We all know that buying a house is probably the most expensive purchase you’re going to make in your life (unless you’re planning to go into space, in which case all the best to you – we’re quite comfy here).
When figures climb as high as they do for the price of a home, it’s easy to start getting blasé about a few thousand pounds extra cost. But that’s still thousands of pounds! To get the best deal on your new home, make sure you know whether or not you’re paying too much.
Know the market
Get an idea of how much different-sized houses cost. A sense of scale (e.g. the cost of a two-bedroom semi versus a four-bedroom detached) can help you develop some value expectations for properties you consider. If you don’t know anything about the market then you’re just taking the seller’s word for it. There is a useful tool called Mouse Price where you only need to type in a post code and it can give you the the area’s market details, including selling prices and sale dates for properties in the area. It can give you an estimated figure of what to expect, but remember that the change in the market has been so drastic in the last few years that the price of a property from 2006 would not be representative of the price now.
Know what you’re looking for
Don’t confuse what you need with what you want. Elements you need are non-negotiable, and any houses lacking more than a few of these shouldn’t be considered. Try making a list of your expectations and then split them up between what you need and what you want (be honest!). The items in your ‘need’ list represent your lowest expectations, and therefore your lowest bidding offer!
Research comparative properties
Are there any similar properties – ideally in the same area – that have sold recently? While it’s true that every property will have a very different price due to its condition or interior, it will still give you a good ball-park figure. It’s not always easy to find a comparative property, but you can make an educated guess by comparing square-footage. It’s much easier to do in flats or apartment buildings, of course. As above, Mouse Price is a helpful tool for this, and we’re not even getting paid to say that.
Location Location Etc.
The location of your home is, and will likely be in the future, the most important factor affecting the price. The price of the house you are buying is directly influenced by the houses that surround it, and you’ll need to consider the impact of the location on your home for resale. Be aware of any construction going on or planned that might change the immedate environment and check that the home you’re looking at isn’t the ‘runt’ of the neighbourhood. Having a smaller house surrounded by larger homes can increase its prices, but you might not want to pay extra for the neighbourhood.
Many people – especially us polite British (no data to back this up) – are not particularly comfortable with negotiation. But when it comes to house-hunting, it’s essential, unless you’re happy to lose money. Most sellers put their property price up as much as 10% more than the value so you will most likely have some price flexibility. Don’t be shy!
One of the costliest mistakes you can make when negotiating is letting the owner know how much you want the house. It’s a tough fact, but negotiations can be ruthless, and sellers will pounce on an opportunity to bring the price up. This isn’t to say negotiations can’t be civil, of course.
Stay out of bidding wars
While negotiation is crucial for a cheaper property, you’ll want to avoid a bidding war with another buyer, unless the property really is the only possible choice for you. Agents may try to encourage a bidding war to help get a better deal for the seller and this can mean paying significantly more for a property than it is actually worth.
Check the condition and get estimates from repair companies
Any successful negotiation could be undone if the house needs several repairs. Take a thorough look around and make sure everything is in good working order because if there are £15,000 worth of repairs required, and you were only able to get the seller down by £10,000, then you weren’t really saving money at all.
Talk to rival real estates
It’s the estate agent’s job to get the sale, so of course they’re not going to shower you with negative factors of the property. Alternative opinions can be garnered from rival estate agents, especially those who have previously tried to sell the property. They may be willing to let you know their opinions on the current sale price, too.
Know your hidden costs
Don’t forget that there’s more than just the mortgage price to consider when moving into a house. When the price of a house sounds great, be aware that there are other costs on top of that price to consider. The Stamp Duty Land Tax (or Land and Buildings Transaction Tax in Scotland) came into effect on 1st April 2016 and while you are exempt if your house is under £125,000 (£145,000 in Scotland), the more expensive your property is, the greater the tax. There is a helpful calculator available here, or from Scotish Revenue if you’re in Scotland.
Keep track of your other costs such as solicitor fees, moving costs and home and contents insurance, which many mortgage lenders require you to have in order to borrow from them. You might also have a mortgage broker (like Coreco!) but if they’re as smart and handsome as us, they’ll be sure to be as transparent as possible about the fees.
Hopefully, now you are better equipped to judge the fairness of the price of the property you’re looking at. House hunting without any idea of what prices to expect could leave you open to being swindled! When it comes to negotiation, knowledge is definitely power. Good luck!