It’s a not-very-closely-guarded secret that, when it comes to property, asking prices aren’t the same as selling prices. Usually, the actual selling price of any house is a fair bit less than its original asking price. So, whether you’re buying a house for yourself, or investing, let’s look at how to get money off a house.
Firstly, however, over the last couple of years the long-standing concept that selling prices are lower than asking prices has gone right out of the window to some extent. The market has been so buoyant that in some places buyers have had to offer the asking price, and sometimes more, to stand a chance at getting the property they want.
Now that the market appears to be softening a little though there may be scope to get a good discount off asking prices once again. Here are some tips for doing it:
* Always be a serious buyer. Buyers who are obviously serious are more likely to have an offer both considered and accepted.
Only start to make offers when you really are ready to buy. Be a cash buyer. Have a mortgage offer in principle. If you’re selling to buy have a sale agreed or at least have your house on the market.
* Consider using a buying agent – if you’re looking for a higher-value property or something unusual. A buying agent may be able to not only help you find it but get the best price.
* Research the local market. Find out how much under the asking price houses are selling for locally (if they are). Find out how quickly properties are selling from first being listed. The quicker sales are agreed the less scope for big discounts, usually.
If you’re selling to buy in the same area the estate agent you’re using for your sale may be willing to tell you this.
* Be as flexible as possible about what you want. Both on area and type of house. This way you should be able to find many possible properties to choose from and so increase the chances that at least one will be available at a good discount.
If you have a very definite type of property in mind, in a particular street, or are looking for a ‘dream house’, there’s much less chance you’ll find it at all, and probably not at a good discount.
* Look for the right type of properties. Poorly presented properties are likely to offer better discount potential simply because fewer people view them and there are likely to be fewer offers and less (or no) buyer competition.
Look for the ugliest possible properties with negative kerb appeal. Also look for poorly presented listings – properties with poor pics and little information in their listings.
* When looking for properties look at their listing and price history. Properties that have been on the market a long time are more likely to be buyable at a discount (assuming the seller actually wants to sell). Properties that have recently been reduced are more likely to be available at a discount. It suggests the original price was far too high and there were few (or even no) viewings or offers. Properties that have been recently relisted may also offer scope for a discount.
Portals like Rightmove, Zoopla and OnTheMarket will usually indicate reductions and you can also filter by time since listed/time on market.
* View the houses you are seriously interested in and do some discreet digging to find out what scope there might be for a discount. Try to do this by way of a friendly chat with the seller, rather than asking outright.
Try and find out why the seller is selling, ie. if there is a reason they need to move or if they’re just ‘testing the market’. Try and find out if they’ve been busy with viewings, or had very little interest.
By the same token, don’t accidentally reveal to the seller that you’re keen (or desperate) to buy!
Once you’ve decided to make an offer on a property the question to ask is this: How much lower can your offer be while still being regarded as a serious potential buyer?
Use the research you’ve done as a guide. But, historically, anything around 10% less than the asking price has been considered a reasonable offer. Offers of around 20% less are usually what is considered to be a cheeky bid! It all depends on the market at the time however.
(If buying in Scotland bear in mind that the system regarding asking prices and offer prices is totally different.)