Buying luxury property in London |
When buyers enquire about whether I will represent them, one of the first things they want to know is how have I been able to negotiate lower prices on luxury property in London than my clients would have thought possible?
There are several testimonials on my website which show that I have achieved this (and many of my clients have kindly offered to speak to potential clients, just in case you think I have made up the testimonials!). So, the focus is invariably on what negotiation and psychological techniques I use.
While, these are important, there are some foundational steps that you must take first to ensure that you achieve your two main goals – to acquire the best property your money can buy and negotiate the lowest price possible.
I will warn you now that some of these may seem obvious or simplistic but having been purchasing property in London for over twenty years, I can guarantee you that the majority of people don’t follow these steps which is why they make decidedly poor decisions. Do you want to be one of those people? Hopefully not.
Step One – Are you in a position to move quickly?
This may sound like an odd question because the seller may actually prefer a delayed completion, but if you cannot exchange contracts quickly then you will not be perceived as an “A Grade” buyer. If you aren’t aware, nothing is legally binding when buying a luxury property in London until you have exchanged contracts, which is when you put down a ten percent deposit.
This gives both the buyer and seller security, but if you are not in a position to do this quickly then you will be massively handicapping yourself and be less likely to negotiate the lowest price. Think of it this way – if you were selling a house and you had two buyers interested, who would you prefer to deal with? The person who is organised and can make the transaction quick and efficient or the person who is not particularly organised and seems a bit vague?
Make sure that you have your buying team in place. If you would like to know more about this, please email dee@mercuryhomesearch.com or call 02034578855 (+442034578855 from outside the UK).
Step 2 – Are you sure that you have found the best property your money can buy?
I told you that some of these would sound obvious or simplistic, but every week I see poor or average properties being bought for high prices when there are much better options often just around the corner.
The problem is that most people just rely on the property portals – either checking them daily or setting up “property alerts”. While I wouldn’t dissuade you from doing this, you can’t rely on them. Firstly, because there are thousands of other people setting up similar alerts you are, effectively, just joining a giant virtual queue, so what competitive advantage does that give you?
Secondly, over 25% of properties in prime central London don’t reach the websites. How many of these do you think are the best homes and investment opportunities? And the higher in value your budget is, the more properties are sold off-market.
If you are relying on the websites, then the chances of you seeing the best property your money can buy is severely restricted. This is why so many buyers get frustrated because they know they are not seeing the “best in breed” properties. Please ensure that you don’t make the same mistake.
Step 3 – Do you know what is fair value for the property you wish to buy?
Again, this may sound obvious, but do you really understand valuations? Where are you getting your information from? Remember, the estate agent is not acting for you. He or she is employed by the owner and is legally obliged to achieve the highest price possible. Their job IS NOT TO FIND YOU YOUR IDEAL HOME OR HELP YOU ACHIEVE A GOOD OR EVEN FAIR PRICE.
The agents aren’t allowed to lie to you and most in prime central London are honest. However, statistics can be manipulated, so you need to ensure that the comparators you are using to establish fair value are good comparators and not misleading ones.
Once you are certain that you have followed these three steps, then it is time to start the negotiations. Of course, negotiating is a huge topic, so I am only going to cover one technique here, but it is a mistake that most buyers make:
Focussing on pound per square feet or metre comparators when buying luxury property in London.
By this I mean that buyers put forward an offer explaining why the price they have offered is “fair” because it is the “right” price per square foot for the area. I have lost count of the number of people who have come to me exasperated that they have failed to reach agreements on a property they like, because the other side simply ignores their calculations.
I had a situation where the owner of a property we were interested in had received multiple good offers from buyers over the course of a year but had refused all of them. The estate agents who were acting for her had slightly given up because she and her husband were not listening to their advice.
I say her and her husband because it was a very ugly divorce and they wouldn’t speak to each other. She was living in the house and he had moved abroad but the divorce process was ongoing. She didn’t want to sell unless she got a massive price and the agents didn’t know what to do. Both male and female agents tried to persuade her to see sense, but she was not interested despite them giving her accurate comparators – remember these were her own advisors.
When my clients decided to offer on the property, I had discovered all this information and put forward an offer that was considerably lower than ones she had already refused. The negotiation went slowly with the agents hitting the same objections from their client. In the end, I managed to persuade them to let me speak to her directly.
But instead of wading in with pound per square foot comparators which is what everyone including her own representatives had done, I simply asked her to explain her point of view and asked various questions about how she had reached those conclusions.
By the end of the conversation, she had reduced her expectations dramatically and I was able to agree a favourable price for my clients, much to the surprise of the estate agents involved. And the simple secret is this – if you only rely on logic to win a negotiation, you will fail more often than you will succeed.
This is one of the many reasons that I am able to achieve better prices than my clients would have thought possible. In the negotiation above, I managed to get the seller to focus on something other than price which in the end was far more important. I also used various other techniques to ensure that the agreement held, because this was a fraught transaction, but we successfully acquired the property and my clients now have an exceptional home.
Buying luxury property in London? Contact Mercury Homesearch
If you are interested in discovering more about how you can negotiate the lowest price possible when acquiring a luxury property in London, simply email my assistant, Dee, at dee@mercuryhomesearch.com or call 02034578855 (+442034578855 from outside the UK.
Best regards,
Jeremy
