When the Queen came to the throne 60 years ago the idea of ‘haggling’ for something was not considered ‘the done thing’. Traders like Dell boy & Rodney would barter offering punters a ‘deal’. Arthur Daley or some similar cheery pearly King would ‘see you right’ but readers of Country Life and London Portrait browsed advertisements that said something like “Price – freehold – £23,500”.
When I first started work for ‘early-morning-alarm-calling’ Savills (ask Piers Morgan) this changed. We started to ask for “offer around” or “offers in the region of” and we did so by claiming ignorance of the real value of a property in a rising market suggesting that by quoting a flexible guide we were no longer bound to accept £23,500 if someone offered it. We would thank the Major for his generous offer but point out that ours was a guide and not an offer to treat. We were hoping for other interest and who knows, a higher offer before we committed our client. And it was a model that worked well.
But times they are a changing. This summer prices in many parts of the country are on the turn. Nationally prices are marked down by 1% over the last year. Cashed up Money Saving Expert Martin Lewis and Money Supermarket’s great Omid Djalili will sensibly encourage you to keep your pounds in your pockets rather than pay ticket price. They beg you to barter, to haggle – not to be so ‘British’ and to be prepared to walk away from a deal if it’s not right. Unwittingly the agent’s clever ‘flexible’ guide price is now biting them on the posterior as buyers now shoot a low-ball offer pointing out that £160,00 is ‘around £225,000’ perhaps just a little bit further around than the vendor might have hoped. Like Luton claiming to be ‘London’s third airport’ we know that most people are taken in by a statement made with authority even if the result is a 30 miles grubby coach ride to Marble Arch.
I recently agreed a deal for a client who wanted to buy a neat flat near Swiss Cottage. The original guide was £1.65m. With patience, good humour and knowledge of the market we tied it up at the price the estate agent said his client “would never take”. £1.3m is a fair price and I acknowledge that it’s not a generous price but that’s business.
Average asking prices quoted by Rightmove.co.uk in May are £84,588 above the average sold price calculated by HM Land Registry. These may be different baskets of properties, different techniques may be used to calculate their respective averages but in my experience it demonstrates the point. Sellers ask more than buyers pay. Even in the seemingly red-hot London market 64% of deals are done below the agents asking price.
Another client has just moved into a lovely house in the country. It was first marketed at £2.6m and many months and a couple of different agents later we paid just £1.85m for it.
So, when you find the flat or house you want remember this. The agent doesn’t work for you so he is going to shame/embarrass/pressure you into feeling bad if you were to offer less than his inflated guide price. I know an agent who has the disgusted “oh I don’t think that offending my client with an offer of that level is going to encourage him to feel disposed to sell to you” response down to an tee. Well, ‘rollocks’ my friend. We’re talking my clients money and like Jimmy Carr, he’d like to keep as much of it as he can. So, if the seller’s got the nerve to reject it, have the good luck to have a higher bid or just wants to stalk off offended then good luck.
Remember, a third of all properties currently advertised for sale have had their ‘flexible’ guide price reduced and only 35% of all homes put up for sale actually sell. If someone with more money than sense or with some weird hang up about being rude to an estate agent wants to pay more then good luck to him. As the great property investors of the last 60 years have said “you make money when you buy, not when you sell”. Buy with your head and not with your heart. Remind the agent that his price is a guide and that in your view it’s not a very good one!