Estate Agent Guide
How do I negotiate with an Estate agent?
Once you have viewed a property and decided that this is the right property for you, it is time to take the plunge and make an offer.
Before you do anything stop!
Firstly you need to work out how much you are going to offer and also work out what your whole negotiation strategy is. What is your top price you are willing to pay? and how are you going to trya nd pay less than that.
Please ensure you remember that the estate agent is employed by the vendor to gain the highest possible sale price. It is worth noting that the job title for estate agents is a “negotiator”.
Therefore it is their job to achieve the best price possible (and they will be using every trick in the book) to get the highest price for their client. After all the higher the price, the more money the estate agent will make. As an indication an estate agent will earn between £100 and £200 for every £10,000 of the property selling price (ie between 1 and 2% commission). Remember you need to be prepared to negotiate the sale price as it could save you thousands of pounds in the long run.
What is a negotiation?
“Try to reach an agreement or compromise by discussion” (source oxford dictionaries askoxford.com)
A negotiation is basically all about finding a conclusion that both parties are happy with. It is important to remember this. If you are too unrealistic in your offer and your demands then the seller may feel insulted and walk away from the sale. Be too keen and you could end up spending thousands over the odds.
What are some negotiation tips?
1 Know your market
3 Know your maximum price
- Work out the maximum you are prepared to spend in buying the property. Be sure to take into account incremental stamp duty, removal costs and mortgage repayments into your overall budget
4 Work out your entry price
- In order to set your entry price, work out discounts from 1% upto 10% off the asking price. If you try and go in too low ie more than 10% off the asking price, your offer may well be considered derisory unless you feel that the property is ludicrously overpriced.
5 What can you spend the savings on?
- Just because you are delaing in big sums of money, take a reality check. Remember that even a £500 saving could be a weekend away, new furniture, a new stereo. Think what you could do with the money if you saved £5,000 or £15,000. Think pragmatically; just because you are buying a property for thousands of pounds, still keep a eye on saving every pound.
6 What are you good points as buyers?
- A seller will be more attracted to a buyer that:-
- Is not in a chain and does not have a property to sell.
- Can push the sale through quickly as they already have a buyer lined up for their property.
- Is a first time buyer.
- Is polite and friendly – manners count.
- Is genuinely complimentary and passionate about the seller’s home. If you have lived in a house for years and somebody comes into your house and makes derisory comments, then you will not be keen on selling your house to such people.
7 Learn about your seller
- It is important to know why your seller is moving so that you can get a better understanding of their position. This can help you in two ways. Firstly it will help you discover any unforeseen problems and also it will allow you to empathise with the vendor. Try to talk to the seller direct, do not trust the agents word, it is always better hearing first hand the reasons somebody is selling their property.
And finally…
What are the the Golden rules of homebuying negotiation?
- Never go above your maximum price. If you pay it, remember this is what you were prepared to pay in the first place, so in theory you have got what you wanted at the price you wanted. Remember anything less is a bonus.
- Once the offer is accepted always get the property taken off the market.
- Even if the offer is accepted, do not stop viewing properties, all manner of thinks could happen, the survey may reveal problems, you could get gazumped, the chain could break etc. Make sure you are still looking, as you need a contingency plan until you exchange contracts.
- Always treat the agent with a degree of suspicion; they are working for the vendor.
- Remember just because £1,000 doesn’t seem a lot of money when discussing a £200,000 property it is still £1,000, a holiday, new furniture, a glamorous shopping spree, our tip is watch the pennies, even when dealing with such huge sums of money.
Read on and see how you can actually structure your offer for the property. By the way before you do this make sure you have an offer in principle from the Building society or bank for a mortgage.
