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How much to cut an asking price by if your home isn’t selling

My husband and I are selling our home to downsize and free up capital we need in our retirement. We have seen a couple of places we would like to offer on, but are waiting for our own house to sell before we do so.

The estate agent originally advised us to put our house on the market for £550,000 but we have thus far, received very little interest. Just a smattering of viewings and very little feedback. 

It has only been on the market for about five weeks, but already the estate agent’s manager is telling us that the price is too high and that we need to reduce the price by £50,000.

I know house prices might be falling a little but that’s almost a 10 per cent cut. Surely cutting the price to £525,000 would make more sense? And surely five weeks is not long enough to be justification for cutting the price?

Buyer demand appears to have dropped off a cliff, according to Zoopla meaning sellers may have to slash their asking prices to attract offers.

Ed Magnus of This is Money replies: This is no doubt a conundrum for many sellers up and down the country at the moment.

In recent weeks, the number of buyers out house hunting has fallen off a cliff, according to Zoopla.

It has found that buyer demand across its website over the past four weeks is 47 per cent lower than what it was this time last year.

The number of property sales agreed is down 28 per cent compared to the same time last year. All this, when the stock of homes for sale is apparently up 40 per cent on the same period last year.

As of last month, the typical property sold, was going for 3 per cent under the asking price. On a £300,000 property, that equates to an average £9,000 discount achieved.

Zoopla's chart shows how price reductions have fallen since the start of September

Zoopla’s chart shows how price reductions have fallen since the start of September

Before even accepting an offer below asking price, many sellers are first finding they are having to drop the price to even attract buyers.

Zoopla says that it is now seeing increasing numbers of sellers opting to bring down their asking prices by 5 per cent or more.

It found that of all the properties listed between the beginning of September and the end of November: 

  • 12 per cent of all sellers have reduced their asking price by up to 5 per cent
  • 10 per cent of sellers have reduced their asking price by 5 to 10 per cent
  •  3 per cent of sellers have reduced the asking price by 10 per cent or more
Home sellers had been getting the asking price on average but that has now changed

Home sellers had been getting the asking price on average but that has now changed

Should you cut your home’s asking price?

It sounds like your estate agent may have promised to get you a higher price than they should have done. That said, five weeks on the market isn’t a particularly long time.

Over the past five years, the average property takes 35 days to go under offer, according to Zoopla. Taking that into account, a £50,000 reduction that far in might be a little dramatic.

The agent may argue that it is necessary in order to get it in front of a new tranche of buyers on Rightmove and Zoopla.

This is because these websites have price thresholds, enabling buyers to search for properties valued up to  a certain point: two of them are £500,000 or up to £550,000. 

There isn’t an option for looking up to £525,000 specifically, so arguably a £25,000 drop won’t make an awful lot of difference in attracting new interest.

That said, there will likely be some buyers with maximum budgets somewhere between £500,000 and £550,000 and people will tend to look at properties above what they can afford, both to see what’s out there and in the hope that they will be able to make an offer and get a reduction.

Any serious buyers will also likely have set up Rightmove alerts in your area: these email through new properties for sale on regular occasion – but the new category also includes those that have a new price. 

If you reduce the price, even by as little as £5,000 you will make it into the alerts, potential buyers will know via email that your property has been reduced, which might encourage someone to at least come have a look and indicates you are serious about selling and might accept an offer.

Ultimately, you will likely want to avoid your property lingering on the market for too long. 

Often the longer it remains, the less interest it will attract. Potential buyers may deem the months of marketing as a clear sign there must be something wrong. Who wants to buy something that clearly nobody else does?

The final point that is worth making is that the huge spike in mortgage costs after Kwasi Kwarteng’s ill-fated mini-Budget saw costs rocket for potential buyers – and many put off home-hunting or making offers while they let the dust settle.

Mortgage rates have come down recently, but remain higher than they were. The top five-year fixes are between 4.5 per cent and 5 per cent – that compares to 2 per cent to 2.5 per cent a year ago. You may have to accept that buyers simply cannot afford to pay the same price for your home now, but the flipside of that is that your new home should be cheaper too.

Borrowers can check the best rate they could apply for based on home value and loan size, with our best mortgage rates calculator. 

But what is the advice of expert estate agents in terms of cutting an asking price to get a home sold. We spoke to Matthew Thompson, head of sales at Chestertons and Jeremy Leaf, north London estate agent and a former Rics residential chairman, for their views.

What the estate agents say on cutting asking prices?

Matthew Thompson replies: I understand that you need for your sale to go through in order to downsize and it’s frustrating to see very limited interest from buyers.

Still, reducing the original asking price by almost 10 per cent should really just be a last resort.

Generally, there are many factors to be taken into account when putting a property on the market and setting the most appropriate asking price.

Location, size and whether the home needs any upgrades play a major role. 

As you have rightly said, economic circumstances must also be considered but the agent should have already calculated for this if your property was put on the market only five weeks ago.

Your agent should have also made you aware that autumn and winter tend to be quieter periods for the housing market, particularly outside the capital.

It would be advisable to weigh up all of the above factors and decide whether you are in a position to hold tight until more house hunters are picking up their search again.

