How to get a bargain when you buy

How to get a bargain when you buy

At HouseSellingAdvice we provide information and advice on selling property, including how to get the highest price for your property.

Of course, for many people, selling is linked to buying another property. Buying at a bargain price is possible if you know how. The combined effect of selling high and buying low can seriously enhance your wealth!

Here are my 7 tips to secure a bargain. This assumes you want to buy a particular property to live in, as opposed to an investment property.

Tip 1. Be in a position to buy

Generally Vendor’s rate buyers in the following order:

  1. A Cash buyer, able to proceed immediately
  2. A Buyer with mortgage, able to proceed immediately
  3. A Cash buyer, with sale agreed on their property, and no chain
  4. A Buyer with mortgage, with sale agreed on their property, and no chain
  5. A Cash buyer, with sale agreed on their property, although with chain
  6. A Buyer with mortgage, with sale agreed on their property, although with chain
  7. A Buyer with a property to sell

If you make an offer on a property before you have a sale agreed on your own house, you won’t be taken very seriously. However you are at least expressing your interest, and once you’ve sold, you can follow up.

However a vendor would be foolish not to continue to market the property until or unless you are in a position to proceed.

If you are not “proceedable” and you make an offer, you’ll find it harder to secure a good deal because you have little to offer in return for a discount on the price.

In most cases it is better to wait until you are able to proceed before you make an offer.

Tip 2. Know how much you are prepared to pay

Check your finances and mortgage availability.

More importantly, decide in advance how much you want this property. If it’s your dream home, or similar properties only rarely become available, and you know properties like this sell quickly, if you offer too low a price, there’s a good chance someone else will offer more and you’ll lose out, or you’ll have to increase your offer to beat it.

Know how much you are prepared to pay. Ask yourself – at what price would I be disappointed if I didn’t get this property?

Write this figure down and stick it on the fridge. You’re not going to offer this amount, but you need to keep this figure in mind all the time so that you don’t let your heart rule your head.

Tip 3. Try and become the vendor’s friend

This is difficult if not impossible if the vendor doesn’t live at the property. Otherwise:

  1. If the vendor is doing the viewing themselves, compliment them on the property. Show real interest; ask them what they like most about living there, and so on, to build a rapport. Don’t stay aloof or make any critical comments. Some people think the best way to get a bargain is to point out the negatives to change the seller’s expectations. Wrong! Try and find common ground – children, local football team, anything you can to build up a rapport.
  2. If the vendor is absent and the Estate Agent conducts the viewing, make positive comments to them as these will be fed back to the vendor.
  3. If the Agent conducts the viewing try and meet the vendor later. Maybe find their phone number or knock on their door at a sensible time. Don’t be too assertive, just say something like “I really hope you don’t mind me contacting you but I viewed your house and I’m really very interested. I just thought of something that you could probably help me with better than the Agent can – I was wondering… (and then ask a question about schools, local transport, the local pub, anything at all that helps you become a real person in their eyes). Finish by saying that you are very interested in the property, you really hope you can offer, are just checking finances, and hope it falls within your budget.
  4. Have a second viewing – again it shows interest and you’ll then be remembered.

Tip 4. Stress that you’re in a good position to buy

Assuming you’re in category 1 – 6 (see Tip 1), stress that you are ‘proceedable,’ and highlight any aspects that apply to you. Do this at every opportunity both with the Estate Agent and the vendor.

Tip 5. Try and find out how much they want to sell for

Which isn’t the Asking Price! They’ll have two numbers in their mind – how much they’d like, and how much they’ll take.

For most people there will be a figure they won’t (or can’t, e.g. due to the mortgage debt) go below.

Above this will be the amount they’d like, to enable them to buy their ideal property, or to release equity for some particular reason.

Of course it’s unlikely that they’ll tell you what these figures are so you’ll need to try and find out.

The first thing to do is find out their circumstances – why they’re moving, where to, to what deadline, etc. The more motivated they are to sell, the more flexible they are likely to be on the price.

Assuming you’ve now become their friend (Tip 3), you can start to put a few cards on the table.

Remind them you’re in a position to proceed, and use an open ended question such as “I wouldn’t want to offend you with a low offer, but we are on a budget, so can you give me an idea of how flexible you are?” or “if we could get a sale to complete within your timescales what sort of offer would work for you?”

Some people will be quite open, others less so.

Tip 6. Make your initial offer low but not too low

If you’ve got an idea of the price they might accept (Tip 5) and this is within your budget, it’s time to make your first offer.

Don’t assume that the price they’ve indicated is their bottom line. Offer as much below this as you realistically think you can, but not so low as to lose their expectations.

Stress the fact that you are able to proceed quickly.

Explain that you really like the property and your offer is based on what you are able to pay based on your circumstances.

Tip 7. Negotiate

If your offer is rejected, don’t be surprised.

In fact it should confirm to you that you’re not paying too much! Express your disappointment and ask them if your offer is far away from what is required.

If you’re dealing with the Estate Agent, remember that they are likely to be a trained negotiator, so might give little information away.

At the same time remember that the Estate Agent wants to sell the property to earn their commission, which won’t change very much whatever the selling price ends up at.

For example, if they are charging 1.5% commission, an extra £10,000 on the price achieved only makes them another £150. So try and get them on your side and advise you what sort of offer could work.

Go back with higher offers in small increments. Each time stress that you are now going above your budget.

Justify this – drawing on savings, loan from family, prepared to forego this year’s holiday – make sure they know that you’re making sacrifices to secure the home you want.

Hopefully you’ll end up getting the property you want at the best price possible. Good luck!

by Richard Watters

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First Time Buyers – Will There Ever Be A Better Time To Buy A House?
Help to Buy - The 10 Questions You Need To Ask

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