Phil Spencer: How buyers and sellers can agree a fair deal as housing market falls

Homes only change hands when both buyer and seller agree on a “fair” price. That’s as true now as ever. But pretty much everything else about the property market, and especially what “fair” means, has changed in recent months. Prices are falling steadily in London and across southern England. Data from Lloyds shows that prices across the UK fell by 1.2 per cent in the year to October. It found that the average UK home dropped in value by £1,900 in October alone. This isn’t a crash, but it sure is a correction. Last week the Bank of England raised interest rates for the first time in three years, making mortgages more expensive. Many estate agents, a profession often accused of seeing the market through rose-tinted glasses, now predict prices will drop further 2027. In a market like this, many of the traditional tactics used – by both buyers and sellers – won’t work. If you’re planning a move, here’s what you need to know about the new rules of engagement – and what a fair price means now. Sellers: time to get real The days of “testing the water” – listing your home at an optimistic initial asking price – are over. Right now, it’s just too risky. The property portal Zoopla says around 45 per cent of the homes listed for sale in the past three years haven’t found a buyer at all. And Rightmove reports that 34 per cent of homes listed this autumn have been reduced in price, by an average of 7 per cent.Set too high an asking price and you risk a slow sale, or perhaps no sale at all. Even if your asking price is realistic, don’t be surprised if the offers you receive are on the low side. This may be disappointing, but remember that the place you’re moving to may well have got cheaper too. If you get more than one offer, don’t automatically choose the highest number. Buyers are spoilt for choice at present, and this can make some flaky or prone to cold feet. A reliable buyer who won’t pull out of the deal at the eleventh hour may be a better bet than someone who offers high but isn’t ready, or certain, to proceed. Your estate agent can help you choose. Ask them how serious each buyer is: have they viewed your property multiple times? Have they sold their existing home? Do they have a mortgage in place already or, best of all, are they a cash buyer? And do they have a deadline to meet, like a new job? In turn, try to be a flexible seller. This may mean compromising on price, or suggesting that you’re willing to move into a temporary rental property to help the buyer meet their moving deadline. This would be an extra hassle and cost for you. But it might help you seal a deal when many other sellers are struggling. Buyers: don’t be silly with your offer We’re in a buyers’ market, and in some areas the number of homes for sale far exceeds the number of buyers. While this can tilt the balance of power in their favour, buyers shouldn’t let it go to their head. Don’t assume every seller will agree to a ridiculous discount on the asking price. Yes you can ask for a discount, but base your offer on what you think the home is really worth. For your own peace of mind, include a margin in your financial plans for its value to fall over the next year. Well-priced homes in desirable locations are still likely to attract interest from rival buyers. So if you make an offer below the asking price, tell the agent why so they can relay your reasons to the seller. Explain why you believe your offer is fair. Reference the local market conditions: what similar homes nearby have actually sold for, not their asking prices. Then detail any issues the property has, and a realistic estimate of what it would cost you to make them good. Don’t forget to make yourself as attractive as possible to the seller. Ideally you’ll have a deal under way for your current home, your finances will be in place and you’ll have a solicitor lined up to start the transaction asap. Nearly a third of sales fall through after an offer is accepted, usually because of an issue on the buyer’s side. If you can show the seller that you’re well-prepared and serious, they may still pick you over a rival buyer who is offering more money but less certainty. One final thought. Consider telling the seller, via their agent, why you love their home and want it. Even in the current market, emotion matters and some sellers would rather their home go to someone who loves it like they do. No reason to sit on your hands Last week the Bank of England hinted that interest rates could rise further in coming months. The estate agent Savills predicts that property prices will fall by an average of 2 per cent in 2027. It’s tough to be a seller already. But it may get even tougher next year, so if you need to move to get on with your life in a new home, there’s little to be gained by sitting tight. Meanwhile buyers who hold off and wait for prices to fall further may find they no longer hold all the cards. If interest rates rise again, borrowing will become more expensive and any saving you make on the price tag may be cancelled out by higher mortgage payments. Calling when a falling market has levelled off is notoriously hard, so the “right” time to move – whether you’re buying, selling or both – will depend on your individual finances and circumstances. Either way, be prepared to think differently about what a “fair” price is.