Home Sellers Offering Significant Discounts as Market Cools

Home sellers are increasingly accepting significant discounts on their initial asking prices, with the average property selling for nearly 10 percent less than listed. This trend is driven by a combination of higher mortgage rates and a larger number of homes available on the market.

Data from estate agent Knight Frank indicates that between July and September, properties sold for an average of 90.6 percent of their initial asking price. This means a home listed at £300,000 would typically sell for approximately £271,800, and a £500,000 property for around £453,000.

Buying agents report securing even larger discounts, sometimes up to 26 percent below the asking price, particularly for smaller flats, new builds, and former buy-to-let properties where sellers are more motivated to make a sale. This contrasts sharply with the market conditions of 2021 and 2022, which were characterized by high demand fueled by the pandemic-era stamp duty holiday, the 'race for space,' and lower mortgage rates. During the same three-month period in 2022, sellers achieved 100 percent of their asking prices on average.

Premium Market Struggles

The high end of the property market is experiencing particular difficulty. Homes priced at £2 million and above are half as likely to sell compared to those below the £2 million mark, taking twice as long to find a buyer and selling with average discounts of nearly £250,000, according to TwentyCi data. In London, fewer than 40 percent of homes listed between July and September found a buyer. In prime London postcodes (£1 million-plus), there were 3.6 homes listed for sale for every one that sold, with only 28 percent of properties finding a buyer during that quarter. The data also revealed that for every 100 sales agreed, 62 homes were withdrawn from the market, a rate double the national average, suggesting many sellers are giving up.

Factors Behind Over-Valuation

Sellers often aim for the highest possible price, leading some to list properties with ambitious asking prices. In some instances, estate agents may agree to these higher valuations to secure the listing, hoping to persuade the seller to reduce the price later. Buying agents note that asking prices do not always reflect the current market value, as sellers may try to recoup their original purchase price, including stamp duty and renovation costs, or agents may overprice properties to gain a competitive edge.

Strategies for Buyers

Buyers in areas with slower markets can feel more confident in making offers significantly below the asking price. It is crucial for buyers to research local demand and property price trends rather than focusing on broader national or county figures. Understanding the seller's motivation and the realism of the asking price is key to calibrating an acceptable offer. Signs that a seller may be in a hurry or have struggled to attract serious offers can provide leverage. Buyers should also ensure they are in a strong financial position, with their mortgage lender and solicitor in place, and present their offer with as much detail as possible regarding their circumstances and timescales.

Experts advise buyers to avoid directly debating property value with estate agents or using comparable sales data to justify their offers. Instead, they suggest presenting the offer with tact, focusing on conveying commitment and a smooth transaction process. A seller is more likely to trust a buyer who demonstrates they are a committed and upstanding buyer, rather than one who appears aggressive or overly focused on price negotiation from the outset.