How to Handle Viewings
I must confess that this page does read a bit like the sort of advice Pippa Middleton might give. So, let me say ‘sorry’ before you start reading, in case you find a lot of this is stating the bleedin’ obvious.
Preparing for viewings
These are a few suggestions:
- Turn lights on unless the flat is already flooded with sunlight. It makes it more attractive than available daylight on dull days. Turn the lights on in the kitchen, which probably doesn’t get much natural light.
- Make sure the hallway is clear.
- Make sure the route to the sliding doors in the living room is clear.
- Deal with potential smells. Get rid of the remains of food, or a smelly bin.
- Open windows wide for a period beforehand.
- Put money, jewellery and valuables out of the way. Thieves view properties.
Let the estate agents do the viewings
Let the estate agent show people round, if at all possible, rather than doing it yourself. There are a number of advantages.
The potential buyers can be honest with the estate agent about anything they don’t like. Since many off-putting features will be obvious from the start, the estate agents can volunteer helpful suggestions. They can emphasise the floor to ceiling windows, the balconies, and the relative safety of the estate. If you do it, you may oversell or undersell. If this is your first outing as a salesman, you may be more flamboyant and gushing than you should be. If you try to counter that, you may come across as unhappy with your own property.
Estate agents will be more credible when it comes to confirming what can be done with your type of flat. They can refer to other flats they know about, or the attitude of Barbican Estate Office to changes. So their repertoire of weapons in the battle of sales is greater than yours. Despite their supposed bad press, most people do believe what estate agents tell them.
Showing people round yourself
- If you are on your own, you may feel you would want a relative or friend to be present. In any event, make sure someone knows you are doing a viewing at a particular time and who it is with. Get some proof of their identity and address first. You can make sure the agents obtain this and verify it before the viewers come round. You could get a landline number and then ring it back to confirm the viewing time.
- If there are two of you, it’s usually best for only one to do the showing. Otherwise, rooms will seem cramped as you all manoeuvre to get out of each other’s way.
- Prepare your comments in advance, by making a number of points on paper. Only note down headings. Never try to write a spiel word for word, or it will come out wooden and unnatural. (Obviously don’t have notes with you during the viewing.
- Never volunteer any purely negative comments. There may be features which are negative, but find something positive to say about them.
- Be ready with answers for obvious defects. You should discuss frankly with the estate agents what objections viewers might have. Once you have had a few viewings, you should ask the estate agents to tell you what the comments were when they rang up the viewers. Based on that feedback, prepare some appropriate comments to make on future viewings.
- Let the buyers go into a room first, so their impression of it is as empty – and therefore as large – as possible.
- Some people like to walk around a property on their own. Obviously, you don’t want to let people steal things, but the best precaution is to put away all steal-able items before viewing and then let people walk around reasonably freely.
How to Select the Best Buyers
It is not all about the money. You need buyers who can perform. Normally this means that they must be able to proceed quickly and without too much complication. But it might mean that you need a buyer who is prepared to allow you to stay on in the flat for longer than the normal one month between exchange of contracts and completion.
Getting the right kind of buyer is often almost as important as getting the right kind of price. If you end up with a nightmare buyer, who hasn’t arranged finance and, in reality, can’t afford the flat on his income, you won’t find that out for weeks, and then you will have to start again, and possibly lose the property you are buying in the process. You should usually insist on seeing evidence that the buyer has a mortgage approved in principle before accepting an offer.
These are factors which are usually important in making a decision.
A cash buyer is particularly attractive. A cash buyer is someone who doesn’t need to sell a property and doesn’t need to raise finance on mortgage to buy your flat. If someone claims to be a cash buyer, check that they really mean they don’t need a mortgage. In fact, ask for some evidence from their bank that they have the funds ready and waiting. Some people seem to think that they are cash buyers because they will be providing money (mortgage money) at completion – as if everybody else didn’t!
Buyers without a chain
A buyer who is not in a chain is attractive. The way the property market works is that most people are selling a property to buy another property and they have to tie both transactions together. This means that there will be several linked buyers and sellers and no one can exchange contracts until everyone is ready. So you only have to have one buyer pull out somewhere in the chain and everyone is delayed. If you find a buyer who does not have to sell a property, you remove that risk (Of course, you still have the potential problem for transactions upstream from the property you are buying).
