Tips for Bidding and Negotiating4 min read
Negotiation is both an art and a science. Many home buyers can find the thought of bidding on a property and negotiating a price daunting- it doesn’t have to be. You always want to avoid a bidding war if possible, but it can be tricky to know what tactics to use to ensure you get your dream property at the best possible price, particularly if there is competition. We have compiled a list of tips for how to win a bidding war on a house that you really want.
- The first step is to contact the vendor’s estate agent and find out how they want you to make a bid. Use the estate agent to get information throughout the process. Is the seller in a buying chain? How fast do they want to sell the house? You can use this information to make decisions about how to proceed when making bids.
- Do your research on local house prices, how quickly similar houses in the area are selling and for how much. This will help to assure you that you are not overpaying for the property and assert how much it is worth.
- Have a clear idea of your absolute maximum price that you are prepared to pay for the property. Keep this in mind if a bidding war ensues and do not be pressured into paying more than the house is worth to you.
- When you place your first bid start low- you can start at 5%-10% below the asking price if you are the first bidder, but be prepared to go about 20% above this if you are serious about buying the property.
- Emphasise your position- first time buyers can be attractive to sellers that wish to avoid delays.
- The estate agent should let you know about other bids that exceed yours, and offer you a chance to place another bid. It is a good idea to place an aggressive bid to try to eliminate a bidding war- but never more than you are prepared to pay.
Never disclose your Approval In Principle amount or upper spending limit to the seller or their estate agent. You may be asked for it, but a letter from your solicitor to confirm you have the required funds will suffice.
- Stay polite and calm throughout the process. While at times it can be frustrating, you will only alienate yourself by acting irritated. However, do push for information when you need to.
- If you sense the seller wants a fast sale or may be desperate, play hard-to-get. It is in your interest not to appear too keen to prevent the vendor estate agent squeezing you for a higher amount. Keep your wits about you and don’t panic-bid.
- Never disclose your Approval In Principle amount or upper spending limit to the seller or their estate agent. You may be asked for it, but a letter from your solicitor to confirm you have the required funds will suffice. This is to prevent you being pushed to this limit too quickly.
- Continue to use the estate agent as a resource for information about other bidders so you can make informed decisions.
- After you have made your best and final offer, the seller may try to drag out the close to attract higher offers. Be assertive and let them know your bid is time limited so they don’t stretch out the process for weeks. Otherwise, be prepared for endless tales of sellers on holidays, solicitors wrapped up in court cases, and missing door keys!