In this year of uncertainties, experts believe there will be a balance between buyers and sellers

Author: yaencontre

Source: Idealista

Experts predict that housing prices at the start of this year may decline after peaking in 2022. If you are considering buying a house in the coming months, it is crucial to know how to negotiate its purchase price. What should you consider this year?

There are several factors that can influence a price reduction or negotiation for a property. These include the size of the property, the condition of the house, the age of the building, and the prices of similar properties currently for sale or recently sold. “This year, additionally, the argument about a new cycle may play an important role in negotiations,” says Ana Villanueva, CEO Iberia of Tiko.

A fourth factor is “the human element,” as the buyer should avoid being impulsive during this process and be realistic when making a counteroffer, presenting objective reasons for the need to adjust the price,” highlights Ernesto Ferrer-Bonsoms, Business Director at Solvia.

Francisco Sierra, General Director of Casavo for Spain and Portugal, points out that this year the real estate sector will consolidate the paradigm shifts, both social and economic, that have occurred in recent months. “Given the moderate increase in interest rates, the number of transactions will decline, accompanied by a reduction in the housing “stock,” affecting eight out of ten Spanish capitals. Madrid and Barcelona will be particularly affected due to their more fragmented markets and higher demand.”

This will lead to a shift in the entire Spanish real estate market. Considering the inflationary context and the more cautious behavior of banks in offering loans, there will be fewer consumers trying to acquire property in 2023. Therefore, experts believe there will be a balance and equal footing between buyers and sellers when negotiating the terms of a sale, allowing for reasonable agreements in both time and form.

“Previously, there was high demand and low supply of real estate, leading to excessive transactions. The current situation will lead to a regulation of the real estate sector, ensuring its sustainability over time with reasonable access to mortgages and a more realistic approach.”

Thus, Casavo emphasizes the importance of a gradual and natural “normalization” of the market. “Given the excessive number of transactions and unprecedented mortgage conditions, these substantial changes in 2023 will be key to achieving sustainability and avoiding an economic crisis.”

Steps to Follow to Buy at a Reasonable Price

Many owners are willing to make a reduction. Thus, negotiating the price when buying a property becomes essential. “Although negotiation plays a significant role, the final price will depend on the demand for the specific property. If multiple buyers are interested at the asking price, the seller will have “the upper hand,” and the buyer will have less room to negotiate. Conversely, if only one buyer is interested in buying the property at that price, they can have more influence on the final price,” notes Tiko’s Iberia head.

If the seller is open to negotiation, it is crucial to justify why the price is higher than its market value. To do this, presenting closing prices is ideal since the asking prices of similar properties are usually above their real value. According to the expert, the problem is that individuals often struggle to know these closing prices as they are not public. Therefore, sometimes it may be helpful to request a professional appraisal to assist in justifying the negotiable price.

“In any case, it is important to handle negotiations with care; remember that the property is likely the owner’s most significant asset, also having considerable emotional value.”

Solvia specifies that, once the process begins, it will be key to generate a negotiation dialogue based on empathy, objectivity, and respect. “It is also necessary to keep in mind the timing to close a price before another interested party advances.”

Budget

First, when acquiring a property, Casavo highlights that the buyer should precisely define their needs and budget. This will allow for a more targeted search and identify properties that are suitable for acquisition.

“Consider whether additional credit for property renovation is needed, as well as the 10% of additional costs related to the purchase process, among other expenses.”

Adjust to Market Price

As noted, the seller should adjust to the market price to expedite the sale of the property with an accurate appraisal. According to Casavo, the average discount on the final price of a property in Madrid and Barcelona after negotiation is around 9%.

Will Negotiation Be Different in 2023?

Experts are clear that prices can be used by buyers as an argument to negotiate a lower price.

Ana Villanueva does not expect drastic changes in housing prices, at least in the major cities where Tiko operates, since “although mortgages are more expensive, there is still high demand and very limited stock.” However, uncertainty about how prices and demand will evolve can be used by buyers to argue for a lower price.

Casavo’s representative reflects that real estate remains a “safe value” against inflation. “Although the number of transactions will decrease, signs of activation and recovery in the sector will persist.”

Until now, banks offered mortgage loans at very low costs. Francisco Sierra notes that this led to an “abnormal” market situation. “The balance between supply and demand, along with the increase in interest rates, will stabilize the Spanish real estate market in 2023. The market, where sellers previously had the “power,” has shifted to a buyers’ market, increasing the negotiation power of potential buyers and improving purchase options and housing accessibility.”

Ernesto Ferrer-Bonsoms, Business Director at Solvia, believes that what will most impact the market is the increase in financing costs or the moderation of demand, which will reduce “competition” with other buyers. “However, we do not believe it will have a major impact… We expect 2023 to end with around 580,000 transactions, figures that, although lower than in 2022, will still be higher than those achieved in the years before the pandemic, so the market will remain dynamic and demand very active.”