Two things to keep in mind: a house sale is a process, not an act, and house prices are flexible and negotiable.
As we already mentioned in the Estate Agent section, you have instructed a professional to sell your house so you can decide whether you want him to do the negotiations or do it yourself.
If the Estate Agent conducts the negotiations you are leaving it to a professional haggler. Most Agents will try to get as high a price as possible for you, but his efforts may be compromised by the fact that he wants to sell the property as quickly as possible - a high turnover is more profitable for him than a marginally higher sales price. Make sure you keep all lines of communication open and discuss every move with him - at the end of the day, it is your house we are talking about.
If you conduct the negotiations you should know that the initial offer is usually 5 to 10 per cent below your asking price. These are the rules of the game, and buyers expect you to know this and to have set the asking price artificially high.
A negotiation involves two parties: do not make too many concessions without getting something in return. If the buyer and the seller eventually meet in the middle, it should be because both have budged a bit. Remember: you are the seller. You can decide who to sell to or not. You are naturally in the stronger position.
As mentioned above, initial offers are usually below your asking price in expectation of negotiations. There is no need to accept or reject an offer straightaway; find out the buyer's position first by engaging him in some bargaining. Neither do you have to inform the buyer about any decisions you have made straightaway. It is perfectly normal for a seller to take a day or two to think things over and then let the buyer know.
It is not a good idea to simply go for the highest offer you receive - there are other important factors to keep in mind when deciding who to sell you house to (see below).
Even when you accept an offer, it is not legally binding until contracts are exchanged. However, if you intend to change your mind as soon as a higher offer comes along, you should tell the buyer so before accepting his offer. Although (unfortunately) not illegal, it is not good practice to simply drop the buyer after he has paid for legal and administrative expenses.
Choosing a Buyer
At some point, you will have to decide who to sell your house to. When choosing a buyer, there are several factors you should take into consideration:
- High offers. The price is obviously the most important consideration, but by no means the overriding one.
- Agreement in principle. This is a mortgage guarantee issued by the lender and assures you that the buyer actually has the necessary funds to buy your house. Make sure your buyer has one.
- The chain. If buyers rely on the proceedings from a sale this poses a disadvantage to you, since one fault in the chain can cause a breakdown and upset your entire time-scale. Look out for first-time buyers, buy-to-let investors, cash buyers and buyers between homes.
Your own negotiating position is influenced mainly by the number of offers you have received. It all boils down to the simple interplay between supply and demand. The more potential buyers, the more likely that you can play them off against each other or even trigger a bidding war. Your negotiating position depends on:
- Level of interest. To repeat: the higher the demand, the higher the price you get for your property. This is the single most important factor influencing your position. This is why we recommend selling in early or late summer, when demand is usually highest. But if you have a good property, there will be many potential buyers irrespective of the season.
- Time pressure. If you need to sell your property quickly, because you need the proceeds to buy a new house or for whatever other reason, your position is obviously weakened. In this case, considerations such as the type of seller (i.e. his not being part of a chain) are more important than the amount of money they offer.
- Strength of the market. When interest rates are low and the neighbourhood you live in is becoming more expensive due to recent developments, you will be able to negotiate a much higher price. To get an overview of the condition of the property market in your area, check out the prices of properties sold recently. This can be done easily via internet property transaction databases.
- State of your property. If your property is in a bad condition, interest will obviously be lower. It is not advisable to wait for too long, since the longer the property is on the market, the lower the price you will get for it. Therefore you will have to be a bit more flexible when considering offers.
Just to remind you
Do not, ever, ever, take risks like exchanging contracts on a new home without having sold your old one! If the buyer pulls out at the last minute, you are left in the highly awkward position of having to scrape together a couple of hundred thousand pounds within about a week. This is a situation good for screenplays, but not that entertaining when it is you who has to worry about losing a finger-nail for each day you cannot pay.
Another thing to keep in mind is not to let any personal issues get in the way of a successful, profitable sale. No matter how much you dislike the people who are about to buy your beloved home, if they are cash buyers and offer you a high price, it would be stupid to let this transaction fail.
For a good impression, send a letter of confirmation to both the buyer and the Estate Agent once the sale has been agreed. Spell out all the details, dates agreed for exchange of contracts and completion, and attach a list of the items to be included in the sale.
Although this is not a binding document, it gives the whole process an official and professional touch and helps to eliminate any doubts.