First time buyers
A buyer who is a first-time buyer is attractive. In fact, this is really just the same as a buyer who does not have a property to sell. The only problem with the first-time buyer is that he or she is often raising a high proportion of the property price on mortgage and raising the mortgage finance may take slightly longer than would be the case for a buyer using funds from a previous sale. The mortgage market is not as easy for first time buyers as it was in the past. Nonetheless, a first-time buyer is an attractive proposition.
Buy-to-let landlords are desirable buyers, because they are simply buying for investment without needing to sell another property. So that also helps to avoid a chain. Barbican flats appeal to buy-to-let landlords.
Buyers with a mortgage approved
A buyer with a mortgage arranged in principle is to be preferred over one who has not yet arranged a mortgage. It is a sensible step for a buyer to take to get prior approval from a chosen lender for the proposed loan. Unless he does that, he won’t know exactly what value property he can afford to buy. If a buyer tells you he does not yet have mortgage finance arranged in principle, that should set off alarm bells. This is all the more important in the current market, because lenders are becoming much more conservative about the loans they are prepared to make. You need to be certain that your buyers aren’t just assuming they can get the necessary loan when in reality they won’t be able to.
(An offer in principle is not the end of the story. The lender is only saying that, based on the buyer’s references and income, that sort of loan would be given. If you do a deal, the buyers still have to obtain a formal mortgage offer and for that the lenders have to check out your flat before guaranteeing the loan.)
Buyers with a property under offer
Buyers who have their existing property under offer are attractive. The best approach to buying and selling is to get your own property under offer before looking for a property to buy. If prospective buyers say that they have not yet put their property on the market, you should normally look for someone else. If they already have their property under offer, that means the conveyancing process has got under way and it shouldn’t then hold up your transaction.
How to Negotiate the Best Deal
Most people aren’t going to offer you the price you are asking – even if they are actually willing to pay it – because they will hope to get something off the asking price by negotiating.
Negotiate via the agents
Unless you are used to negotiating as part of your business life, or even if you are, it’s best to do the negotiating through the estate agents. It’s easy to get polarised. After all, it’s your home – and, by implication, you – that they are insulting by offering less than your asking price.
Buyers handling their negotiation personally are liable to get aggressive in the same way we British typically mishandle negotiations over carpets in foreign bazaars. If both sides exchange messages via the estate agents, it takes all the shoulder-squaring and eyeballing out of the process. It also gives you time to think. If you are dealing with a buyer face-to-face, snap decisions have to be made, and that’s when you find you make concessions that you later regret – such as throwing in all the furniture, or agreeing to a delayed completion period.
There’s a good chance that the buyers will have confided in the estate agents to some extent – buyers often come to regard the estate agents as their allies, a feeling which estate agents naturally want to foster.
Buyers don’t seem to take it fully on board that estate agents act for you, not for them. Buyers would never dream of telling you that they could go up another £10,000 if they really have to, but they might impart this information trustingly to the estate agent. The estate agent will then tell you. You can then instruct them to go back with a suitable counter offer.
But equally, it is a good idea to keep your cards close to your chest if you can. The estate agents will negotiate according to whatever instructions you give. But the nature of the job is to achieve deals, and the estate agent will be trying to get you and the buyers to arrive at a consensus. So it’s best not to tell your estate agents what your bottom price is, or they will almost subconsciously be drawn towards finding a consensus between the buyers’ highest price and your lowest price.
What you really want is that the buyers should be pushed up as far as possible, without you having to move down to meet them. Unscrupulous agents might reveal your bottom line to the buyers to get the deal done.
The absolutely worst thing you can do is to have a handshake deal with the buyer direct. That tends to turn what is in fact a commercial deal into something to do with personal honour and your word, and you will be accused of all kinds of moral wrongdoing if you later need to alter the terms at all.
