The purchase of a home is often the biggest financial commitment that a person makes – yet it is surprising how many buyers go into such transactions with minimal preparation and without the information that will enable them to negotiate a satisfactory price, says Tony Clarke, Managing Director of the Rawson Property Group.
“As a start,” he said, the potential buyer should find out all he can about the property he is intending to buy, i.e. a great deal more than the information usually supplied on the sales brochure. He must then familiarize himself with the prices of homes in the same area that are comparable in size, quality and features.
“It may well happen that, being new to the market, the potential buyer will have to rely on a reputable estate agent to give him this information. All agents should be able to produce a comprehensive comparative market analysis – if they cannot, it indicates that they are not true professionals. If possible, more than one agent’s market analysis should be called for.”
Once the price structure of the homes in the area has been understood by the potential buyer, he should, said Clarke, try to find out why the seller is moving.
“This information can greatly strengthen the buyer’s negotiating powers. If, for example, he knows that the seller has to move soon to another town to take on a new job or if he knows the seller needs cash urgently, the buyer’s bargaining position can be greatly strengthened. Similarly, if the house is tenanted and the seller knows when the lease will expire, this information may enable him to negotiate a better price.”
Clarke advised buyers to check the zoning of the property they are contemplating buying and to make diligent enquiries as to whether major developments are likely to take place there. If this is the case, he said, the exact nature and size should be clarified. Enquiries should also be made to find out if the local authorities have plans for the development of amenities in the area.
“New developments and new amenities can be either beneficial or detrimental to property values,” said Clarke. “It is important to ascertain what form they will take if they are planned.”
Clarke said too (as he has done previously), that although national and regional sales statistics can be very helpful, buyers must recognize that they may not be applicable to certain areas.
“One of the discernible trends to become evident in the downturn,” he said, “has been that certain niche markets have the ability to ‘buck the trend’ and maintain their value to a greater or lesser degree. Although scepticism is always advisable, if an agent claims that his area is outperforming others, this may well be true – and such areas tend to be highly suitable for investment.”
Once the buyer has decided to make an offer for a home, he should, said Clarke, not overplay his hand.
“We have seen instances where the buyer’s offer was so low as to be ridiculous. This can result in the seller refusing to discuss the matter any further and in some cases even to his withdrawing his property from the market. The first offer must, therefore, be realistic, even if it has slightly ‘cheeky’ undertones.”
Where more than one buyer is interested in purchasing a property, the seller and his agent can sometimes push them both to raise their prices up and up. In these cases, said Clarke, the buyer should know before he starts his bidding just how high he can go – and should not go above this limit.
If, however, he wants the house desperately and the seller for one or another reason refuses to accept his offers, it may be possible to negotiate a deal in which the seller’s price is accepted on condition that a range of improvements such as repainting, retiling or a garden improvement is undertaken by the seller at his cost and within a specified time.
This type of conditional deal, said Clarke, has often led to a successful sale – but it should be emphasized that the conditions must be in writing and must be so clear that there can be no arguments down the line.
Although house prices are improving, it has to be accepted, added Clarke, that the market is still slanted in favour of the buyer. Buyers should, therefore, not rush into decisions. In the distressed and repossessed property market, he said, the many bargain prices previously obtainable are now seen far less frequently and those hoping to make a killing here should take action fairly soon because the supply of these properties is slowing drying up.
Via Rawson Property Group