Search for ‘negotiation’ on Amazon and you get 18,600 results. Search specifically for ‘property negotiation’ and there are 14 with most focusing on a buyers perspective on how to secure the lowest price possible. When it comes to being the property owner, advice on how to secure the best price is virtually non-existent.
I started thinking about this topic a couple of months back when the National Association of Estate Agents (NAEA) published an article under the heading, “Three-year record high for proportion of homes sold below their asking prices.” And the figure for this record high, 84%. That’s eight out of ten properties not achieving their asking price.
Now, I’m less hung-up about it being the highest in three years as they’ve only been collecting data for three years so I don’t think that’s a long enough timeframe to see this as overly significant. What I’d like to see though is the data for the other 35 months, which sadly we don’t have. My feeling is that whilst 84% sounds high, I suspect that all the other months show figures above 50% and that on average, 60% of properties do not achieve their asking price.
Again, there’s a critical piece of information missing; by what percentage are properties missing their asking price figure? And just to be super precise, how does this relate to time spent on the market? It’s fair to assume that the longer you spend on the market, the more likely the need to negotiate becomes.
Having accepted that an amount of negotiation is likely to take place, I started to consider some of the reasons why and I think I’ve narrowed it down to three possible reasons:
The property was overpriced to begin with. The market is always the best determiner of the property’s value. As estate agents we can do our research and give an indication of a marketing figure, but there’s a lot for the old maxim that a property is worth what somebody is prepared to pay.T
here is a particular factor affecting the property. Beyond a property’s normal quirks and idiosyncrasies, additional issues such busy main roads, railway lines, electricity pylons, substations, structural defects, neighbouring planning applications etc. can be a real problem for buyers. However, a problem that typically seems to be solved with a reduced offer.
Uncertainty in the market. When there is uncertainty, confidence takes a knock and buyers become more reserved when it comes to offering. It’s difficult because we can only exist in the market in that moment. Buyers will offer based on a perceived future value and with uncertainty, that future value in their mind is bound to be lower.
My point to all of the above is that at Waymark, we understand the wide range of factors which can influence buyers and their likely negotiation process. This is important as it firstly directly influences our advice on where to position the asking price for a property and secondly on our recommendations to our clients on when to negotiate and to what extent.
It is important to remember that we work for the people who have trusted us to sell their homes. We’re not here to get the buyers a deal. We’re here to achieve for our client, the best price possible in whatever market conditions are present at the time and within the timescales given to us.
Thinking about it, I reckon we could fill a much-needed gap on Amazon!