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A new report from Countrywide, the UK’s largest estate agency and property services group, gives an interesting insight into the art of negotiation in the property market. It looks at the different perspectives of the house seller and buyer and some of the negotiation tactics employed.
Selling a home is a big deal, for many it’s a once in a generation event. Owners decide to sell for all sorts of reasons, but what unites almost everyone is their desire to get the best price as quickly as possible. But every seller is slightly different, and is driven by a whole host of needs and desires, all of which have an effect on how they go about selling their home. Given that no two homes are identical, it’s not surprising that there tends to be deliberation over their value. Owners naturally put a higher price on their home than the buyer, and it’s only when they can agree that it gets sold.
The first offer is always a welcome expression of interest. It takes an average of 11 days between someone putting their home up for sale and them receiving their first offer, a figure which closely reflects the strength of demand in their market and the level at which the asking price is set. While it might be welcome, more often than not vendors turn down the first offer in the hope or expectation of getting a higher price. In 2016, 71% of first offers were turned down with London homeowners more likely than anyone else to hold out for a higher offer in the future, turning down 82% of initial bids.
Where they have a choice, most vendors choose to sell their home to the person who is willing to pay them the most for it. In 2016, the highest offer was an average of £4,400 or 1.8% above the second highest. But while price is important it doesn’t always determine who ends up buying a home. Over the last decade around 1 in 5 vendors decided not to accept the highest offer, a figure which tends to reflect the strength of the housing market.
In a strong market where prices are going up, sellers are most likely to accept the highest offer. Should the sale fall through, there’s likely to be someone else waiting in the wings to step in to match the offer or even pay a little bit more. But during a downturn, the balance of power changes and sellers have to pay much closer attention to the ability of their buyer to complete on their sale. In 2010, at the height of the slowdown, a record 28% of vendors opted not to take the highest offer. Typically this means accepting an offer from a buyer who they feel is a safer bet in the face of greater uncertainty.
Sales happen when a buyer and a seller can reach a compromise that leaves both of them happy. While the price of a home tends to be the focus of the negotiation, there are a whole host of other factors involved too meaning the chance of a deal isn’t solely determined by how much money the buyer has. Who they are, how the deal is funded, and the timescales they’re both working towards all affect their chance of sealing a deal.
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