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Barclays Mortgages reveal first-time-buyers are missing out on thousands of pounds in potential savings on their home

  • More than half of first time buyers (52 per cent) admit to never negotiating before in their life and 51 per cent regret not negotiating before buying
  • One in five pay above the asking price for their first property, and on average are forking out nearly £8k extra to secure the deal
  • Barclays Head of Behavioural Finance, Peter Brooks reveals his top ten tips for becoming a better negotiator

It’s no secret that first time buyers are experiencing a difficult time in the property market, with rising house prices and a lack of affordable homes contributing to the growing problem. New research from Barclays Mortgages has revealed how 51 per cent of those who bought for the first time in the last five years regret not negotiating prior to purchase. 52 per cent of first time buyers – typically aged 32 1 – admit they have never negotiated for anything in their lives, with a further 53 per cent carrying a fear of missing out in the “extremely competitive” 2 market if they were to negotiate.

In fact, the market is so competitive that 35 per cent would avoid negotiations given the small pool of affordable housing available, as is clearly shown in recent market data from Countrywide Estate Agents, shared exclusively with Barclays Mortgages.  Figures on property purchases made through Countrywide between April 2016 and April 2017 show that one in five (21 per cent) British first time buyers paid over the asking price for their property, forking out on average an additional £7,758 to secure their chosen property. Surprisingly in England and Wales it’s not Londoners but those in Yorkshire and Humber who proved to be the most likely to go over the asking price with almost a third, 29 per cent, paying more than the initial selling price. In Scotland, the figure is even higher at 40 per cent but this reflects the fact that properties are often purchased through the sealed bid system.

  

Region

Percentage of first time buyers paying over asking price

Average amount paid over the asking price by first time buyers

Scotland

40%

£6,666

Yorkshire and the Humber

29%

£7,378

West Midlands

23%

£5,263

South East England

23%

£9,358


London

23%

£13,691


North East England

19%

£5,049


East Midlands

15%

£6,306


North West England

14%

£5,331


East of England

14%

£7,935


South West England

13%

£6,529


Wales

7%

£3,758


GB average

21%

£7,758

Source: Countrywide

 

This comes as a huge 91 per cent of first time buyers who purchased within the last five years, believe there is not enough negotiating advice available from trusted sources. In fact, 30 per cent have admitted to being confused by the limited information available and 42 per cent are still leaning on their parents for negotiation advice. Despite this, appetite to learn the skills of a good negotiator are strong with 66 per cent wanting to be taught more.  

Proving that not all first-time buyers are negotiation adverse, 55 per cent said they feel comfortable negotiating through an estate agent if they haven't formed a relationship with the homeowner during a viewing. Once a personal bond is formed it becomes more difficult to keep focused on the negotiation. A further 54 per cent said they would haggle when they are on holiday outside of the UK, if it was accepted as part of local culture.

Despite the holiday haggling, 40 per cent do not consider themselves to be good negotiators and admit that their parents are better trained in the art – highlighting a clear generational skills gap. With a clear need for trusted advice and basic rules when negotiating; Peter Brooks, Head of Behavioural Finance at Barclays, has compiled a list of top tips for the all-important first purchase 3:

 

  1. Do your research – There are many online tools available that allow prospective buyers to see the average selling prices, school catchment areas and crime rates in the local area. Buyers should always do their research and use this knowledge as negotiation ammunition.
  2. Be optimistic but always be willing to walk away – A positive attitude will help engage your counterpart and encourage them to work with you to find a deal, but don’t pin all your hopes on just one property despite the temptation to become attached to a particular property – there are plenty more opportunities out there if this one doesn’t go to plan.
  3. If at first you don’t succeed, try, try again – Don’t feel defeated if you are unable to negotiate on the offer price. Your initial offer isn’t your only opportunity to negotiate: have a professional survey done on the property as it might find issues that need addressing and for which you can use to negotiate the final sale price.

Peter Brooks, Barclays Behavioural Finance expert, said: “Buying a property is the biggest investment of most people’s lives and it’s imperative that the negotiation process is approached with a healthy combination of pragmatism and fearlessness. The biggest mistake many first time buyers make is to rush into decisions and then panic once they have been made. Always remember to balance your approach and referring to informed and independent advice will allow for a smoother negotiating process for all parties.”      
   

