How to Negotiate House Price

Most of us enter the house buying process with a list of criteria about the type of property we want.

But sometimes, our ideals don’t match up with the reality of our budget. Instead of walking away, you might figure, why not give negotiation a go?

This article will run through how you can find the sweet spot, navigate the negotiation process and more…

How To Negotiate House Price As A Buyer

We’ve broken down a simple four-step process to help you negotiate a house price.

1. Researching House Prices

To be a good negotiator, you need to know what you’re talking about – that means doing your research ahead of time.

This may involve:

Developing an understanding of the local property market through listings and house prices.
Checking sold prices on the Land Registry for properties similar to the one you want.
Assessing the frequency of listings for similar houses and how many sell for the asking price.

2. Obtaining Mortgage in Principle

Every seller wants to make as much money as possible from their house sale, so by negotiating, you’re automatically making yourself a less attractive buyer. One way to twist the balances in your favour is to prove you’re ready to buy now.

This way, even if the seller can’t secure the price they want, they at least benefit from a quick sale.

Ideally, you’d be able to entice sellers by offering to buy the property with cash. But since this isn’t possible for most people, an alternative is securing a mortgage in principle.

To get an offer in principle, start the process with a mortgage lender. In many cases, you can get a mortgage in principle quickly and easily by providing information such as your income, debts, and spending. Bear in mind that you will have to show the proof of these numbers to an estate agent after you make an offer.

If applicable, you can also use your first-time buyer status to your advantage. This is attractive to sellers because it means they don’t have to worry about others in the chain jeopardising the sale.

3. Keep Your Cards to Your Chest

When you start attending viewings for houses, don’t give away how much you like a property or what your financial position is.

Remaining calm and downplaying interest early on will help set the stage for a better negotiation later down the line.

4. Negotiating the House Price Offer

It’s great to have a few extra cards up your sleeve with good preparation, but what about when it’s time to actually start negotiating the house price?

A common piece of advice is to start by offering a lower price than what you’d be prepared to pay, with the expectation the seller will come back with a price closer to your upper limit. Generally, offering between 5% and 10% of a house’s asking price is seen as reasonable.

However, it’s a delicate balance. If you offer too little, the seller may perceive you as a time waster or refuse your offer flat-out. Also, remember you’re not necessarily the only one making an offer – there may be other buyers interested in the property, so being too stingy could result in you losing out.

Estate agents will usually let you know if other potential buyers have already made offers.

If you suspect this is likely (which may be the case if there’s a seller’s market or the property has only just been listed), you might want to give a more generous offer to boost the chances of acceptance. But making an offer above the asking price usually isn’t recommended unless there’s good reason to think there are other buyers.

How to Make an Offer

To make an offer, you tell an estate agent your number, and they will pass it on to the seller. At this point, it’s a good idea to offer any information that could help your case, such as a willingness to move immediately or being chain free.

When you negotiate house prices, there are a few possible situations to be aware of.

Firstly, there’s a sealed bid. In this case, sellers make offers confidential, requiring buyers to submit their offers at a specific date and time without knowing what other interested buyers offered. In this case, it’s tricky to figure out whether to try to negotiate or offer above the listing price.

A similar situation is best and final offers. In this scenario, sellers ask buyers to offer the highest amount they’re willing to pay, of which they will select the best. This is similar to sealed bids, but it’s a more informal process.

However, the most common set-up is that the estate agent will work as an intermediary and give you advice.

How To Negotiate House Price After Survey

A house survey (such as a Homebuyers Survey Level 2) reveals if a property has any underlying issues you would have to deal with after purchasing the house. Some of these include:

Roof structure issues
Damp or mould
Faulty electrical installations
Heating system issues
Damaged gutters and/or faulty drain pipes
More serious problems such as subsidence or other structural movement
Drainage problems and/or
Lack of test certification
Asbestos
Woodworm
Dry rot
Japanese knotweed
Inadequate insulation
Badly installed or dated windows

If the survey report does reveal any issues, it can put you in a strong position to negotiate. You can use the estimated costs of the repairs or problems highlighted in the report to offer a lower price.

On the other hand, if the house survey comes back all clear, it will be of little use in your negotiation.

How To Negotiate New Build House Price

When you buy a new build, you’ll be dealing with house developers rather than home sellers, but there are still ways to negotiate effectively for the best deal possible.

Start by comparing the house to similar properties in the area. Although you should always expect to pay a premium for a new build, you need to start by working out what the premium is. Then, you can consider how you can negotiate a lower value.

Another tip is to opt for off-plan houses (properties that haven’t yet been built), the last plots on a site that is almost fully occupied, or at the end of a year. In these cases, developers have the greatest incentives to sell quickly, meaning they’re more likely to accept a lower offer.

As with any property, the deal you can negotiate will depend partly on what the demand is like on the market.

How To Negotiate House Price As A Seller

The bulk of this article has focused on negotiating house prices from the buyer’s perspective. But maybe you’re looking at things from the other side and have been faced with a prospective buyer trying to negotiate with you.

Below, we’ve compiled a few tips:

Use an expiration date for counteroffers to encourage buyers to make a decision quickly
Maximise competition between buyers by only opening offers after a few buyers have had a chance to view the property
Counter a lower offer with the original listing price to encourage a higher offer on a house
Offer to pay closing costs instead of accepting a lower offer
Reject an offer outright to encourage a higher offer

Some of these strategies might turn some buyers away, so use them cautiously if selling your house quickly is more important to you than selling for the highest value possible.

How Much To Negotiate House Price

If you can’t afford the asking price on a listing and you still want the property, most people would agree that there’s little to lose from giving negotiation a go. But at what point do you walk away if things aren’t going as well as you’d expected?

Sometimes, if you really want the property and the seller isn’t budgeting, you may have to accept that you’ll need to try a higher amount to get your offer accepted.

If you’re asking for a discount of more than 10% or you’ve already sent multiple rounds of offers and been rejected, it may be time to stop negotiating.

Other Tips to Negotiate Successfully

In some cases, you could contact the seller directly to try to negotiate instead of discussing the deal with the real estate agent. However, bear in mind that agents are usually more prepared to negotiate (and more comfortable to do so) than sellers. As a result, this tactic won’t necessarily work in your favour.

Sometimes, an estate agent might try to sweeten the deal by throwing other items into the house sale, like furniture or white goods. However, this generally won’t be as good a deal as it first appears and could benefit the seller more than you.

In some cases, it could be worth working with a buying agent, or even multiple agents. This is a professional that finds properties for their clients and gives them valuable insights, such as local house prices or whether it’s likely to be a competitive market. They can also aid you with negotiation. Of course, it comes with extra costs.

Nail the House Negotiation Process

To negotiate the house price of your dream home, start by researching the local real estate market and securing a mortgage in principle. You may also be able to secure a better deal if you’re chain free, a cash buyer, or a first-time buyer.

If you’re trying to sell a house and struggling to sell or get the offer on a house you’re looking for, consider working with a property buyer to help you sell quickly. At Property Solvers, we give you an upfront offer for your house, allowing you to sell your house fast with no negotiation needed.

Ruban Selvanayagam

Sell House Fast and Auction Expert

James Durr

Founder, Property Entrepreneur and Sell House Fast Expert