How to negotiate house price

If you're house hunting right now, you've probably noticed that property prices have been climbing steadily. According to the latest data, prices have risen for five months in a row.

According to latest data, the average UK house price has increased by 1.2% in comparison to the previous year, with the average home in the UK now comes with a price tag of £269,800.

This is why it’s never been more important to know how to negotiate house price when buying a home. The following tips explain how to negotiate a property price down.

Key Takeaways

• Research is leverage: Use Land Registry and Rightmove data to justify your offer based on actual sold prices, not just asking prices.
• Identify market conditions: In a "buyers’ market," you may be able to get money off the asking price; in a "sellers’ market," expect to pay closer to or above asking.
• Highlight your strengths: Being a chain-free first-time buyer or having a Mortgage In Principle makes your offer more attractive than higher bids with more risk.
• Negotiate post-survey: Use specific repair quotes from a professional survey to request a price reduction before exchanging contracts.
• Formalise your offer: Always submit offers in writing via email, listing your strengths and conditions (like taking the property off the market).

How to negotiate house price

1. Know your market

Knowing what the state of the mortgage market is when you're looking to buy can be really useful when it comes to negotiating house prices. A buyer’s market happens when the number of homes for sale outweighs the number of people interested in buying them. It happens in times of economic uncertainty - for example, this happened in the run up to the Brexit vote and during the early phase of the pandemic. Households put off their decision to move until the dust settles, while homes that are up for sale linger for longer. These conditions offer home buyers an opportunity to negotiate lower property prices because.

In comparison, in a seller’s market, demand for homes outweighs the number that are being sold, which results in multiple buyers bidding for one home. In these situations, house price offers are generally made above the asking price to win a bidding war between interested buyers.

When buyers and sellers are more evenly balanced, it’s typical to try to negotiate around 10% off the property's asking price, but you could bargain harder. Your success will depend on a combination of good preparation, understanding the market conditions, and clear communication with the seller.

2. Research recent sales

Buyers can make an unsubstantiated offer without research. But unless the seller is highly motivated to move quickly, you risk damaging the relationship or appearing uncommitted to the purchase.

Instead, do your research first. Find out what similar houses have recently sold for so you can make a realistic offer. You can also ask the agent how long the property has been listed. The longer the house is up for sale, the more likely the seller will be to accept a lower offer.

Try using the Tembo property report feature to find out if the house is fairly priced.

3. Set a realistic budget

Find out how much you can afford to borrow for a mortgage before you make an offer. The mortgage, plus your deposit, is the maximum purchase price you can afford to pay. Remember, don’t tell the estate agent your maximum budget - they work for the seller, not you.

4. Highlight your strengths

Once you’ve arrived at an offer, you need to sell it to the vendor by selling yourself. For example, being a first-time buyer is a big plus because you are chain-free. This means you can help the seller move quickly, which makes your offer more attractive and gives you stronger negotiating power.

You can also show the seller proof that you’ve instructed a solicitor and you have a Mortgage In Principle to show you’re serious and can act swiftly.

How to negotiate house price on newbuilds

All new-build homes have a premium of between 5% and 10% attached to the price tag because of their ‘newness’. The moment you move in, the resale value normally drops by this amount. This can mean that if the home is also overpriced, you may struggle to sell it without losing money.

To negotiate a lower house price on a new-build property, first research how many new-build developments are underway in your area. If there’s a glut of apartments under construction, the developers will be in competition with each other for your cash.

Keep in mind that developers want quick sales, so if you're chain-free and mortgage-ready, this is very appealing and a useful chip when negotiating the house price.

If they won’t budge on the price, ask them to pay your stamp duty bill or reduce the cost of standard appliances instead.

You might like: How to reduce stamp duty

How to negotiate a house price down after a survey

Defects picked up on a property survey can give you leverage to negotiate a lower house price. To do this, you’ll need to pay for a homebuyer’s survey first, but it could save you money in the long run. If the problems found from the survey aren’t too serious and you want to go ahead, get quotes for the work and use these to negotiate the price down. For example, if the roof needs a full repair, you could get a roof specialist to come to quote the cost of a new roof, and negotiate the cost off the purchase price. 

How to put an offer in on a house

To put an offer in on a house, you must submit it in writing (email is fine) to the estate agent who will pass it on to the lender. Your offer should include:

• The amount: Your specific offer price.
• Your position: Mention if you are a first-time buyer, chain-free, or have a Mortgage in Principle.
• Your caveats: Request that the property be taken off the market and viewings cease upon acceptance.
• Your timeline: How quickly you are prepared to move to exchange and completion.

What is gazumping?

Gazumping is when a seller accepts a higher offer from another buyer after accepting yours. To minimise the risk of being gazumped, ensure you are in a position to move quickly, such as making sure you've got all the needed documentation to hand and organising things like exchanging contacts, surveys and checks as soon as possible. You can also ask the estate agent to take the property off the market to prevent other buyers from finding the property and making a better offer.

What is gazundering?

Gazundering is when the home buyer lowers their original offer just before contracts are exchanged. Buyers choose to do this when they are banking on the seller accepting a lower offer because it’s so late in the process that they won’t have time to find a new buyer.

Gazundering isn't technically illegal because you haven’t exchanged contracts, but it’s not considered fair play. However, if house prices have dropped since you made your offer, or your own seller has gazundered you, then it may be necessary.