With the UK housing market changing dramatically before our eyes, future homeowners are experiencing an unprecedented boom of […] According to PropTech reports, the average home now sells for around £16,000 under asking price. This amendment acknowledges the reality of the market with increasing cost pressures. Meanwhile, house price growth plummeted to just 1.3% yoy. In this environment, buyers are increasingly sophisticated while sellers still work off legacy valuations. In this climate, knowing how to get the best through the door has made all the difference in closing strong transactions.
The present economic environment, fuelled by a cost-of-living crisis and escalating mortgage interest rates, is stretching finances for everyone. This unfortunately has resulted in homebuyers taking a much more conservative approach who are willing to take the expected, well thought out risks. Alan Murphy and his wife to be, Anne, came to Brighton to look for their first purchase – a semi-detached house. Get ready to follow along on their journey to find their “forever home.” Through these experiences, buyers are becoming educated on how to position their offers in a way that gets accepted.
As we know, estate agents play a huge role in the pricing of properties. Too frequently, they represent a distillation of previous optimism rather than the present state of the market. The problem is that most homeowners are listing their homes using stale information. Zoopla’s recent findings make clear how this trend continues to peg them to the dark ages. We encourage buyers to come equipped with data and a grounded perspective on what constitutes value prior to making an offer.
Understanding the Current Market Dynamics
The present housing scene is characterized by a stark gap between what sellers want and what buyers will pay. According to Zoopla’s data, a quarter of homes are listed with a price that isn’t realistic anymore—asking at a premium compared to prices received. Rowena Bower and her husband managed to buy a four-bedroom house in south-east London on just one full-time salary. They bought for £535,000 which is £15,000 under the original asking price of £550,000.
The couple’s decision was influenced by their assessment of the property’s true condition versus its potential. They recognized that the higher asking price was often more about what the property could become rather than its current state.
“It’s fine to test the waters … But you need to be careful not to overstep.” – Rowena Bower
Perhaps no one sentiment from buyers today rings truer than this one. They orient around actual existing features of a property rather than future potential or speculative development when calculating their offers.
Christian Hilber, a professor of economic geography at the London School of Economics, argues that today’s pricing measures are an inadequate stopgap. They are descriptive of the gaps and silos presented by the status quo. “When confidence returns and the economy strengthens, the balance of power in the housing market is likely to flip again,” he notes.
The Role of Strategic Negotiation
Strategic negotiation also becomes paramount in this dynamic marketplace at the vanguard of change. Robin Edwards, partner at Curetons, warns buyers to negotiate with care. He challenges them to come in with proposals backed up by solid evidence. This involves gathering survey results and a good sense of how much work will be evident to the public on the property.
“Most sellers can tell the difference between a fair negotiation and someone trying to get away with something.” – Robin Edwards
Buyers who are courteous and work to back up their offers with data will have a much greater likelihood of being accepted. Realistic offers Edwards takes the time to explain why realism matters.
“Realism means understanding that value isn’t what the market once was – it’s what the numbers support right now.” – Robin Edwards
These types of approaches not only telegraph seriousness, but build trustworthiness with potential buyers.
Furthermore, it is highly valuable for purchasers to develop a personal rapport when working out terms. Bower recalls how her family’s circumstances resonated with the sellers: “We had carried out an independent survey and done our research, so we knew the property’s condition and comparable sales. At the same time, we could communicate honestly with the sellers about how every margin counts when raising a family.”
The Psychological Aspect of Pricing
Mistake #3—Emotional Attachment Many sellers are emotionally invested in their homes and think that because they renovated their home, it’s worth the increased asking price. Experts such as Hilber refer to this emotional bias as “loss aversion.” Sellers have difficulty with this because they open themselves up when it comes to consideration and get emotionally attached to the property.
“Your home is your pride and joy, and if you’ve spent years investing in it, you’d hope it’s worth as much as possible.” – Christian Hilber
As the market shifts in favor of buyers, buyers will need to walk into negotiations with empathy, but with data-driven counter-arguments about property values. Christou, of estate agents Christou & Co, is a keen exponent of building up that evidence. Buyers can start by reviewing recent comps and evaluating demand in the area.
“I start with evidence: recent comparable sales, local demand and how long similar homes have taken to sell… The real value isn’t what an algorithm predicts – it’s what an informed buyer is realistically willing to pay.” – Christou
This deep level of insight provides homebuyers the ability to become shrewd negotiators, even in an ultra-competitive market.