The average price of housing rose by 7.8% in the second quarter, which is the biggest increase in the last two years. Prices are suffocating buyers and the ever-useful trick of haggling is no longer infallible. There are owners who are closed to negotiations. Although the purchase of houses has fallen by 5% until June, the negotiating power is in the hands of the seller, who knows that the supply has been considerably reduced and does not even come close to meeting the existing demand. 14% of the houses sold in the second quarter were not advertised for even a week, according to Idealista. “In the real estate market of cities with more than 5,000 inhabitants, where the primary residence predominates, the power is on the side of the seller. Some towns today have only 30% of the supply they had five or six years ago,” says José María Alfaro, president of the National Federation of Real Estate Associations (FAI). The seller also knows that the market is reaching a turning point: the European Central Bank (ECB) lowered interest rates by another 25 basis points in September, which opens the door to cheaper mortgages and, therefore, to the expected increase in the number of sales. Fotocasa Research analyses show that negotiations between buyers and sellers have decreased to 58% this year. Almost six out of ten haggle. “The percentage is at its lowest levels for six years, except for 2020, the year of the pandemic,” explains María Matos, director of Studies at Fotocasa. And the worst thing is that, in general, there are no big discounts. The market is not in a position to offer many discounts. According to data from the Tecnocasa network, the reduction in the initial sale price is 7.5% on average this year. “Last year it was 8.4%, so the margin for negotiation has decreased,” explains Lázaro Cubero, director of Analysis for the Tecnocasa Group. According to Fotocasa, 64.9% of sellers negotiate up to 10% and only 6.6% cut up to 20% on the announced amount. In large cities this percentage can be much lower or even non-existent. “The difference between the sale price and the closing price of the purchase is minimal at the moment in areas where demand is much higher than supply,” says Alfaro. The amount of the reduction varies according to the real estate agency consulted and also depends on various factors such as whether the starting price is very inflated or whether the seller is in a hurry. These are issues that you need to know in order for the negotiation to come to a successful conclusion. Although the seller is now a tough nut to crack, there are some guidelines that can help the potential buyer. One is to gather all the information possible before making an offer. “Both from the marketing point of view (how long it has been on the market), as well as from a technical analysis of the facilities (if it needs reform, its energy efficiency) and also from a legal analysis (state of charges and limitations)”, says the president of the FAI, who speaks of “bringing rationality into the purchase process”. You have to find out how the seller has set the price. “If you have looked at similar homes advertised on real estate portals that have not sold because they are overvalued, it means that your house will also have an incorrect price”, Cubero emphasises. This is because the majority of owners who sell on their own tend to set a high price by default thinking that there is always time to lower it. “Many owners who sell without professional advice set high prices based on incorrect assumptions. This can mean that the house is on the market for a long time and, finally, is sold at a lower price than expected,” says Ricardo Sousa, CEO of Century 21 Spain. Sousa advises owners to “set realistic prices in line with the local market.” One clue to start haggling is to see if the house has been advertised on portals for a long time: “If it has not been on the market for two months, it is overpriced,” adds Cubero. At the Comprarcasa brand, this period is reduced: “If it is on the market for more than 15 days, it means that it is very overpriced and that there is room for negotiation of between 20% and 25%,” says its commercial director Jordi Clanchet. The expert insists on the fact that if the house is sold at its real market price, it should not take more than 48 hours to be sold. Sometimes, “it does not even go on the market and only moves between the contacts in the agencies’ database,” he points out. Knowing if the seller is in a hurry is important. «It depends on the nature of the rush: if it is for personal or work reasons the margin is less than 10% and if it is for economic reasons it can be greater,» says Alfaro.
Tactics and arguments
Fotocasa recommends some tactics for negotiating, such as making an initial offer lower than what you are willing to pay. There will be time to raise it later. “This leaves room for the seller to negotiate without reaching their maximum budget immediately,” says Matos. She adds: “Point out problems or repairs that would be necessary and use them as an argument to request a reduction in price.” The director of Studies at the portal recommends making a formal offer, in writing, when you already have a clear idea of the price you want to propose to the seller. “The owner perceives it as a serious decision.” Be careful if furniture or appliances are included in the negotiation. “If you don’t leave it tied up and in writing, it may happen that when you enter the apartment you see that the seller has taken them,” Cubero explains. You have to show interest in the house, but without appearing too anxious. “It is better to be direct but respectful, avoiding aggressiveness. A clear focus on your expectations and budget makes the negotiation easier, but it is important to listen to the seller and be strategic when making demands or proposals. Maintaining a collaborative attitude and showing interest without appearing desperate is usually the best tactic to reach a favourable agreement,” advises Matos. Regarding whether it is better to wait for interest rates to fall even further, the experts are clear. “In the coming months, in the main cities, sales prices will continue to rise and it will not be worth waiting for the Euribor to fall either if you have to finance,” says Alfaro.