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Home truths: Why Brits’ fear of negotiation comes at a cost
- Brits are more willing to haggle on the price of a used car than they are on their own home
- 30 per cent of British homeowners didn’t negotiate AT ALL on the cost of their current home out of fear of losing the property, and feelings of embarrassment or intimidation
- Despite previous hesitation Brits hope to knock a fifth off the asking price of their next home, the equivalent of £40,000 on average UK house price
- Barclays Mortgages aims to help homeowners hone their skills with negotiation tips from Rob Smith, Head of Behavioural Science
Buying a house is the biggest financial decision a person can make, and yet Brits are at risk of paying over the odds for their property due to a Fear of Negotiation (FON), new research from Barclays Mortgages reveals¹.
The mortgage lender found that as many as 30 per cent of homeowners didn’t negotiate at all on the price of their current home, missing out on huge potential savings because of their Fear of Negotiation. Yet such reluctance doesn’t extend to other areas of daily life, with Brits more likely to negotiate on the cost of a used car than on the more expensive price of their new home.
What’s holding Brits back?
A huge stumbling block for many is a simple lack of knowledge, with over one in five Brits (22 per cent) confessing they just don’t know how to negotiate.
Other fears holding Brits back from haggling down the price of a property include:
- Fear of losing the property (17 per cent)
- Fatigue at the process of buying and just wanting it over (10 per cent)
- Finding negotiating embarrassing (8 per cent)
- Finding negotiating intimidating or scary (8 per cent)
- Not wanting to upset the seller (7 per cent)
The stress test
The research reveals that homeowners aged 25 to 34 are prone to experiencing the most anxiety or stress when negotiating, compared to those aged 65+ who are much more comfortable with the process and find it the least stressful.
The anxiety holding back those aged 25 to 34 comes at a cost, as more than a third (35 per cent) of homeowners in this age group say they had to spend more of their savings to afford the house they wanted.
Fool me once…
All is not lost, however, as Brits look to dust themselves off and learn from their mistake, with over half (52 per cent) of Brits vowing to negotiate more on their next property so as not to miss out second time round on those crucial savings. The nation’s homeowners revealed their wish to knock an average 18 per cent off the asking price of their next home, which is the equivalent of just over £40,000 based on the average UK house price, or indeed the cost of a loft conversion.³
Rob Smith, Head of Behavioural Finance at Barclays comments: “There are a number of factors that may influence how comfortable we feel to negotiate. In particular, how emotionally attached we are to the property is significant, and may contribute to a reluctance to push. If you have already started picking out the furniture, negotiating will prove much tougher, as not getting the property will feel more of a loss. As humans, we are wired to avoid losses, so this could be territory we don’t want to risk entering.
“Buying your first home is a particularly emotionally laden experience, and combined with having no prior experience of the process, its unsurprising that younger homeowners find it tough. However, if your aim is paying the lowest price possible then there are a couple of top tips which could help you along the way.”
How to haggle
Negotiating isn’t for everyone, and sometimes you may not be in a strong position so it’s not worth the risk. However, for those who feel they are in a position to negotiate but remain daunted by the idea, Rob Smith has compiled some top tips to demystify the process and make it that little bit easier
Do your research - Nowadays, there are so many tools that provide you with a lot of the information you’ll need to make an offer on a house. Never enter a negotiation without having done extensive research. For example, check out the surrounding area and what the houses are like, look at the local schools, shops and facilities, and crime rate. Don’t forget to check how long the property has been on the market, and if the price has been reduced already. You should come armed with the information, as well as questions or issues you want to raise.
Know your competition - It’s worth checking if there is anyone else also offering for the property – as this will affect the dynamics between buyer and seller. You can always increase an offer that was too low if there are no other bids – but not if someone else’s bid gets accepted. One useful tip is to try and understand the mind set and emotions of the seller, perhaps they are keen to sell or they have already reduced the price.
Know your end goal but also be realistic - It’s important to have in your mind exactly what you want out of your property, and your financial limits. Estate agents may show you properties outside of your price point, and perhaps that kitchen island or bi-folding doors might tempt you to stretch your budget a little bit more. But take a step back and make sure it’s really what you want – and can afford – before you start haggling.
Find the communication style suitable for you - Some find face-to-face meetings easier, in order to get a feel and understanding of the person you’re negotiating with. In the current climate, this is less easy to arrange and many don’t want to meet in person. However, not meeting face-to-face may also help you disconnect emotionally from the seller and it reduces feelings of confrontation, which most people shy away from. But whether you meet face-to-face or via the phone, it’s crucial to always follow up in writing after any conversation you have, as keeping a paper trail will help leverage any potential fallsbacks.
Be patient and use time to your advantage - Buying a home is an important process, and for many it’s the most expensive purchase they’ll ever make. So, let yourself take the time you need to feel happy with your offer; you don’t want to feel pressured to make an offer or ultimately regret anything, and no matter how much you love this one, you will find another you love even more.