How to get a better price on your property purchase
1) From the start make sure you are in the best position possible for a purchase; get your solicitor appointed and your mortgage offer in principle as well as your cash in an account ready to transfer. Show this to the estate agent when you make your offer. Estate agents lose almost 50% of offers before exchange of contracts so they will not necessarily recommend the highest offer to the vendor if they don’t think the offer will proceed.
2) Find comparable property sales which help your argument on price; the residential market is imperfect and there is always property sale evidence which could help you to negotiate a lower price.
3) Try and negotiate a reduction for any defects or highlight any problems early in the bid process; get a survey done to back up any comments you have made with prices to fix any problems. Sellers are more likely to agree to a price reduction if you have mentioned early on you are concerned about for example, the roof, and then you prove it needs replacing by having a survey done, and then getting a price for the new roof, repairs etc.
4) It is useful to understand early in the process the reason for the seller needing to leave the property; it may be that there have been lots of maintenance problems so if you offer to take away the problems the seller will accept a lower price. However, be careful when negotiating a price reduction due to maintenance, and then trying for more when a survey highlights more issues. At this point you have spent money and many deals fall through because the seller may think the purchaser is pushing too far.
5) Cash offers; what does this mean? It can mean a cash deposit and a mortgage or all cash without a chain involved or it could be pure cash and no mortgage. Another word of warning about people with cash; sometimes people say they have cash but frequently they are refinancing another asset so the “cash” may not be available now and hence there could be problems. Always dig deep and ask questions if you are a seller or a buyer as the more knowledge you have the better price you should be able to achieve, and the risks around a purchase will also be lower.
Ben Temple is chief investment officer at Temple Field Property