Negotiating the right price

Hi gfuys wonder if u could help me.
I recently posted about buying a nw home in scotland.
Now i was wondering how do i negotiate the right price with the agent. I have already put in 2 offers through my solicitor and both offers have been declined, and both offers where really generous. The agent is not for dropping down and stick solidly on the asking price. Its on a fixed price, but as everyone knows, its a buyers market, i know i can get the house for lower than the asking price. But just dont know how to go about it!
J

JonnyP123 said:

Hi gfuys wonder if u could help me.
I recently posted about buying a nw home in scotland.
Now i was wondering how do i negotiate the right price with the agent. I have already put in 2 offers through my solicitor and both offers have been declined, and both offers where really generous. The agent is not for dropping down and stick solidly on the asking price. Its on a fixed price, but as everyone knows, its a buyers market, i know i can get the house for lower than the asking price. But just dont know how to go about it!
J

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Has the agent even contacted the seller with your offer ?

Go around the agent and try negotiating direct....that will learn him eh !!

If you are not overly fussy about what you buy....you could line up say 20 properties and bid all of them in the bol locks.....see what happens....someone will bite !

This is the 8th house we have seen and we absolutely love it, but want to try our luck and see if we can get it lower then what they want......

my brother is an agent, and a very good one, in the current climate, he advises the client before he takes on an a property that they should market slightly under market value, i.e he undervalues the property purposely. for one reason and as you say, it is a buyers market and they can hold out before sellers come to the realisation that their property is not being sold forcing them to eventually rethink the situation. also this gives a margin of safety for the passage of time, as by the time the property gets sold, the property will meet the market value..

by doing this he tells the seller that they have the best chance of beating the market, otherwise, the longer the house is left unsold, the more unattractive the property will become because their is absolutely no incentive for buyers.

if sellers are stubborn my brother proceeds to explain that if they dont do this from the beginning, time will lapse, property values may probably continue to decline and then everything will need to be re-evaluated, by adopting this strategy the property gets sold a lot quicker for more money, relatively speaking. anything else then the seller is wasting effort and money chasing the market, only to end up selling at rock bottom, months/years down the line.

if the seller refuses, my brother declines the instruction........

moral of the story - go looking for a bargain...its your opportunity.

you cant negotiate with a stubborn seller, if he doesn't sell today, he will when the Nth buyer comes....for a lot less than what he is asking for today probably.

are you in a hurry? you may love the property, but sure enough another will come on market and you will probably get a much better deal on it.

i was just wondering, the driveway is monoblocked but its really bad, maybe because its was done sometime ago....plus the integrated fridge seemed a bit dodgy now dont get me wrong the house is really nicely done, but when i negotiate could i bring these issues up to my advantage?

If you've already put in 2 offers that are over-generous and "know" you can get it for less, stop and think what you're doing - you obviously think you're doing wrong. Why do you know you can get it for less? - work that out and use it in the negotiation process. Don't rush - let the seller stew. You won't get trampled in the rush at present.

I've bought and sold many (several dozen at least, maybe more) houses as a private buyer (ie not pro property dealer) and have always found that what's achievable on price comes down to the type of seller you're dealing with - assuming that you have your own plan and limits etc. Some sellers are just thick and "know" what their house is "worth" and won't budge. Just move on - you can't deal with this sort.

NB - Scotland has different rules from England for property sales - no experience there but i have heard that as it's now a buyer's market things in practice may have changed.

These are my "rules" - probably not in the correct order! (and only the ones i can remember at 1.30am)

1. Dependent on stae of market & seller decide a max & min price that you think you can realistically achieve. Get to know the vendor and their circumstances - if they are testing the market, you may be wasting your time. If they have to sell, this gives you leverage.

2. Don't get hung up on a house - many of the ladies do this and will then pay any price.

3. Always start low - it's easy to increase your offer. In fact go low enough to establish their bottom price - you may be surprised.

4. Don't show your emotions to the seller - just let them think you are serious, level headed and unwilling to pay over the odds.

5. If they turn down sensible offer - politely walk away but make sure they know that you might still be interested if they change their mind (out of desperation etc). If they do come back out of weakness, then you may want to consider offering a lower price.

6. Be patient & don't rush - especially at the moment. There is loads of choice. If you are in a position to buy (ie no house to sell etc etc) you hold all the cards.

7. Ask what they are prepared to knock off the price (let them know you can move quickly and will not mess around if the price is right) - you will often be favourably surprised.

Some people take the view that if you're not embarrassed by your offer then you're offering too much. You can take this to extremes and during the recent property boom I did get laughed at once or twice (which costs you nothing) - but I did get one or two good buys also.

If however, you have seen a house you want and nothing else will do, once you have found out what they want and won't budge from, you will have to pay the price - it's very tempting and only you can decide. I've "lost" one or two houses because I wouldn't pay over the odds and in hindsight this may have been a "mistake" but I've always found something else that I've been happy with.

In essence it's no different from market-stall negotiating or haggling with the car salesman. The biggest danger is that you pay over the odds because you like the vendor or the house too much - take emotion out of it (is that possible with a house ?) - it's a business proposition.

Hope this helps - all IMHO.

jiggly said:

you cant negotiate with a stubborn seller, if he doesn't sell today, he will when the Nth buyer comes....for a lot less than what he is asking for today probably.

