Renegotiating an accepted offer on a property

Negotiating House Prices: Before and After Your Offer

Negotiating a house price effectively requires preparation, research, and the right approach. Whether you’re preparing to make your first offer on a house or need to renegotiate the asking price even after your offer has been accepted, understanding the process and having a solid strategy will help you secure the best possible price.

Negotiating Before You Make An Offer

Before you submit an official offer on a property, it’s important to make sure you’re in a strong negotiating position:

1. Research the market: Look at recent sales of similar properties in the area using resources like Rightmove’s house price data. Understanding what comparable homes have sold for gives you solid evidence to support your offer.
2. Get mortgage pre-approval: Having a mortgage Agreement in Principle (AIP) demonstrates to sellers that you’re a serious buyer with the financial backing to complete the purchase. This puts you in a stronger position to negotiate.
3. Understand the seller’s situation: Learn why the seller is moving. If they need to relocate quickly for work or have already found their next property, they may be more receptive to a lower offer in exchange for a faster, more certain sale.
4. Start with a realistic but lower offer: A common strategy for many prospective buyers is to begin 5-10% below the asking price, provided you can justify this with market data and the property’s condition. However, avoid making an offer too low that it isn’t taken seriously, as this can immediately dissuade the seller.
5. Justify your offer: When making an offer, explain your reasoning based on comparable sales and any repairs or updates the property needs, which you may have identified upon a property visit. Evidence strengthens your position and shows you’re making an informed, fair offer rather than simply trying to get a bargain.
6. Be flexible and prepared to compromise: Show willingness to be reasonable. If the seller won’t budge on price, consider negotiating on other terms such as the completion date, included fixtures and fittings, or agreeing to certain repairs.
7. Use a multi-stage approach: Don’t reveal your maximum price in your first offer. Be prepared to increase your offer in response to counteroffers, and signal when you’ve reached your ‘final’ offer to indicate you’re at your limit.

Stay objective: Keep emotions in check during negotiations. This is a significant financial transaction, so focus on the logical aspects such as price, market value, and the condition of the property rather than becoming emotionally attached.

Negotiating After Your Offer Has Been Accepted

Until contracts are exchanged, your purchase is not legally binding, which means you can renegotiate the price based on new information. Whilst survey findings are the most common reason for post-acceptance renegotiation, there are other valid reasons you might seek to revise your offer:

• Survey results revealing expensive issues: The most common trigger for renegotiation. If your RICS survey uncovers significant problems such as structural issues, damp, subsidence, faulty wiring, or a leaky roof requiring costly repairs, you have strong grounds to request a price reduction.
• Issues during conveyancing: Information that comes to light during the conveyancing process, such as boundary disputes, restrictive covenants, or planning issues, may provide justification for renegotiation.
• Market changes: If the property market has softened significantly since your offer was accepted, particularly if the seller has been slow to progress the sale, you may have grounds to renegotiate based on the property’s current market value.

Important considerations when renegotiating:

• Gather strong evidence: Whether it’s a detailed survey report with estimated repair costs, quotes from qualified builders, or recent comparable sales data, the more evidence you have, the stronger your negotiating position.
• Calculate a fair revised offer: Determine a realistic new offer based on the cost of necessary repairs or the property’s current market value. Don’t simply make an arbitrary reduction.
• Be prepared to walk away: Understand that the seller is not obligated to accept your revised offer. They could reject it, potentially leading to the deal collapsing. However, if you’re not willing to pay more than you believe is fair, you must be prepared to walk away.

The seller might compromise: In many cases, sellers will meet you halfway rather than lose the sale entirely and have to start the process again with a new buyer who will likely discover the same issues.

Your offer to purchase a property is ‘subject to contract’ and this includes the results of any survey that is undertaken. If your survey report identifies defects in the construction or any repairs that should be done, then these will affect the property value due to the cost associated with the repairs.

How will the Estate Agent react?
• Estate agents commonly see this every day so won’t be phased by your asking to renegotiate.
• Some people will pull out of the sale completely due to defects from the survey findings.
• The sellers and estate agents should not dismiss your concerns as other buyers will also find the same defects.
• It is also worth noting that the agents would not have known about the repairs when they valued the property, so a discount is not an unreasonable request.

What to do next – the best way to renegotiate an ‘accepted offer’…
1. Do not leave it down to the estate agent to just pass on a verbal message to the seller.
2. Write a formal email or letter, with your new proposed offer and that this is due to findings in your survey report by an independent RICS Chartered Surveyor.
3. Tell the seller what the situation is and emphasise that you love the house and are still very keen to continue with the purchase but do not want to pay full price when repairs are clearly needed.
4. Add a note in a polite way that other buyers will face the same problem. Finding a new buyer again will be very inconvenient/time-consuming/costly, then hopefully the seller will stick with you.

What if the seller rejects your renegotiation?
If the seller refuses to negotiate and you believe the property is overpriced given the issues discovered, you face a decision: proceed with the original offer price, accepting that you’ll need to fund the repairs yourself, or withdraw from the purchase. Consider that finding a new buyer will likely result in the same issues being discovered, so many sellers will eventually come round to negotiation rather than start the process again. However, in a competitive market or if the seller has other interested buyers, they may be less willing to compromise.

What should you write in your letter?
• Be polite but clear and state the facts
• List the defects and the associated costs of repair.

• If you’ve had a full Level 3 RICS Building Survey (Level 3) then the surveyor may have included an estimate of the cost of repairs.
• If you’ve had a Level 2 RICS HomeBuyer Report (Level 2), you will need to get your own repair estimates from a qualified builder or other professionals such as a damp report specialist.

• Total the costs and decide on a reasonable discount off your original ‘accepted offer price.
• It’s worth adding a copy of the specific pages of the report that relate to the repairs, but you don’t need to give a copy of the whole report to the estate agent or the seller.

• You could also include the name of the companies that have given quotes to strengthen your proposal and re-negotiation.
• The seller will then need to consider this if they still want to sell within a reasonable time frame.

We hope this helps you in your home-buying journey.

P.s if you haven’t had a survey yet you can get an instant on-screen quote now, just click the blue quote box on the right or give us a call and we’ll be happy to help.

NEXT – Importance of getting a survey video