Do market conditions affect negotiation power in property?
The property market often moves in cycles, with periods that favour buyers and periods that favour sellers. While these changing conditions can influence negotiation dynamics, they do not completely determine the outcome of a property transaction. According to Adrian Goslett, CEO and Regional Director of REMAX Southern Africa, understanding the current market environment can help both buyers and sellers approach negotiations more strategically and achieve the best possible outcome.
“Negotiation power in property is rarely fixed. Market conditions impact the power each party possesses, but preparation, correct pricing and understanding local property trends and demands remain critical factors in any successful negotiation,” he explains. In a buyer’s market, there are more homes for sale than there are buyers looking to purchase. This gives buyers more bargaining power. Properties often stay on the market for longer, which may lead to sellers lowering their asking price, or including certain fixtures as part of the sale.
“Buyers tend to have more room to negotiate during slower market conditions because sellers are competing for limited demand. However, buyers should still be careful not to submit unrealistically low offers that could jeopardise the deal altogether,” says Goslett.
On the other end, in a seller’s market, where demand outpaces supply, sellers are typically in a stronger position. Properties may attract multiple offers and sell more quickly, reducing the need for sellers to compromise on price or terms. “When stock levels are low and buyer demand is high, sellers can often negotiate from a position of strength. In some cases, buyers may even need to compete against one another above asking price or accepting less favourable conditions,” he says.
Interest rate changes also play a significant role in shaping negotiation conditions. Higher interest rates can reduce affordability and dampen buyer activity, often shifting negotiating power towards buyers. Lower interest rates, in comparison, tend to stimulate demand and strengthen sellers’ positions. Factors such as economic confidence, employment trends, and consumer sentiment further influence how willing buyers and sellers are to negotiate. During times of economic uncertainty, both parties may approach the negotiations more cautiously, leading to longer negotiation periods and greater emphasis on value. Despite these wider market trends, Goslett says that understanding local conditions are just as important.
“Property markets can vary greatly from one area to another. Even if the national market favours buyers or sellers, certain suburbs or types of properties may experience different conditions. Factors such as good schools, safety, lifestyle attractions, and the number of homes available in an area can all affect how much negotiating power buyers and sellers have locally,” he says. Goslett concludes that successful property negotiations depend on more than just market conditions alone. Buyers and sellers who are informed, flexible, and guided by experienced property professionals are often best positioned to navigate negotiations effectively and reach mutually beneficial agreements.
