The art of negotiation

Negotiation is an important part of the home buying process and in more recent times sellers have been gaining an advantage in negotiations. As a result, buyers are having to offer more to secure a purchase. Offers are an exciting part of the process and are normally part of a negotiation that often includes a couple of rounds of offers and counter-offers before an agreement is made. But some Britons are more willing to haggle on the price of a used car than they are on their own home, according to research. 30% of British homeowners didn’t negotiate at all on the cost of their current home out of fear of losing the property, and feelings of embarrassment or intimidation[1].

Fears for not negotiating and haggling down the price of a property include:

• Fear of losing the property (17%)
• Fatigue at the process of buying and just wanting it over (10%)
• Finding negotiating embarrassing (8%)
• Finding negotiating intimidating or scary (8%)
• Not wanting to upset the seller (7%)

The research reveals that homeowners aged 25 to 34 are more prone to experiencing the most anxiety or stress when negotiating, compared to those aged 65 and over who are much more comfortable with the process and find it the least stressful. The anxiety holding back those aged 25 to 34 comes at a cost, as more than a third (35%) of homeowners in this age group say they had to spend more of their savings to afford the house they wanted.

LONG-TERM DATA
If you’re entering negotiations to buy or sell a home in 2021, you’ll want to know the following statistics. Recent data shows that more than one-third of homes (37%) sold for above or equal to their asking price[2]. From 2005 to 2021, the average has been less than one-quarter (23%). Looking again at the long-term data, an average of one in ten homes have sold for more than the asking price since 2005. But, the data shows that early this year the number almost doubled to 18% or nearly one in five.

INDICATOR OF HIGH DEMAND
This is an indicator of high demand in the housing market, leading to multiple offers on the same home and, in some cases, a bidding war. Buyers should consider that offers below the asking price might not be taken seriously in these conditions. So as a buyer, once you have found the perfect property, you then need to decide how to bid for it. Do you put in a high offer to clinch it, and risk wasting money? Or a low offer and risk losing your dream home?

GOOD NEWS FOR SELLERS
Average asking prices hit a record high of £336,073 in January 2021. Looking at that in combination with the other statistics, it’s extremely good news for sellers that not only were homes listed for their highest ever price, a significant portion of them were sold at over that value. For the first time ever, the average proportion of the asking price paid has exceeded 98%, reaching 98.1%. So, if a home is listed at the average price of £336,073, statistically you would expect it to sell for approximately £329,687.

STILL ROOM TO NEGOTIATE
It’s good news for buyers that there is still room to negotiate on the asking price in most purchases. However, sellers are in a strong position to ask for more or wait for a higher offer. Before your start looking at property to buy, get your mortgage pre-approved. You need to be able to prove to a seller that you can get a mortgage. Remain emotionally detached – there are plenty of other properties – and be prepared to walk away.