Sharpen your elbows and hone your haggling skills — the summer property sales are upon us.
Discounting through negotiation was already rife in London’s housing market but has stepped up a gear since the EU referendum, with vendors accepting they must drop asking prices to offload homes.
Meanwhile, nervous buyers have become more demanding, wanting deals that will insulate them from possible future price falls as the UK’s separation from the EU takes shape.
Paul Mahoney, managing director of property advisers Nova Financial, says: “With the uncertainty in the market many buyers want a sweetener to make them feel more comfortable with making a transaction. Buyers should use this uncertainty and the slowdown in transactions to their advantage.”
Price cuts have been spreading across the market over the past two years, largely thanks to increases in stamp duty at the top end, and tax increases for buy-to-let investors and a generally tougher mortgage lending climate in the mainstream market.
Ten ways to talk down the asking price
Do your research on property prices in the area and get hard evidence to back up a discount request.
Find out how long the property has been on the market. The longer it has lingered, the more likely a deal.
Never admit your true budget to agents — inevitably they will want to push you to its limits.
Don’t say you are in a rush to buy — it weakens your position.
Really cheeky offers just annoy everyone. Stay within 10-20 per cent of the asking price.
You will be more appealing if you are a cash buyer, chain free or have a mortgage in place.
Always go for a discount on new build at slow times of the year such as summer holidays and Christmas, when builders like to unload stock in the run-up to their financial year.
If you can’t get money off, ask for freebies — for example, if the vendor will throw in carpets, shelving, expensive light fittings, garden furniture etc. With developers, discuss rental guarantees, stamp duty payments, legal fees and furniture pack inclusions.
Don’t panic if the agent says there are other keen buyers — it’s probably not true.
A poor survey can be a negotiating point. Suggest splitting all the cost of repairs 50/50.
In May the average discount on the original asking price of a UK property was over £25,000 — up nearly £4,000 compared with January.
But even if a property has already been discounted it would be a mistake to assume it is a steal — it may simply have been overpriced in the first place. “The Brexit result has been the catalyst for what is actually a correction in the market,” explains Anthony Pears, sales manager at Lurot Brand.
“Vendors who do now need to sell are more likely to cast their optimism ;aside and ask a more enticing and realistic asking price.”
What the market will do over the next year or two is anyone’s guess. Buyers will naturally want to avoid buying at the top and tumbling into negative equity.
But if significant numbers succeed in driving down prices, particularly of new build, the market will also fall.
The only major player so far to estimate how much prices will fall in Brexit’s wake is KPMG. It forecasts nationwide drops of five per cent, and a little more in London.
Most agents advocate calm. “We don’t expect huge falls but slower price growth and fewer transactions in places where prices were most stretched,” says Jeremy Leaf, of Jeremy Leaf & Co estate agents. “Lack of stock is supporting prices even if demand weakens.”
But Lucian Cook, head of residential research at Savills, feels it is “far too early” to tell exactly how the market will react to Brexit.
Johnny Morris, head of research at Hamptons International, says: “You might not get the price you would have done six or 12 months ago but the same will be true of the house you’re now buying.”
A natural reaction to the current uncertainty might be to do nothing. “But I would ask, wait for what?” adds Morris. “We certainly won’t see a quick resolution of the EU situation.”