Now the game begins, or if you would rather not treat it as a game, now the stress starts. It is helpful to realise at this stage that there’s a reason why it’s called the “housing market”. Property vendors (sellers) want the best price that they can get, whilst sellers would like to pay the lowest price possible. Ultimately, it’s helpful to both parties, to agree a reasonable price.
What constitutes a reasonable price, will vary with the location and type of property, the property condition, the number of people interested in the property at any given time, current economic conditions, and the price asked.
Further, the market for property is not static, instead, it changes almost daily. Imagine buyers and sellers as being lined up opposite each other on conveyor belts. New people, and properties are being added to the coveyor belts daily. At the same time, other people and properties are being removed.
If you are a seller, you want the conveyor belt opposite you to be full of people – i.e. lots of buyers in the market. You also want your conveyor belt to have few properties on it – i.e. few sellers. This guarantees plenty of viewings and a probable “bidding war”, with prospective purchasers trying to outbid each other to secure your property.
If you are a buyer, you want the opposite – i.e. many sellers, and few buyers. This means that you can place a few low bids on the properties that you like, in the knowlege that one seller will probably cave in, and agree to a bargain price.
Recognising what type of market you are in, is therefore a primary consideration. Bear in mind that the micro market – i.e. the local market, may be entirely different to the macro market – i.e. a regional or national market.
Also be aware that there may be a temporary uneven-ness in the ratio of buyers to sellers that may quickly pass.
Overall – decide on the price that you are prepared to pay, and try not to deviate from this too much.
In today’s market conditions I’d suggest going in low, perhaps around 15 – 20% lower than the asking price as an initial bid. It will probably get refused, but you never know, you might have just bumped into a motivated seller.