Craig Calder, Director of Barclays Mortgages, said: “Barclays Mortgages research shows that the fear of first time buyers missing out on their ideal property purchase contributes to 53 per cent feeling unable to negotiate, with almost a third (31 per cent) willing to be prepared to pay above the asking price.

We have helped over 3,500 first time buyers get on to the property ladder in 2017; and we understand the often-challenging process that all first time negotiators go through when purchasing.

“Despite 85 per cent of first time buyers describing the housing market as being “extremely competitive”, our tips on negotiating will help to provide the confidence needed to achieve the right purchase price.”

Barclays current range of innovative mortgages for First Time Buyers include the Barclays Homebuyer Cashback Mortgage and the Family Springboard Mortgage. The Homebuyer Cashback helps to support a greater number of first time buyers or homemovers by offering a £2,500 cashback available on mortgages greater than £150,000 and up to £500,000 that will cover the Stamp Duty on properties valued up to £250,000. A £1,250 cashback is available on mortgages between £100,000 - £150,000 that matches the maximum Stamp Duty on properties value at £187,000.

Barclays Help to Buy ISA can also help with the overall cost of buying a home, thanks to the 25 per cent government bonus on amounts saved between £1,600 and £12,000. The bonus is payable on completion of the property purchase, so it can’t be used as part of the deposit put down when exchanging contracts. In the first month, up to £1,200 can be paid in but after that, the maximum that can be paid in is £200 a month. The Barclays Help to Buy: ISA currently has a market-leading rate, paying 2.27 per cent.


For more information, please visit:

 

 http://www.barclays.co.uk/mortgages/family-springboard-mortgage  


or

http://www.barclays.co.uk/mortgages/homebuyer-cashback

Notes to editors

 

One Poll surveyed 750 people who have bought a property in the past five years (April 2017).

 

Countrywide Estate Agents provided additional data on property purchases by first time buyers from the period April 2016 – April 2017.

 

1.            The typical age of a first time buyer was revealed by the National Association of Realtors in 2016. Full information can be seen here

2.            85 per cent of those surveyed would describe the current property market as “extremely competitive”
3.            Top
ten tips for the all-important first purchase

  1. Be clear and assertive – When buying a property, many parties are involved meaning miscommunication is common. Being clear, decisive and assertive will ensure a faster process which the vendor will ultimately appreciate.
  2.  Be a good listener – An estate agent is always looking to secure a deal. They will often share insights into the vendors thinking, providing invaluable tips on their priorities and clinch points to secure the sale.
  3. Do your research – There are many online tools available that allow prospective buyers to see the average selling prices, school catchment areas and crime rates in the local area. Buyers should always do their research and use this knowledge as negotiation ammunition.

  4. Be optimistic but always be willing to walk away – A positive attitude will help engage your counterpart and encourage them to work with you to find a deal, but don’t pin all your hopes on just one property despite the temptation to become attached to a particular property – there are plenty more opportunities out there if this one doesn’t go to plan.
  5. Play your cards close to your chest – Estate agents ultimately want the best deal for their client, so letting them know your maximum budget or how quickly you want to move gives them the upper hand in negotiations, which may result in you paying more than required.
  6. Be prepared to make multiple offers – It is important to remember that this is a two-way deal and you both want the best possible result. This could mean multiple offers are required to secure the property.

  7. If at first you don’t succeed, try, try again – Don’t feel defeated if you are unable to negotiate on the offer price. Your initial offer isn’t your only opportunity to negotiate: have a professional survey done on the property as it might find issues that need addressing and for which you can use to negotiate the final sale price.

  8. Know your limits – Stick to a budget and avoid viewing properties that are above your chosen price range. First time buyers should avoid the temptation of looking at more expensive properties and remember to save money for any hidden costs - this might include surveys, insurance, removals and solicitor fees.

