The dynamics of the property market in the UK shift all the time. Sometimes changes happen overnight, and sometimes they are more gradual. In a buyer’s market, the buyer (that is the person buying the property) has the advantage. A buyer’s market is created when there are more properties available on the market than there are potential buyers for those properties.
In a seller’s market, we see that situation reversed. The seller (the person selling the house) now has the advantage as there are more buyers out looking for properties than there are properties available. It’s the age-old tension between supply and demand played out in the housing market.
Due to pent up demand caused by the housing market effectively being closed for a time during lockdown, and galvanized by stamp duty holidays which have since been introduced – much of the UK is currently a seller’s market. (You may also hear people referring to this as the property market being particularly ‘hot’.
We don’t know how long these conditions will last. But we do know that in a seller’s market, the usual rulebook for buyers regarding making offers and negotiating on property goes out of the window. So we need to rethink our approach to negotiating a sale. Here are some top tips to help you do just that.
Top tips for making an offer in a seller’s market
The most notable characteristic of a seller’s market is the speed. Everything moves very fast. The good properties do not stay on the market very long. Perhaps only a day or two. You can therefore expect it to be competitive not only with regards to booking viewings, but also with regards to making offers as it’s much more likely that properties will attract multiple interested parties. As a result, frequently given advice recommending that you put your initial offer in at 5-10% under asking price, doesn’t tend to go down well. Often the bidding starts at asking, and can go up from there.
Here’s what to do:
In a seller’s market, offering under asking price probably isn’t going to work. There will likely already be other buyers making offers and outbidding you. And it’s quite likely you’ll have to offer more than what is being asked.
2. Stay cool
This will not be the first time I mention this in this post, but buying and selling a property can be a hugely emotional time for all involved. As a buyer, if you’ve fallen in love with a property, you may feel a pull to do whatever it takes to secure it.
However, in a seller’s market, with the increased competition, you may find that this pushes you to make offers well over asking.
Now to be clear, it’s your money and if this is what you want to do, and you can afford it, go for it. But if possible, try to keep a cool head about it. Sleep on it if time allows. See how you feel in the morning. Might something else come up? Do you really want to win at all costs? This is a huge financial decision and it will have ramifications for years to come.
This is particularly true if you buy a property at a higher value than what it’s actually worth, and you end up in negative equity. Negative Equity occurs when a property is worth less than the mortgage on it.
3. Go in prepared
When you put an offer in on a house, and especially if you’re a first-time buyer, estate agents like to see certain things from you to decide your credibility as a potential buyer. They may request a mortgage in principle, proof of deposit and proof of identification. They will also want to know your current situation. For example, are you a first-time buyer currently living in rented accommodation or with parents, and therefore are not in a chain? Or do you need to sell a property before you can complete on buying a new home? And how quickly can you move? (For more on the home-buying process, and how you can prepare, check out this blog.)
Having all of this to hand when you make your offer will help ensure the estate agent takes you seriously as a potential buyer and consequently recommends you when putting your offer forward to the seller.
4. Make yourself attractive as a buyer
Aside from money, there are a lot of things you can do to make yourself more attractive as a buyer. Sellers and estate agents are particularly attracted to cash-buyers. Cash-buyers are buyers who are able to purchase the property with cash alone. They do not need a mortgage. They are preferred because they are much more likely to make it to the end of the sales journey and complete the purchase as they are not subject to the decisions of mortgage lenders regarding valuations, surveys and offers in general.
Clearly this is unachievable for the vast majority of us, but because you might hear it bandied around during your home-buying journey, I thought I’d include it here. Hopefully, you won’t find yourself competing with a cash-buyer on a property you love.
Other things you may be able to do to become more attractive to the seller are: Offering a larger deposit, giving flexibility to the sellers on potential completion/moving dates and being a nice person to do business with (more on this in the next point).
5. If you love it, say so
Most people in the process of selling their home are in two minds about it. On the one hand they’re (usually) excited to move and start a new adventure. But on the other, they love their home. They may have lived there several decades. They may have raised a family there. They may have invested a significant amount of time, energy, effort and money in making their home exactly how they want it. For good or bad, this home will have been a huge part of their life for a certain time. And letting go of that, isn’t easy. Change never is. Whatever the circumstances.
Sellers want to sell to someone they like, who they think is going to look after their home. For all the legal and financial elements of buying a home, we have to remember it’s still a very emotional thing. Of course, you don’t want to overdo this to the extent that the seller thinks you seem desperate and will overpay to secure the property. But showing enthusiasm can go a long way. You can do this by including a note to the seller with your offer on the property.
6. Viewing on the weekend may put you on the backfoot
Again, because the property market moves so fast you may find that those viewings you lined up early in the week for the weekend are cancelled before you get to see the property as a result of an offer being accepted.
Buying a home in this market requires you to be really on it with viewings. Because of this, lots of people end up viewing properties without the person they’re buying with present as they couldn’t both get out of work. And offers are being made when one or more of the buyers hasn’t even seen the property!
So there you have it. The property market is quite crazy at the moment and if you’re house hunting I wish you the best of luck with navigating it. Over the next few weeks I’ll be publishing more articles related to helping you buy a home, so stay tuned.