One in five pay above the asking price for their first property and on average are forking out nearly £8k extra to secure the property.
Research from Barclays Mortgages has revealed how 51% of those who bought for the first-time in the last five years regret not negotiating prior to purchase.
Some 52% of first time buyers – typically aged 32 – admit they have never negotiated for anything in their lives, with a further 53% carrying a fear of missing out in the “extremely competitive” market if they were to negotiate.
And some 35% would avoid negotiations given the small pool of affordable housing available, as is clearly shown in recent market data from Countrywide Estate Agents, shared exclusively with Barclays Mortgages. Figures on property purchases made through Countrywide between April 2016 and April 2017 show that one in five (21%) British first time buyers paid over the asking price for their property, forking out on average an additional £7,758 to secure their chosen property.
Surprisingly in England and Wales it’s not Londoners, but those in Yorkshire and Humber who proved to be the most likely to go over the asking price with almost a third with 29%, paying more than the initial selling price. In Scotland, the figure is even higher at 40% but this reflects the fact that properties are often purchased through the sealed bid system.
This comes as a huge 91% of first-time buyers who purchased within the last five years, believe there is not enough negotiating advice available from trusted sources. In fact, 30% have admitted to being confused by the limited information available and 42% are still leaning on their parents for negotiation advice. Despite this, appetite to learn the skills of a good negotiator are strong with 66% wanting to be taught more.
Proving that not all first-time buyers are negotiation adverse, 55% said they feel comfortable negotiating through an estate agent if they haven't formed a relationship with the homeowner during a viewing. Once a personal bond is formed it becomes more difficult to keep focused on the negotiation. A further 54% said they would haggle when they are on holiday outside of the UK, if it was accepted as part of local culture.
Despite the holiday haggling, 40% do not consider themselves to be good negotiators and admit that their parents are better trained in the art – highlighting a clear generational skills gap.
Peter Brooks, behavioural finance expert at Barclays, said: “Buying a property is the biggest investment of most people’s lives and it’s imperative that the negotiation process is approached with a healthy combination of pragmatism and fearlessness.
“The biggest mistake many first-time buyers make is to rush into decisions and then panic once they have been made. Always remember to balance your approach and referring to informed and independent advice will allow for a smoother negotiating process for all parties.”
Craig Calder, director of Barclays Mortgages, added: “Barclays Mortgages research shows that the fear of first-time buyers missing out on their ideal property purchase contributes to 53% feeling unable to negotiate, with almost a third (31%) willing to be prepared to pay above the asking price.
“We have helped over 3,500 first-time buyers get on to the property ladder in 2017; and we understand the often-challenging process that all first-time negotiators go through when purchasing.
“Despite 85% of first-time buyers describing the housing market as being “extremely competitive”, our tips on negotiating will help to provide the confidence needed to achieve the right purchase price.”
Peter Brooks, head of behavioralfinance at Barclays, has compiled a list of top tips for the all-important first purchase.
- Do your research – There are many online tools available that allow prospective buyers to see the average selling prices, school catchment areas and crime rates in the local area. Buyers should always do their research and use this knowledge as negotiation ammunition.
- Be optimistic but always be willing to walk away – a positive attitude will help engage your counterpart and encourage them to work with you to find a deal, but don’t pin all your hopes on just one property despite the temptation to become attached to a particular property – there are plenty more opportunities out there if this one doesn’t go to plan.
- If at first you don’t succeed, try, try again – don’t feel defeated if you are unable to negotiate on the offer price. Your initial offer isn’t your only opportunity to negotiate: have a professional survey done on the property as it might find issues that need addressing and for which you can use to negotiate the final sale price.
