Purchasing flat: when to haggle? Do Americans and Brits do it differently?

Alrighty. We put a bid in for the flat. Then we were turned down. Then we put in a higher bid for the flat. And then we were told that they were going with a different offer.

It has been a week and a half, and they still have the listing up--so we are under the suspicion that the estate agent and seller still are trying to sell the place, but wanted us to go away...

My US-born/now UK citizen friend thinks that we were being "too American" in our attempts to bid on the flat. That, here in the UK, generally, you start with close to your highest-willing to go amount-- get the bid accepted at the start. Then you gazunder-- you, with the help of your solicitor and the bank valuation threaten to pull out unless they reduce the price. US/UK friend thinks that we were too difficult to start, and that the agent and sellers likely thought we would spend all their time haggling at the start and then just gazunder.

So,(sigh), what to do? Anyone here have an opinion on ettiquette? Do I just let my husband continue this behaviour--of the slow-going low-incremental bids? Will this NEVER work because we're too American? Or do we try this higher-bid to start/then gazundering thing? Is it that the gazunder is more appreciated because the buyer has already committed to a solicitor and the mortgage--so there's a level of committment?

Of course, let's not even talk about my fears regarding gazumping. Or, yes, go ahead. Please--any advice about experiences and what to do is appreciated.


Best, Rutabeg

Rutabega - my husband's been an estate agent for 7+ years and is happy to give you some advice on how to haggle for the best price.  I'll post a reply this evening when he's home!

Well, that's certainly not how Phil & Kirstie do it! 

Seriously though, the process of buying & selling in the UK is so vastly different to the US that it is quite confusing.

Personally I would never count on being able to gazunder to get a better deal. When we sold hubby's house we accepted a bid slightly under the asking price and everything continued on course until the day of exchange. Then the buyers attempted to gazunder us. Hubby flatly turned them down and told them they didn't have to complete if they wanted to try and change the deal! As they were in a chain and would lose that sale, they relented and paid the agreed price. (we were in rented accomodation and could've stayed there until another buyer came so we weren't desperate) In fact hubby was quite upset that they tried this tactic.

Our in-laws recently sold their house. They negotiated a price with several offers and counter-offers. Ultimately they took a lower price than they wanted because the buyer was ready to complete quickly.

That brings up another point - are you considered "good" buyers? Financing in order? No chain? What kind of completion date are you looking for? All of these factors count when a seller is considering your offer. Maybe it wasn't your price but something else that made them want someone else to bid??? 

Don't get discouraged - the right house at the right price is out there waiting for you.

I can tell you that gazundering, is not a nice practice and definitely not the normal thing to do.  In some ways it's riskier for you as the buyer.  You will have also payed some fees such as surveys up front, so maybe £300-500 quid.  If you try to pull a fast one on the buyer and they aren't in a hurry to sell, they'll probably just tell you to take a hike.  

For instance, we are in the process of selling our flat.  Offer has been accepted after a tiny bit of negotiation.  We aren't in any hurry to move.  Our solicitor is a family member and charging us a set amount due on completion.  We have not out-layed any cash for this particular offer yet.  If our buyer were to suddenly come back and offer us say £5K less.  We'd just not accept that.  We aren't out any money. We aren't in a hurry.  We have nothing to lose putting it back on the market.  So if she were to try and gazunder us, she would lose out on a flat that she presumably wanted and liked.  Her loss, not ours.

So you can try gazundering, but it's not always a sure thing because you don't necessarily know the seller's situation.  Since the agent is only working for the seller, he's not going to help you get a lower price as his commission will be less.

It could be that the seller accepted another offer based on something non-monetary - Chain free, larger deposit, mortgage pre-approved.  The seller may know that you are American and perhaps knows that it can be harder for foreign nationals to secure mortgages.  Not that that is the case for you, but could be their perception.

Be patient, I think what you are doing is the way to go.  Make a realistic offer to start and have a little wiggle room to go up.  When we were buying, we put in offers on two other places before we found ours.

We also put in offers on three other places before we had ours accepted. The first time, they went with a different buyer, then took it off the market. Second time, we offered 5K less than asking price and they said it wasn't enough and later took it off the market. Third time, fabulous apartment, many, many takers, and ours wasn't the highest offer. Oh well.

So, given our negative history, when we found our new place we instantly made a full-price offer. Didn't wait to mull it over - we had seen hundreds of places, so there was no need (although it made my husband very nervous to act so quickly). Didn't try to haggle. We were in a hurry by this point.

What happened: we offered full price, plus we wanted all kitchen appliances. Seller accepted. THEN the agent started pushing his in-house mortgage on us, which had a higher rate than the one we were going with. Threatened that the seller might not go through with it if we're not a "guarantee" (because having an in-house mortgage makes us so much more "guaranteed"). We agreed, on the condition that we get 7.5K off the purchase price. Seller agrees. Mortgage doesn't go through, so we're back to our old mortgage with the better rate AND the discount on price.

Does this count as gazundering? I don't really think so, but it is one of the ways that people can end up with a lower price after an offer's been accepted. I don't think that gazundering is really a normal practice, though. Like the other posters said, it has good potential to backfire.

