Negotiating real estate asking prices: What you need to succeed
Deal or no deal?
Whether or not a deal is struck when buying real estate naturally depends heavily on the purchase price of a property. This is especially true if you want to invest in real estate, but it also plays an important role when purchasing your own home. If you see a listing somewhere, it'll come with an asking price. If the number is too high for you, but you find the property itself exciting, you can bargain down the purchase price. Or at least try. Read more to find out what helps in negotiating the purchase price when buying an apartment or a house. A preview of the basics can be found here. 👇💡
What matters when negotiating
Check how long the listing has been online and if it is offered through multiple agents
Try to find out the real estate prices and valuations in the immediate area
Can you find out how many offers there are already and how high they are?
If you are buying an apartment in an apartment building, you may want to check the minutes of the owners' meeting to find arguments for the price negotiation.
Can you already present a financing or a financing certificate? Do it. Speed is often an important factor in negotiation.
Stick to the facts and negotiate empathetically, objectively and fairly.
Is the property really worth the purchase price?
You have already explored your credit limit in the context of real estate financing. Now you're looking for a suitable property in this range. But whether the price for your dream property is fair is another story.
As with everything, supply and demand determine the purchase price. And since everyone simply has to live somewhere and demand for property is rising, whether for personal use or as an investment, prices in many locations have risen over the years. But there is almost always room for negotiation in the real estate purchase price. More info below in the text or in the corresponding episode of our podcast.
Negotiating real estate asking prices:
getting started
The real estate buying/selling process is often an emotional affair, especially for the seller and their memories associated with the property. And sometimes, the seller and the buyer have very different ideas about what the price should be. When this happens, it's a good idea to develop some clear and objective arguments in your favor before you begin negotiating.
Research as a basis for price negotiations
For example, finding out how long the property has been listed online is simple. If it's been on the market for a while, your chances of talking the seller down to a lower price are pretty good. After all, the seller is looking for a way to get the property off their hands. If it turns out that the property is being sold through more than one real estate agency, you might also be able to use this information to your advantage. One of the agencies may already be listing the property at a lower price.
However, it's also a smart move to be more direct. In many cases, good arguments aren't enough to tip the scales – you need to know if the seller has any other offers on the table and how high they are. So why not just ask? If the other offers are over your budget, then you can just stop looking for arguments altogether because there's nothing left to negotiate. Unfortunately, a great personality won't do much for you either. But the good news is: the next property is right around the corner. So, just register here and find a property that suits you and your wallet.
Lack of furnishings? Modernizations necessary? Negotiate purchase price down with a list of arguments
You've ticked off the obvious and no one has been given the deal yet? Then take a close look at the property data. You can safely leave out cosmetic repairs. But if you notice any deficiencies in the furnishings, make a note of them. If there is no garage or no balcony, or if the terrace needs to be redone, you can bring this into the price negotiation for the condominium.
Does the apartment have single-glazed windows, old wiring or a damp cellar? Put it on the list. Is there a lack of infrastructure? Correct: put it on the list. It also makes sense to take a look at the last minutes of the owners' meetings. Pay particular attention to planned maintenance and modernization measures.
If you are not quite sure about the costs of repairs, an appraiser can help. It costs a bit - about 1,500 € - but if you can negotiate the purchase price of the property to lower than this amount, you'll already offset the costs. You can't go wrong with properties on the Urbyo marketplace. Before an offer goes online, we check the condition, location and price for you.
Getting an edge in negotiations
by being quick.
If you've already checked your eligibility for financing and know, at least in theory, that you qualify for a loan, this can give you considerable leverage. Sellers who have had their property on the market for some time already are usually interested in concluding a deal quickly. And if you come along more or less ready to sign a purchase agreement, it not only makes you much more attractive as a potential buyer but also gives you room to negotiate for a better price.
If the apartment or house is listed through a real estate agency, the agent is also interested in quickly closing the sale. And if you've already got a guaranteed financing commitment, this is a compelling argument in your favor.
Ancillary costs:
a negotiating pro tip
Ancillary costs are important to consider, not only when you're trying to get financing to buy a property but also when you're negotiating with the seller for a better price. The , notary fees, and real estate agent's fees can quickly add up to 10% of the purchase price, which you have to pay on top of the purchase price itself. Here's a tip from us: you don't have to pay for everything that comes with the house. How so?
The basic rule goes like this:
Anything permanently attached to an apartment, house, or property goes into the purchase price; anything that isn't doesn't. Fitted kitchens and other fixtures can be subtracted.
