Price negotiation is a crucial stage in the home-buying process, and resale home buyers often find it difficult to navigate it. This is because resale homes are different from new properties. Effective negotiation strategies can lead to substantial savings for a buyer. One thing to note about resale homes is that buyers have greater flexibility in negotiating, unlike new properties, where developers set a fixed price. Buyers who know how to negotiate resale home prices smartly save costs and work the deal in their favour through favourable terms and conditions that benefit them in the long run. In this guide, we share effective negotiation strategies for homebuyers purchasing a resale home.
Understanding the resale home market
Resale properties differ from new properties in many ways and price is one of the biggest differentiating factors. Due to older construction and layout, resale homes are priced lower. Factors such as higher maintenance costs, limited amenities, and advanced features further increase costs. However, factors like prime location can offset this price advantage for buyers.
To succeed in negotiations, a buyer must understand these key differences. They must also consider the role of distress selling and other factors that compel sellers to accept a lower price. Additionally, property sale trends vary by city. In prime residential markets such as Mumbai and Bangalore, buyers may have limited scope for negotiation due to high demand, which drives prices upward. Hence, it is important to realise that the price negotiation process starts much earlier for a buyer.
Research resale home prices in the locality
To be in a better position to negotiate, buyers must be aware of the prices of comparable properties in the neighbourhood. They must look up the prices of similar properties in their society and nearby areas. Factors such as the same floor, property age, and size and layout should also be considered when comparing prices of similar properties. This will help them get a clearer picture of price trends. Moreover, property prices may vary based on additional features such as parking, views, upgrades, and other amenities, and buyers should take these into account.
By understanding the factors that affect property prices in a given area, home buyers can negotiate with sellers with greater confidence.
Use property age and condition to your advantage
Most homebuyers do not realise how factors like a resale home’s age and condition can work in their favour. Even older properties in prime locations can command a high asking price, but effective negotiation can help buyers reduce it significantly. Buyers of resale properties are likely to incur hidden maintenance costs. Such properties are likely to have issues such as plumbing, electrical, seepage, flooring, tile cracking, and other structural problems that may go undetected by the owner. Moreover, an older resale home is likely to have an outdated layout or floor plan and may also lack facilities such as a lift and parking space. Prospective buyers should conduct a thorough inspection of the house and use their findings to negotiate the price.
Timing matters
Timing is crucial for both buyers and sellers when it comes to negotiating. For a seller, choosing festive seasons can be advantageous, as demand is higher and they can charge a higher price. Similarly, a person looking to buy a resale home should know the best phases when negotiation can work in their favour. Due to personal urgency, such as relocation or loan default, a seller may agree to a lower price. The same festive season can benefit a buyer, as it is when sellers may find buyers, whereas other months may not see much activity. So, smart negotiation can help buyers get the deal at a reasonable price.
Negotiating beyond price
Most home buyers focus only on negotiating the price, which is often the visible component of the property transaction. Buyers who see beyond the price and focus on the value the property offers have a win-win situation. For instance, if the house comes with ample parking space and access to a terrace and storerooms, it is an added advantage and increases the property’s value in the long run. Similarly, buyers should check whether items included in the property are included at no additional cost. These include wardrobes, chimneys, air-conditioners, furniture, etc. So, focusing on the property’s overall value is more important than insisting on a lower price.
Housing.com POV
To summarise, buyers of resale homes need to be thoroughly prepared before starting any discussion with sellers. They must be aware of the prevailing prices of similar properties in the neighbourhood and wait for the right time to sign the deal. Smart negotiation helps lower property buying costs, even providing greater benefits than newly launched properties in the same neighbourhood. Moreover, viewing the property in terms of long-term value, rather than its price, is also necessary.
FAQs
Is it easier to negotiate resale flats than new properties?
Yes. Negotiating the prices of resale flats is much easier than for newer properties because the property’s condition and personalisation give buyers greater flexibility.
When should a buyer walk away from a negotiation?
If the buyer does not get any value from the resale property and there are legal risks involved, it is better to avoid such properties.
