Spanish buyers offer 21pc below asking price on average

How far below the asking price should you pitch your offer?

How far below the asking price should you pitch your offer?

The average offer made in July was 20.9% below the asking price, according to data from the Spanish property portal Idealista.com, based on offers made via the portal. This invites the question, how low should you pitch a starting offer when buying property in Spain?

Idealista has a tool that allows potential buyers to communicate an offer to vendors, who can reply if they are interested. Idealista tracks these offers, and compares them to asking prices, with more than 2 million offers tracked since 2010.

A tool like this that is so easy to use might encourage potential buyers to make low ball offers out of curiosity, and I would expect these offers to be lower than those made face-to-face or communicated via estate agents. The vast majority of these bids will be made by Spaniards chasing first homes, so not an accurate reflection of the second home market on the coast, where foreigners mainly buy. Even so, it does say something about the different price expectations between buyers and vendors in the Spanish property market.

For a start, the average discount demanded by potential buyers in July this year was slightly smaller than it was in July 2015, when the difference between offer and asking price was 21.6%. That could be a sign that vendors are now in a slightly stronger position as the market recovers in places.

The biggest gap between asking prices and starting offers was in La Rioja at 23.6%, followed by Cantabria (-23.5%) Murcia (-22.7%), and the Valencian Community (-22.6%).

Madrid is the region where offers were closest to asking prices, just 16.5% below, compared to 19.3% last year. In Andalusia, the difference has shrunk from 21.7% last year to 19.9% today.

In some regions the discount that vendors are now asking for has gone up, from 18.8% to 23.5% in Cantabria, 18.9% to 22.5% in Asturias, 19% to 21.4% in Galicia, and 21.3% t0 22.5% in the Balearic Islands.

By City, the difference between asking price and offer was 24.4% in Valencia, 20% in Madrid, 16.4% in Barcelona, and 15.2% in Malaga.

PITCHING AN OFFER

If you don’t ask for a discount from the asking price when you make an offer, you can be sure you won’t be given one. There is no harm in making an offer below the asking price, but the trick is to ask for the biggest discount possible to position for negotiations without being told to get lost.

People sometimes ask in the forum how best to pitch their offer, and it all depends on variables such as how much you want the property, how many alternatives you have, how quickly you can move, the state of market segment you are in, and the motivations of the vendor. Estate agents are best placed to advise buyers on how to pitch their starting offer but estate agents also have their own interests in the game. They want to get the highest price for the vendor and their commission, but are almost always better off making a sale than not.

And it’s not easy knowing where to pitch a starting offer in a market like this, where some segments are hot, whilst others are still moribund. You need to get as much information as you can on the property, the local market, and motivations of the vendor, and then make your pitch in the light of that.

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About Mark Stücklin

Mark Stücklin is a Barcelona-based property market analyst and consultant, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on ms@spanishpropertyinsight.com.