Why £20,000 off the asking price isn’t always a good deal

Many buyers think about price like this: the house is on the market at £600,000; if I get £20,000 off, I’ve done well. It feels logical. It can also be the most expensive assumption in the whole purchase.

The asking price is a starting point, not evidence

The asking price is the figure a property is launched at. It can reflect what the seller hopes for, the agent’s marketing strategy and market conditions. On its own, it doesn’t prove what the property is worth.

If you negotiate down from the wrong starting point, you can still overpay.

An illustrative example

This is a typical scenario, not a specific client case.

A family finds a house listed at £600,000. They offer £570,000 and agree £580,000. They are pleased: £20,000 saved.

But the three most comparable homes on nearby streets – same type, similar size and condition – sold over the past year at levels well below the agreed price, and one of them had a larger garden. Measured against those sales, the “discount” didn’t bring the price down to the market. It brought it down to a level that was still above it.

Price, value, appraisal and valuation are four different things

• Asking price – the figure the property is marketed at.
• Market value – what the property is likely to be worth on the market; not automatically the asking price.
• Market appraisal – the selling agent’s estimate when taking the property to market. Useful, but not an independent valuation.
• Formal (RICS) valuation – carried out by a qualified surveyor or valuer. Your lender’s valuation is done for the lender, to decide whether the property is adequate security for the loan.

What a useful comparison looks like

A good comparable is not just any house in the same postcode. It should be similar in type, size, condition, street, plot, parking, layout and tenure – and sold recently enough to reflect today’s market. Then the differences need to be weighed: a busier road, a smaller garden or no parking can matter a lot.

Sold prices are publicly available, but choosing and interpreting the right ones is where most buyers go wrong.

Before you make an offer

1. Look at what comparable homes sold for, not what similar homes are listed at.
2. Adjust for the differences that matter to future buyers, not only to you.
3. Decide your walk-away figure before you negotiate.
4. Remember that a price reduction on a listing may be a correction, not a bargain.