Friday 1 February 2008

Negotiated property price during a downturn

There seems to be little doubt that we may be facing a property slowdown, and in all likelihood a crash. House prices fell in the final three months of 2007. Halifax figures currently show, and are likely to continue doing so during 2008.

 But while renting is probably the best thing you could be doing right now, there will always be those who need to sell their house and others willing to buy, even in the worst market conditions.

So how can sellers market their homes in a downturn, and how can buyers take advantage as confidence gradually begins to fall?

One option for sellers is to offer incentives, but it’s not something to do lightly. The trouble with freebies is that they make it clear to prospective buyers  that a property has been on the market a while, the vendor is keen to sell and the sale price is probably unrealistic.

And “the worst way to sell anything is make yourself look desperate”, as Andrew Scott of Strutt & Parker Lane Fox told The Sunday Times. But it isn’t always a bad idea. If you’re keen to sell and your price is fair there are certain incentives that do work.

However, if you are thinking about buying don’t assume the same trick will work for you. When a home in Kensington went for sale, one hopeful sent the vendors a case of champagne with a note saying , “I do hope you’ll accept our bid”. The vendor didn’t, leaving the prospective buyers with no home and a bill for a case champagne.

But, of course, that was in the boom times. Now buyers can forget bribery tactics and get ready for some hard bargaining. This doesn’t mean you should wade in and offer 25% below the asking price at least, not at this stage of the slump.

“The British public can be quite stubborn when it comes to selling their main asset, and many will still prefer to sit tight rather than sell a home for less than they think it is actually worth,” highlights Ross Clark in The Daily Telegraph.

A good way of getting a discount on new build property is to negotiate what is included in the selling price. After all, “the last thing developers want to do is to admit that sales prices of their properties are actually falling”, says Clark.

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