Then, they’ll add on things that increase the value of your property, like if you have a new kitchen or bathroom, if you’ve 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’s in their best interest to impress you. Agents also know that if someone is selling their house, they’re probably 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’re more likely to get the sale.

This is why many houses on the market are massively overvalued, and it’s why you should never be afraid to negotiate. There is also the fact that people apply sentimental value to their home, so they believe it is worth more. It is important that when you buy a property you do not pay above market value. If you do, then you’re 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 have access to the same information as estate agents. Sites like Rightmove allow you to check which properties have sold in a specific area. So, if you’re looking to buy a property, but you can see that four houses in the same area sold for £30,000 less in the past two years, you know there is room for negotiating.

Don’t be afraid to show comparable sold prices to estate agents. If you make an offer below the asking price, then you need to give a clear reason why you are doing so. If you ask for £10,000 off the asking price just because you can, then it’s likely you’ll annoy both the agent and the vendor, ruining your chance for further negotiations.

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

How to negotiate house prices Step #2- Refurb work

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

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

If the carpets are rugged and you see damp in the property, then you need to get a rough cost for this work and use it in your negotiations. Find out your expected investment, and request for it to be knocked off the purchase price. In some cases, the vendor might not even realise the extent of work that needs doing, 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 word and some guess figures.

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

This is a powerful negotiating trick, but it’s not for everyone, and it’s not the only way to get the best price. We recommend using this if you’re dealing with a difficult estate agent, or you suspect that the agent is not acting with the vendor’s best interests at heart.

Ultimately, 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.
By getting in front of the owner, you speak directly with the decision-maker. Your message isn’t getting lost in translation, and you can begin to build a genuine relationship. By building a rapport with the homeowner, you move on to the next step.

How to speak directly to homeowners

Before we continue, we want to say that you should never cut an agent out of a deal. It’s unethical, and it’s a surefire way of ruining your relationship with that agent and ensuring that 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 we would never recommend anyone act outside of these values.

So, with that aside, here is our most powerful 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 isn’t always possible, but most vendors won’t object to conducting the odd viewing themselves if they think it will help them secure a sale, especially if they are motivated.

Once you’re in front of the homeowner, it’s 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 either need to 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

In terms of negotiation, there are two types of people who 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 afield, needing to be in a school catchment area or a variety of other reasons.

Unmotivated sellers are what they say on the tin: They’re unmotivated, and therefore are in no rush to move. Maybe they are just testing the market, or maybe they’ll only move provided they achieve a certain sales price.

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

For example, let’s say you talk directly with the homeowner on a viewing and you discover that they need to sell due to a job opportunity. They are stuck in a chain and cannot move until they sell their house. They are understandably desperate, and if they can’t sell their home in the next month, they’re going to lose the job opportunity and take their home off the market. Let’s say 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 make the promise that you can complete the purchase within the next month. Sure, they get less for their home, but you’re giving them what they need; the ability to move quickly and secure their new role.

When you’re 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 that 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 properties that are Sold Subject to Contract (SSC). If these sales fall through, you’ll likely 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 don’t want to use estate agents. This can be because they don’t want to pay their fee, or perhaps they want a discreet sale. These people will 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’re using these platforms to sell their property, then they’re typically motivated. A lot of people don’t think to search these platforms for properties, so you also have less competition.

If you want to speak directly to a motivated seller, we highly recommend checking these platforms regularly.

Intanest- The ultimate platform for connecting buyers and sellers

At Intanest, we connect buyers and sellers directly, meaning no estate agency fees or unscrupulous businesses promising you the earth and under-delivering. Our platform is also beneficial to estate agents, allowing you to sell your customers’ properties without paying eye-watering prices to use our site.

We believe in honesty and transparency, creating an environment where people can communicate their needs openly and honestly.

The best part is, this is completely free. So, if you want full control over your home’s sale, you’re looking for a new property in your area, or you’re an agent looking for a competitive edge, you can sign up today for zero cost by clicking here.