  9. Be patient – Buying a new property can be time consuming and frustrating, so patience is required. Remember it can take time to find the right mortgage rate or property. It’s easy to forget that both parties are looking for the same outcome.
  10. Don’t take it personally – Buying a new home should be seen as a smart investment over an emotionally driven purchase. To help reign in emotions, invite someone else to view the property with you. Since they won’t be living there they can provide a more practical opinion on the property. Buying a property is a big financial deal and one you will have to live with for a long time.

 Case Study available for interviews

 

Anna Stokes is a professional buyer and successfully negotiated £5,000 off her first property purchase. When asked to give advice to prospective buyers in a similar position, she commented: “When purchasing a property, it is good to do your research, looking into how long it has been on the market and if the price has been reduced. From this, you can often tell how quickly the vendor wants to sell and how much demand there is for the property.

 

“This information will give you an idea on how much room there is for negotiation. Never be too shy to go in with a cheeky offer, as you never know if the seller will accept, and if not they are likely to give you a better idea of what they are expecting.”

 

About Family Springboard Mortgage

With the Barclays Family Springboard mortgage, the borrower is able to secure a mortgage without a deposit. Instead, the borrower’s family or loved ones provide 10 per cent of the property’s price as security. This money is held in a Helpful Starts Account and returned to the helper after three years with interest.

 

Family Springboard

Deposit (%)

3 Year Rate

Follow on Rate

(BBBR+)

Application Fee

Min Loan

Max

Loan

Helpful Start Account

3 year fixed

0%

2.99%

2.49%

£0

£5,000

£500,000

BofE + 1.5%

3 year fixed

5%

2.79%

2.49%

£0

£5,000

£500,000

BofE + 1.5%

 

Barclays Helpful Start Accounts

Barclays Helpful Start Accounts are those into which the family member deposits savings equal to 10 per cent of the final price of the house and after three years the money in the account is returned to the family helper with interest of Bank of England Base Rate + 1.5 per cent.

 

Barclays Homebuyer Cashback Mortgage

With the Barclays Homebuyer Cashback Mortgage, a £2,500 cashback is available on mortgages greater than £150,000 and up to £500,000. This cashback will cover the Stamp Duty on properties valued up to £250,000.

 

A £1,250 cashback is available on mortgages between £100,000 - £150,000 and matches the maximum Stamp Duty on properties value at £187,000.

 

Cashback Mortgage

LTV

Rate

Application Fee

Min Loan

Max Loan

Cashback

5 year fixed

80%

2.69%

£0

£150,000

£500,000

£2,500

5 year fixed

80%

2.69%

£0

£100,000

£150,000

£1,250

 

Barclays Fixed Rates – 5% deposit 

 

Fixed Rate

LTV

Rate

Application Fee

Min Loan

Max Loan

Follow on Rate

2 year fixed

95%

3.69%

£999

£5,000

£500,000

BBBR +£3.49%

2 year fixed

95%

3.99%

£0

£5,000

£500,000

BBBR +£3.49%

5 year fixed

95%

4.55%

£499

£5,000

£500,000

BBBR +£3.49%

 

Barclays Help to Buy: ISA

With the Barclays Help to Buy: ISA the government provide a 25 per cent bonus on amounts saved between £1,600 and £12,000. The bonus is payable on completion of the property purchase, so it can’t be used as part of the deposit put down when exchanging contracts. In the first month, up to £1,200 can be paid in but after that, the maximum that can be paid in is £200 a month. The Barclays Help to Buy: ISA currently has a market-leading rate, paying 2.27 per cent

 

About Countrywide plc

Countrywide plc is the UK’s largest property services group.  The company spans both the residential and commercial sectors.  With the biggest residential estate agency and lettings network in the country, Countrywide operates across all price points and sells more homes than anyone else. In 2016, Countrywide exchanged on over 60,000 homes, representing £19 billion worth of property.  As the largest single mortgage broker in the UK, Countrywide completed on over £15 billion of mortgages last year.  In addition, the company manages over 90,000 properties.

About Barclays

Barclays is a transatlantic consumer, corporate and investment bank offering products and services across personal, corporate and investment banking, credit cards and wealth management, with a strong presence in our two home markets of the UK and the US.

With over 325 years of history and expertise in banking, Barclays operates in over 40 countries and employs approximately 120,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.

For further information about Barclays, please visit our website www.home.barclays .