Hold your nerve
Do not rush to accept the first offer you get. If it is a lot less than your offering price, wait for a few days to see what other viewings bring. (However, if it is definitely a ‘buyer’s market’, and if you have waited for a long time even for that first offer, then discuss it with the estate agents and accept it if they think it is a fair offer.)
If you immediately get an offer at the asking price, or if the prospective buyers make a lower offer that is easily pushed up to the asking price, you must consider whether you have under-priced the flat. Prices can be quite volatile and you may have priced your flat too low. Don’t feel you have to accept an offer just because it’s the price you are asking. See what a few viewings brings in. If it is clear that several people are prepared to pay the asking price, then you should seriously consider increasing the price. You are not doing anything wrong if you don’t accept the offer and re-advertise the flat at a higher price. ‘Gazumping’ only occurs if you accept an offer and later pull out and go for a higher price. (And even that is not illegal, just morally dubious.)
How to negotiate with buyers.
If you receive an offer less than the asking price, don’t simply refuse it, or even necessarily go back with a counter offer. Ask the buyers to explain how they arrived at their figure. The chances are they have just plucked a figure out of the air because they believe that bartering is the correct thing to do. Asking the buyers for reasons puts them on the defensive. At worst they come back with an explanation that a similar flat is on the market at a lower price which is at least an argument you can consider.
Don’t negotiate direct with a buyers. If you do that you are losing out on one of the main benefits of employing an estate agent in the first place. Using an estate agent to negotiate gives you an opportunity to consider your response before going back.
If you receive an offer well below your asking price, you could simply refuse, if you are confident of your price. But if you are willing to make concessions, one useful tactic is to go back with a counter offer which is only a very small amount below your original asking price. Negotiators expect parties to start splitting the difference. If a buyer puts in an offer £20,000 lower than the asking price, it is tempting to go back at £5,000 less, then the buyers counter at £10,000 and then you split the difference and do a deal at £7,500 off the price. But that is allowing the buyer to set the parameters. If you go back offering, say, £2,000 off the price you set a more restricted playing field for the negotiating game and make it clear that any reduction is going to be minimal. There is a good chance that the buyer will accept your bluff as evidence of your confidence in your price and settle for £1,000 off the price.
Have something to offer up your sleeve
If you have to compromise during negotiations, try to give something up which does not actually cost you money. These are some examples.
Offer to throw in some fixtures and fittings. If they are not mentioned as included in the sales particulars, you can offer to include the white goods in the kitchen, or the curtains or carpets. This probably won’t cost you any money in reality, because you are probably not planning to take them with you to your new property anyway. Fixtures and fittings always give some margin for negotiations.
You can offer to take the flat off the market. A sensible buyer should insist that you take the flat off the market as soon as the offer is accepted, but you can make it seem like a concession. It removes the anxiety from the buyer’s mind that a better offer might come along. In reality, although the agents stop pushing the property, if they do receive a higher offer they are legally obliged to pass it on to you. You are legally entitled to switch to the new buyers, if you choose. If you do receive a higher offer it suggests that your estate agents may have underpriced the property.
What to do if you get competing offers
If you are very fortunate, you may receive a number of offers from buyers desperate for the type of home you have, and all competing for a small pool of such properties.
If you feel that you may be able to squeeze more money out of the transaction, you can institute a ‘bidding war’ in which you invite the competing buyers to make higher offers. This is anathema to buyers, of course, because they keep being pushed up. Sometimes they just pull out of the transaction altogether and look elsewhere. One fairly civilised way of dealing with competing bids is to have ‘sealed bids’. How this works is that the competing buyers are asked to give the estate agents their highest price. At a particular time, the estate agent will open all the bids and tell you the results. You can then choose the highest bid. (Strictly speaking, you are not bound by this arrangement at all, and you can still choose a lower bid if you think the buyer is more likely to perform, or you can carry on trying to push the price up.)
Another way of reacting is to have a contract race. Under this arrangement, you accept offers from two or more buyers, and turn it into a race as to who gets to the point of exchanging contracts first. This would only be of interest to you if your priority is to exchange contracts quickly. This can simply put buyers off because they have to incur legal expenses which they may lose.