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June 24, 2022
Jeremy McGivern
Posted in: Negotiation advice and techniques

A great example of a London property negotiation

A client recently decided to sell her home.

She was in no rush, but the house was surplus to requirements.

So, I arranged for the four best agents in the area to value it and then advised her on which one I thought would achieve the highest price (I only acquire properties for our clients but do give advice on the best agents to use when they are selling and manage the agents for them).

As she wasn’t under pressure to sell and the market was very strong for that particular style of house we decided to test a guide price of £3.9m but despite lots of viewings didn’t receive any offers.

So, after four weeks, we decided to drop the price by 5.7% to £3, 685,000. We received an initial offer of £3,520,000 and within a week had two competing bidders one of whom agreed to pay £3,712,500.

Now, it would be very easy to just assume that the only lesson here is that if an owner puts their property on the market for too much, then it won’t sell. But not only is this not true – I can show you dozens and dozens of examples where buyers have massively overpaid – there is also a lot for buyers to take from this.

Firstly, people have varying attitudes to negotiations. Many sellers won’t reduce their asking prices because they are convinced that buyers always offer way under the asking price, so they stick to outlandish prices despite being happy to accept a significant price reduction.

This is a narrow-minded approach because many buyers are too timid to put forward low offers for fear of offending the seller. Alternatively, they just feel that the owner is not serious about selling, so don’t bother making an offer until the price is reduced to what appears to be a more sensible level.

But this is not wise. Whatever you do, please do not be worried about offending the seller. In 21 years of negotiating property transactions, I can only remember one occasion where the seller was “offended” and they still accepted a significant reduction on their guide price, so they weren’t so offended they wouldn’t deal with us.

If it helps, look at it this way – are you offended by idiotic asking prices? Hopefully not, otherwise you may spend rather a lot of time getting upset…

More importantly, if you put in “low” offers for property, you will actually discover that many sellers are far more flexible than you would have imagined. Not in every case – there are plenty of owners who have an overinflated view of their property’s value – but you will uncover great opportunities.

In the case of my client’s house, the buyers who had both seen the property before the reduction could have offered £3.5m and she would have accepted it. However, because they waited for the price reduction, it meant that they were suddenly in a far more competitive situation and ended up paying more than they needed to. And let’s be honest, the price they agreed was only 5% under the original guide price, so not even a particularly big reduction anyway.

So, you want to put forward offers before the price reduction has happened. After all, does it take long to put forward an offer? No. So, what is the big deal about doing it? The chances of offending the owner are low (and if they are offended that is their problem – they can simply say no rather than getting upset), while the chance of negotiating a good price before other buyers become involved is rather good.

Of course, there are various things you need to do to make the offer as attractive as possible despite the level being offered, the language you use is important as is how you handle the agent who might be embarrassed about putting forward the offer.

But done correctly, you can save yourself hundreds of thousands, even millions of pounds in the negotiation. So please do not be put off by high guide prices.

And if you are planning to acquire a property but are having difficulty finding the right opportunities or have questions you would like answered, you can request a complimentary 15 minute Strategy Cal with me. This is a diagnostic consultation where I will look at your requirements to pinpoint the problems and expensive mistakes you are in danger of making to help you avoid them.

Simply email my assistant at dee@mercuryhomesearch.com or call 02034578855 (+442034578855 from outside the UK) to request a Strategy Call.

Please note that this is a diagnostic consultation and you will not be able to discuss the service I offer. We only have 15 minutes so the focus will be on your requirements and the concerns you have.

Simply email my assistant at dee@mercuryhomesearch.com or call 02034578855 (+442034578855 from outside the UK) to request a Strategy Call.

About the author, Jeremy McGivern

My name is Jeremy McGivern. I am the founder of Mercury Homesearch, the internationally renowned property search consultancy, and author of The Insider’s Guide To Acquiring Luxury Property in Prime Central London. I have been acquiring property in prime central London for clients for over 13 years.

Having physically viewed over 22,000 properties in prime central London, studied the details of over 153,400 apartments, houses and investment opportunities and spoken to 232+ estate agents every week for over a decade.

My advice is in high demand and has featured everywhere from Bloomberg Television, The Financial Times and The Daily Telegraph to Forbes India and Bahrain Confidential.

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