This trick not only reduces the purchase price of the property a little, but also the ancillary purchase costs. Smart move. But you still want to exchange ideas? No problem! Just ask the buyers in the Urbyo Community. By the way, if you want to start calculating the price based on concrete figures, take a look here. 👇
Figures & statistics on negotiating leeway when buying real estate
Now you know what you should pay attention to, how to prepare for the purchase price negotiation for a property, and what arguments you can work with. Of course, you need to go into the talks with realistic goals and know what is expected. So how much discount is possible when negotiating the purchase price of real estate?
Condo to apartment building: Are real estate prices always negotiable?
If you feel insecure before negotiating the purchase price of a property, that's perfectly normal. It is just as typical that many people, as potential buyers, do not trust themselves to evaluate the market. So here are a few numbers for orientation:
Surveys show that almost 40% of market participants worry that someone else will beat them to the punch when negotiating the price.
In Germany, more than 75 % of people go into negotiations before buying real estate.
More than 55% of negotiators in Germany are successful — in some locations, the rate is even significantly higher.
So you see, negotiating real estate purchase prices is standard, sensible, and has high success rates. In 2023, negotiating a purchase price is even more important, with rising interest rates and inflation-related higher costs in many areas.
So you should do it, primarily if you invest in real estate. Because the numbers matter, and the investment has to pay off. And if it doesn't pay off with the asking price, then you just bid less. If it doesn't come to a deal, that's how it is. Typically, especially newcomers have a hard time in negotiations at the beginning. Sometimes it helps to talk to people who have already negotiated successfully.
How much of a discount is possible when buying real estate?
Negotiations are standard and are often successful. But what is a good deal? What goal should you aim for? How low can you realistically go? It depends, of course:
Most discounts are between 5% and 15%.
Just under 45% are between 5% and 10%.
36% are between 10% and 15%.
Experienced sellers always add 10% to 15% to their asking price to give them room to negotiate.
So the listed property prices aren't random. Real estate agents do the same because they are paid proportionally to the sales price. With these numbers, you can calculate what to expect from your house or apartment purchase. And if you think it sounds like little wiggle room, remember: Buying real estate comes with high price tags. So you can't compare it to "20% off everything except pet food."
How to negotiate with real estate agents & lower the purchase price:
You've closely examined all the documents for your dream property and gathered the facts you need to negotiate the purchase price. Perfect. Now you're ready for the real deal. Especially if you want to invest in real estate to provide for your old age, you shouldn't wait any longer to get started.
Remember
You aren't trying to make a list of negative things to make the property look bad. Your goal is simply to get the seller to agree to a price equal to what the property is really worth. So be just as fair to the seller as you expect them to be with you.
Are you a true negotiation whiz? Congratulations! Then pick up the phone and get started. If you're scared of possibly being hung up on, schedule an appointment with the seller to ensure no one is under time pressure. Whether you meet in person or online or talk on the phone doesn't matter. Just stick to the facts and be empathetic and fair.
The easiest way to do things is with the real estate listings on our site. They're all thoroughly checked — also concerning the property's purchase price. Of course, you can still make a counteroffer. It's just a click away. If the seller accepts, you've just made a great deal. Buying real estate can be so easy.
Price psychology for purchase price negotiations - briefly summarized:
Price Anchoring:
The price anchor refers to the initial presented price.
Sets the negotiation range and serves as a reference point.
A higher anchor price makes subsequent prices appear more expensive, while a lower anchor price fosters perceptions of affordability.
Careful selection of the anchor price influences the perception of whether something is expensive or affordable and establishes the framework for negotiations.
Price Contrasts:
Comparisons with other properties or market value assessments influence the perception of real estate value.
A lower square meter price may create a sense of getting a bargain despite a high overall price.
Personal Price Limits:
Individual psychological barriers influence purchasing behavior.
Agents should be aware of these limits and develop corresponding negotiation strategies.
Negotiation Strategies:
Creative approaches, such as emotional appeals, bonus offers, or presenting options, are used to demonstrate perceived value enhancements.
Example: Presenting multiple options, with the mid-priced option appearing as the most attractive.
Decimal Point Effect:
Unconventional prices, such as 247,300 €, may convey the impression of precise calculation, enhancing the perceived attractiveness of the offer.
Commissions:
In a seller's market, the commission may be considered acceptable.
In a buyer's market, the absence of commissions can enhance the perception of a good deal, as commission payments are not easily affordable.