We usually see a spike in buyer enquiries just ahead of Christmas. If, by this time, you still haven’t received more serious offers, we would recommend discussing a slight reduction in your asking price but are in favour of your suggestion of a gradual decrease.

We need to consider what has happened since – have other properties of a similar nature been reduced or sold or are they attracting offers 

Jeremy Leaf replies: It is rather difficult to comment because selling property is not an exact science and we are not party to all the facts here.

For instance, was the original asking price realistic in the market prevailing at that time, which was probably a little busier five weeks ago? And what was the basis for setting that price at that time?

Perhaps, more importantly, we also need to consider what has happened since – have other properties of a similar nature been reduced or sold or are they attracting offers which has prompted the estate agent to recommend a reduction in price?

The estate agent may have made a mistake in setting the price too high at the outset; unfortunately, if that happens, the seller often ends up with less than they were originally expecting.

It may be worth asking an honest friend to consider the marketing of the property from a more independent stance.

Does the property stand out from its competitors as it must in order to generate interest?

There are two stages to price setting – one is to attract interest in viewing and the second is to instigate an offer and you won’t get one without the other.

It is also worth focusing not just on your selling price but the difference between what you are selling and what you are buying for 

In many ways, price should be the last rather than the first consideration. How is the property marketed? Does the presentation need freshening up or changing? How can it avoid looking stale?

It is also worth focusing not just on your selling price but the difference between what you are selling and what you are buying for.

Don’t hang onto a headline price but think about the difference between what you are making on your property and what you will have to pay for the next one. As you are downsizing, it is worth thinking about the broader benefits of the lifestyle change.

Are house prices heading for a crash?

Ed Magnus of This is Money replies: Although it’s impossible to predict what house prices will do over the coming months, it’s probably worth being aware of what is happening.

Having surged since the pandemic-induced home-moving rush, with house prices up 25 per cent from April 2020 to their peak, according to the Nationwide index, there is now widespread expectation that UK house prices will fall next year.

Estimates of how much range all the way from 5 per cent to 30 per cent, with the Government’s official forecaster the Office for Budget Responsibility predicting a 9 per cent house price fall.

And house prices are already beginning to fall, although not yet at a pace that necessarily calls for drastic action or panic. House prices fell £4,500 on average, or 1.4 per cent in the month of November, according to Nationwide’s index, but they are up 4.4 per cent over a year.

Going down: The average UK house price fell 1.4% to £263,788 last month, according to Nationwide BS's index, a drop of almost £4,500.

Going down: The average UK house price fell 1.4% to £263,788 last month, according to Nationwide BS’s index, a drop of almost £4,500.

Over the past three months a larger fall has occurred, the average house price was £272,259 in September but now it is £263,788.

There are other indicators showing that Britons are increasingly putting their home buying or moving plans on hold.

Net mortgage borrowing by individuals fell from £5.9billion in September to £4billion in October, according to the latest Bank of England figures.

Mortgage approvals for house purchases also fell by more than 10 per cent to 59,000 in October, down from 66,000 in September, and down 20 per cent on the 74,400 mortgage approvals recorded in August, suggesting home-buying appetite is dissipating amid rising mortgage rates.

Return to stability? Mortgage rates have steadily fallen in recent weeks, since peaking in late October in the wake of the mini-Budget

Return to stability? Mortgage rates have steadily fallen in recent weeks, since peaking in late October in the wake of the mini-Budget

However, on top of the wider economic factors impacting the property market, such as higher mortgage rates and fears of an impending crash, there is also a seasonal element to consider.

The weeks running up to christmas are often quieter. According to data produced from both Rightmove and Zoopla, buyer demand tends to fall away as christmas approaches before bouncing back in the New Year.

However, with mortgage rates so much higher than they have been for more than decade and so much negative sentiment surrounding the property market, many seasonal trends will have little significance.

Buyer competition per property tends to fall towards the end of the year according to Rightmove's data

Buyer competition per property tends to fall towards the end of the year according to Rightmove’s data

What to do if you need a mortgage 

Borrowers who need to find a mortgage because their current fixed rate deal is coming to an end, or because they have agreed a house purchase, should explore their options as soon as possible.

This is Money’s best mortgage rates calculator powered by L&C can show you deals that match your mortgage and property value

What if I need to remortgage? 

Borrowers should compare rates and speak to a mortgage broker and be prepared to act to secure a rate. 

Anyone with a fixed rate deal ending within the next six to nine months, should look into how much it would cost them to remortgage now – and consider locking into a new deal. 

Most mortgage deals allow fees to be added the loan and they are then only charged when it is taken out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I am buying a home? 

Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be. 

Home buyers should beware overstretching themselves and be prepared for the possibility that house prices may fall from their current high levels, due to  higher mortgage rates limiting people’s borrowing ability.

How to compare mortgage costs 

The best way to compare mortgage costs and find the right deal for you is to speak to a good broker.

You can use our best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.

Be aware that rates can change quickly, however, and so the advice is that if you need a mortgage to compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you.

> Check the best fixed rate mortgages you could apply for 

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