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Yes, I think a lot of sellers are still in denial.


dd

Johny see below. The way you buy a house in Scotland is different from England and Wales. I copied and pasted a few points below. Be careful of putting an offer on a house as it is binding under scottish law. Good Luck

Sealed bids

In England and Wales, houses are normally advertised at a given price and the vendor accepts that he may well have to settle for a price that is lower than the original asking price. Under the Scottish system, the vendor sets a price and invites offers in excess of this via a sealed bids system. Although this type of secret bidding is sometimes seen in the rest of the UK, it is normally only in cases where the property is particularly expensive or desirable.

Commitment

When you buy a house in Scotland, if your offer is accepted, you are immediately under an obligation to buy that property. This is why an agreement in principle is required before you go house-hunting. By contrast, in England and Wales, you can pull out of buying the property without penalty up until the time when contracts are exchanged.

The Scottish vendor is also committed to the deal as soon as he accepts the buyer’s offer. Hence the risk of gazumping (where the vendor later accepts a higher offer from someone else) is removed.

Solicitors

Because of the earlier commitment to buy, solicitors play a much greater role in the buying and selling of homes in Scotland. In many cases the solicitor will act as the selling agent for a property rather than an estate agent.

The actual house-hunting process in Scotland is much the same as anywhere else. But don’t forget, when you are looking at properties, that the advertised price is the minimum you will have to pay, and is not a starting point for bargaining downwards.

As a buyer, you will need to appoint a solicitor before, or as soon as, you see a property you want to make an offer on. Once you are ready to make an offer, your solicitor will contact the selling agent and ask them to “note interest”.

JonnyP123 said:

Hi gfuys wonder if u could help me.
I recently posted about buying a nw home in scotland.
Now i was wondering how do i negotiate the right price with the agent. I have already put in 2 offers through my solicitor and both offers have been declined, and both offers where really generous. The agent is not for dropping down and stick solidly on the asking price. Its on a fixed price, but as everyone knows, its a buyers market, i know i can get the house for lower than the asking price. But just dont know how to go about it!
J

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Another way of looking at it - houses aren't in short supply, but there is only one of this particular house. As you say you can get other houses more cheaply, but if you're stuck on this particular house you have to pay what the seller is willing to sell it for. It may be a buyers markets in general, but if the asset us unique it's value is where both a buyer and a seller are prepared to do business. In this case, perhaps the seller doesn't have to sell and can afford to wait a year or more, or could rent it out rather than accept a crap offer.Forgive me, but it's a little like saying a share is worth £1 when it's trading at £1.20. Even though you may be right, it doesn't mean you can buy it for what it's worth - markets simply aren't that efficient.

How far below asking price were your offers? If they were risible, it's no real surprise they weren't accpeted, especially in Scotland where as Gedward3 says, the asking price is the minimum and you're expected to go up. Making a third offer is really your last chance - for all that you say it's a buyers markets, three offers would suggest to me that you were desperate to buy it, and will pay whatever it takes. My advice - tell the agent this will be your final offer, and ask what they'll take. There's no rule says you have to make all the running (although normally you do). If he comes back with an acceptable figure, don't haggle for a couple of quid. If it's not acceptable, either make one final offer and walk away, or walk away saying you'll be interested if they can drop it x thousand.

Guys thanks for the advice. Much obliged. Well i've had a long hard think about it. If the agent phones me today to see if i'm interested then i will make my third and final offer, which is going to be 3k short of what they are asking for, its the absolute max that i can go to....so if that fails then i'll need to go house hunting again.

for what it is worth,

I think you should wait, seriously the current economic situation is not favourable for such large commitments.

you may buy today only to be left with a morgage on a property that is highly overvalued several years down the line.

I dont think you should change your situation yet if you can..

The conveyancing system for the exchange of residential property in Scotland is great, apart from the key step of agreeing a price with the seller. I would go so far as to say this aspect of buying something in Scotland is utterly retarded.

Whether at "fixed price" or "offers over", there is no rhyme or reason to it. It seems to me that the whole system is a closed shop where you can only deal with the fraternity of solicitors, and no better price setting mechanism can be introduced. However, I believe that the intermediary solicitors are required to pass on all offers from potential buyers to the seller when at fixed price, as well as when there are no expressions of interest when the property is offered at "offers over".

From my experience in Edinburgh, the best opportunities arose when the actual owners were the one's who let you in to inspect the property - you should take the chance to make a frank and open verbal offer there and then. The solicitors advise both sides against this, but mainly because it threatens their monopoly.

Thanks for everyones advice. The stress is over me and the wife got our dream home, the owners and us agreed on a good price so it was a win-win situation, absolutley over the moon. Many thanks again.
J

JonnyP123 said:

Thanks for everyones advice. The stress is over me and the wife got our dream home, the owners and us agreed on a good price so it was a win-win situation, absolutley over the moon. Many thanks again.
J

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Really glad to hear that. Best of luck. Now for the markets ...........

JonnyP123 said:

Thanks for everyones advice. The stress is over me and the wife got our dream home, the owners and us agreed on a good price so it was a win-win situation, absolutley over the moon. Many thanks again.
J

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congratulations