Seller discounts

Moving to a new home can be driven by a multitude of factors, such as personal, financial or health-related reasons. However, at times, a property may fail to sell on the open market despite your best efforts. Some home sellers in today’s market are finding that they are having to offer a discount from the asking price in order to complete a sale.

This can ultimately mean giving up some of the gains made in recent years, when property prices have risen steadily. However, it is important for buyers and sellers alike to understand why this may be necessary in order to achieve a successful transaction. The current state of property prices can make it difficult for individuals to get the best value possible out of their homes, as there is often little room for negotiation with potential buyers if you want your home sold quickly.

FACING CHALLENGES

Additionally, competition among some other sellers in the same area can mean that discounts need to be offered by those trying to stand out in the marketplace. Home sellers who are willing to offer a discounted price can benefit from more interest in their homes, and therefore more offers from potential buyers.

It’s not uncommon for sellers facing challenges in achieving a sale having to accept an average discount of 4.5% on the asking price, which is the highest in five years due to the current buyers’ market. This means that on average, sellers are forgoing £14,100 or one-third of their pandemic house price gains, according to new research[1].

BUYER AFFORDABILITY

In Scotland, most homes continue to be marketed as ’offers over’, with discounts from the asking price larger than pre-pandemic levels. This reflects a shift towards a buyers’ market, after a period of time where buyers had to pay the asking price for most properties throughout 2021 and 2022. As mortgage rates have risen and with the impact of buyer affordability, there is nationwide repricing taking place as the market adjusts to these changes.

“ It’s not uncommon for sellers facing challenges in achieving a sale having to accept an average discount of 4.5% on the asking price.”

Recent trends also highlight that the purchasing power of buyers is gradually improving as mortgage rates drop from their peak of 6% in late 2022. However, despite the decrease to 4%, the average home buyer still has 20% less buying power compared to a year ago when mortgage rates were as low as 2%, according to the data.

BUYERS REBOUNDED

The demand for homes from buyers rebounded in the first two months of 2023, but it’s still behind last year’s levels due to cautiousness among buyers. However, sales volumes have recovered and are tracking the usual seasonal upturn seen post- Christmas.

Although they are a quarter (24%) lower than this time last year. In contrast to 2022, there has been a significant increase in the number of homes for sale by over 60% compared to last year. This means that market supply is returning to normal, creating more choice for home buyers.

PRICE REDUCTIONS

On average, estate agent offices now have 24 homes for sale compared to just 15 a year ago. This increase in available properties provides more options for homebuyers who can negotiate on price and reduce the upward pressure on house prices. Many sellers, supported by agents, are adjusting their asking prices in response to weaker demand.

Looking ahead, small month-on-month price reductions are expected over the next two to four months as a soft reset in house prices continues. By summer, modest annual price reductions of up to 2%–3% are anticipated. Overall, these changes will further boost buyer choice and make homeownership more accessible for those looking to enter the housing market.

PROSPECTIVE BUYERS

Although it may be disheartening for home sellers to give up some of their recent gains in order to find a buyer, discounting may be necessary in order to make sure that you get the best possible deal. Discounts can also attract more attention from prospective buyers and help your home stand out from other properties on the market.

By understanding why this is sometimes necessary, you can ensure that you maximise the value of your property when selling your home.

Don’t forget, our professional friendly advisers are on hand to support you and can help you explore all of your options.

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