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How to negotiate the purchase price of a home?

house purchase price

 

The question may seem absurd for some, especially in the Grand Duchy of Luxembourg where real estate prices continue to flare up. In 2018, sales prices rose like never before and this trend is far from easing in 2019, as the latest STATEC figures [1] show . With a demand far superior to the offer, sellers are in a strong position and bargaining becomes more and more difficult. Should we give up any attempt to negotiate when we want to acquire a property   ? No, of course, provided you know the rules of the game.

 

Study the real estate market

The first step is to keep yourself informed on the real estate market. When you have found a good that you like, analyze it and its environment according to several criteria. Where is the property located?  What type of property is it   ? Is this a new or old dwelling   ? What are its specificities?  Depending on the answers, you will already have an idea of the trading margin you can have in the case of a transaction.

The localisation. Even if sales prices continue to climb in the Grand Duchy, that does not mean that everything is expensive everywhere. Large disparities continue to exist between regions and municipalities depending on their geographical location and accessibility. Thus, prices are higher in the Center and the South than in the North where, apart from areas near the Northern Highway, direct connections to the capital are rather rare. To give an order of magnitude, the average sales prices of existing apartments in Luxembourg City and its suburbs exceeded 7,000 € / m 2 for the period 1 July 2018 to 30 June 2019 when they were less than 4,000 € / m 2 in the northern regions of Wiltz and Clervaux for the same period [2] .

The type of property you covet may also have an impact. The more the good is requested, the lower your trading margin will be. Thus, a new property with a higher energy performance class will be more expensive than an old one. At least in principle, because this gap is narrowing in areas where the tension between supply and demand is the highest, as is the case in Luxembourg City. The living space is also an important criterion. Even though selling prices per square meter tend to decrease with the size of the dwelling , 1 and 2 bedroom apartments are generally more desirable than others.

The specificities of the property can also play. A house or an apartment without cellar or parking will inevitably be less attractive. It will be the same if the property requires major renovations. The less housing matches the search criteria of most households, the greater your trading margin will be.

 

Learn about the good and use common sense

Now that you have a better idea of the real estate market , find out if the property you have chosen is for sale for a long time. If this is the case, perhaps it is due to a price that is too high compared to the reality of the market and you therefore have every chance of being able to convince the seller to lower his price. You can, if necessary, call on a real estate expert to help you formulate a realistic offer.

That being the case, use common sense. Attempting to negotiate a 10 to 15% decrease in the initial price - which corresponds to the national average - is totally counterproductive for a property located in Luxembourg-City , especially if its price is justified in relation to the state of the market. . Your negotiation is unlikely to succeed. Worse, you risk disqualifying yourself in the eyes of the seller who will refuse any further transaction with you. When you bid lower than the ad price, also think about the arguments you will make to justify your attitude   : street too noisy, poor exposure of the house, no electricity standards, faulty plumbing, etc. If necessary, get help from qualified professionals, especially if renovations are needed.

Do not bother either   ! If the price of the property is justified in relation to the state of the market, if it matches your search criteria and you have the financial capacity to acquire it on the terms advertised, do not waste your time in vain discussions. The Luxembourg real estate market is very dynamic at the moment and everything is selling very fast, especially in the capital and the surrounding area.

 

Find  all the advice  of ING experts.

 


[1] Housing in figures in the second quarter of 2019, STATEC - Observatoire de l'Habitat, October 2019.

[2] Housing prices and rents in the Grand Duchy of Luxembourg, Habitat Observatory, 2019 edition.