But. The housing market is in an odd situation at the moment (or at least it was the past six months, while we were buying). Since people are frequently selling for less than they paid, they're often reluctant to let it go at a price that will actually sell. So some houses sit on the market for ages and ages, while reasonably-priced houses are being snatched up the moment they go on the market because they're so rare. We saw this happen over and over and over: we'd find a great place, then *snap*, it'd be gone. It was really, really hard on my husband because he just can't stomach spending that much money, and wanted to think about each individual flat for a week. But we didn't have the luxury to do that, and lost a couple of places because we couldn't even make an offer before it was off the market.

Anyway, to answer your question, yes, Brits and Americans do it differently. Especially in the current market, it's important to look within or under your ideal price range and be prepared to either make a close-to-asking-price offer or be turned down. You can make a few cheeky offers if you want, but in my experience you'll just be told where to stuff it. Also, I doubt they just want you to go away - they're not going to refuse your money because they don't like your previous offer. I've seen the listings for some places stay up after they're sold, while other agents will put SOLD over the ad five minutes after the offer's accepted. Don't worry about it. Just keep looking for the best property for you, and be aggressive when you find it!

Good luck, and happy house hunting!

Ah, many thanks for the tales. This helps to put it into perspective. We've been more inclined to haggle up front, but I wanted to make sure I understood this gazundering bit. I was concerned that it is an expectation and that we were not ready to do that.

It's a really WEIRD market right now. People are taking it hard that the value of their home has gone down... and, although they have the home on the market, they are trying to make a profit. So the market seems flooded with places--but stalled at the same time.

We're good with a mortgage from our bank here. They have been helpful-- but, yes, they certainly do want to try to sell you their mortgage, don't they? Oh well, nothing to do but persevere!

Any further comments are most welcome!

Best,
Rutabega

Hi Rutabega,

Sorry for the delay.  This is hubby's advice:

I would strongly advise against the practice of 'guzundering'. This is highly unethical is also highly unlikely to do you any favors. It is however, likely to anger both the estate agents, the solicitors on both sides (as they have to deal with the fallout) and the seller. Maintaining a good relationship with your seller is PARAMOUNT to the smooth running of any deal. Threatening to pull out, is not likely to get you anywhere than precisely that. Out of the deal. Not a good thing. So no. Doing this will more likely backfire than anything else.
 
In relation to your offer on the property, once an offer is accepted, agents usually continue to list the property in order to draw in applicants for anything else that they have available. They should display an 'under offer' tag on the property and 'Sold, Subject to Contact' tag on it once a mortgage offer has been made and the transaction enters its final stage.
 
It may be the case that they have another offer on the table. Or it may not. I would advise that you have someone neutral (like a work colleague or friend) mystery shop the agency and find out if they are still marketing it. If they are running with an offer, they should tell you this. If the survey has been carried out, then they should definately tell you this. Although guzzumping is becoming a thing of the past (thankfully), it is still not illegal (unfortunately). However if an agent WAS to guzzump you, then you could report the matter to the OFT or Ombudsman.
 
It is a mandatory requirement (by law) that all agents must belong to some sort of redress scheme such as one of these.

Finally, I will say that it is unlikely that they are not running with your offer because you are American. Don't forget, that they work for their client (the seller) and will have no loyalty to you as a buyer, as their clients pay their wages. Keep an eye on the property, but also keep an eye on the agent and their behavior. Trying to be cocky and 'over barter' will just give the seller a bad impression of you and make them unlikely to proceed with a transaction.
 
If you need any more info, please let me know.

Thank you, Aless. I am grateful for everyone's replies. We will continue with the practice of haggling up front. I just wanted to check to make sure that gazundering was not the accepted practice--and we were doing it wrong.

Being that we're not in London, and we're in the sleepier East Midlands, I'm finding that the property listings available even through rightmove.co.uk are WAY out of date. Although the estate agents should be noting when a place is under offer, they are not doing it, which has just led to tons of speculation. So, in the past two weeks we went back out, looked at a ton of other places, and found that a fair number of postings have been under offer for quite some time without noting it online. SIGH.

Also, since the economy tanked a lot of people are listing properties at the price they paid three years ago--which is not the current value. So, there seems to be too much disappoint all round. Oh well, we're just going to keep going and see.

Good luck to all those seeking a home in the UK!

I'm finding that the property listings available even through rightmove.co.uk are WAY out of date.

That's frustrating. One helpful thing might be to do a search every day, or every three days, and just set the search results to "listed in the last 24 hours" or "last 3 days". That should weed out the out-of-date properties.

It helps to become an addict to the real estate listings. The best places sell fast. We got so tired of being told a place was off the market that, like I said, we made an immediate offer once we found a place we liked - which was the same day it was listed.

Also, since the economy tanked a lot of people are listing properties at the price they paid three years ago--which is not the current value. So, there seems to be too much disappoint all round. Oh well, we're just going to keep going and see.

This was a pain for us, too - two of the properties we made offers on were taken off the market because they couldn't get the money they wanted for them. It was too bad, really (and all those hours spent decorating these places in my head! I get too excited.).

Good luck! The right place is out there - hope you find it soon. 

CD,

Great idea about looking at the last 24 hours or last 3 days.

Thanks! Stalking--here we come!

Best,

Rutabega