BUYERS NEED TO NEGOTIATE WISELY for BEST RESULTS

Posted by Lise | Filed under: Buyers

Smart sellers are working hard in this market to encourage offers from buyers rather than turning them off, so they can get their homes sold as quickly as possible, for as much as possible.  But buyers need to be careful!  This is not the buyers’ heaven that you think it is, even in upscale markets like Potomac, Chevy Chase Village, or Foxhall Road. You can annoy the seller without meaning to and suddenly,  you are not getting that dream home at the best price and terms, or you have turned a smooth transaction into a nightmare!

Avoid unnecessarily irritating the seller and the listing agent and strive instead  to  create a  environment of cooperation.  Then you might just get a better price, extra items you want thrown into the deal, or even more flexibility around settlement and move in – all benefits that can make your life easier and your budget go further for those great Bethesda homes for sale.

Here’s a few of the most common buyer-perpetuated seller turnoffs, with tips for sellers on how to keep calm!

1. Trash-talking. Trash-talkers are the home buyers who think they’re going to negotiate the list price down byslamming the house whether in Kenwood Forest or Kenwood or Kenwood Park, telling the sellers how little it is really worth, how the house across the street sold for nothing, why the school on the corner should make them desperate to give the place away, etc. This strategy never works; in fact, when you attack a seller and their home, you only cause them to be defensive, and think up all the reasons that (a) their home is not what you say it is, and (b) they shouldn’t sell their home to you!

Sometimes this happens with buyers who actually love a house and just walk around it fantasizing about all the ways they would customize it to their tastes while a seller is there.  Sellers: avoid being at home while your home is being shown.  Leave your townhouse in Kenwood Forest and go grab a cupcake at Georgetown Cupcake! Lock the door in Avenel and go for a walk on the canal! LEAVE!!  Buyers: save your commentary for your agent; if you do encounter the seller in person keep your conversation respectful and avoid critiquing the house or the list price.

2. Being unqualified for mortgage financing. When a seller signs a buyer’s offer, most often the seller agrees to effectively pull the home off the market, forgoing other buyers who might be interested.  As such, the only thing worse than getting no offers on your home is getting an offer, getting into contract, then having the whole thing fall apart when the buyer’s loan falls through – especially if that could have been predicted or avoided up front.

Sellers: Work with your agent to vet your home’s buyers’ qualifications, including their loan approval, down payment and earnest money deposit – before you sign a contract.  It’s not overkill for your agent to call the buyers’ mortgage pro before you sign the contract and get a level of comfort for how robust their qualifications are.  Buyers: Get pre-approved.  Seriously.  And make sure that you don’t buy a car, quit your job, deposit lottery winnings or do any other financial twitchery between the time you get loan approval and the time you close escrow on your home.

3. Making unjustified lowball offers. No one likes to feel like they are being taken advantage of.  And sellers generally know the ballpark amount that their home is worth, as well as what they need to sell it for to get their mortgage paid off.  Yes – the price you pay for a home should be driven by its fair market value, rather than the seller’s financial needs, and deals are more available in a market like the current one, in which supply so vastly outpaces demand. But just throwing uber-lowball offers out at sellers hoping one will hit the spot is not generally a successful strategy, especially if you really, really want a given property.

Sellers: Don’t get overly emotional about receiving a lowball offer; counter at the price you and your agent decide makes sense based on the total circumstances, including your motivation level, recent comps and the interest/activity level your listing is receiving. Buyers: Work through the similar, nearby homes that have recently sold (a/k/a comparables) before you make an offer to factor the home’s fair market value into your offer price – also factor in how much you want the place, too.  Don’t be amazed if you make an offer far below asking, and don’t get a response.

4. Renegotiating mid-stream. Sellers plan their finances, moves and  – to some extent – their lives around thepurchase price a buyer agrees to pay for their home.  If you get into contract to buy a home, find out during inspections that costly repairs need to be made, then propose a lower sale price, repair credit or even actual repairs to the seller, that’s sensible and fair.  But if you were aware that the property needed a lot of work before you made an offer on it, then you come back asking for beaucoup bucks’ worth of credit or price reductions midstream, expect the seller to cry foul.  And holding the seller up two weeks into the transaction because you caught a case of buyer’s remorse? Not cool, and not likely to foster the spirit of cooperation you may need to get your deal closed.

Sellers: avoid mid-stream price renegotiations by having a full set of inspection reports and repair bids at hand when you list your home. Buyers: try to avoid renegotiating the entire deal unless you get some major surprises at your inspections or inflating small repairs to try to justify a major price cut.

5. Misleading or setting the seller up Being misled by listing photos or very fluffy property descriptions really upsets buyers.  Sellers can be upset too.  Offering way over asking with the plan to hammer the seller for a reduction when the house doesn’t appraise at the purchase price? THAT IS WROONG!   Making an as-is offer while planning the whole time to come back and ask for every penny ante repair called out by the inspectors?   THAT IS REALLY WRONG.

Sellers:
If you get multiple offers and are tempted to take a sky-high one or one that claims to be all cash, consider requesting proof that the buyer has sufficient funds to make up the difference between what you think the home will appraise for and the actual sale price, and statements showing the cash truly exists.  Buyers: Don’t be obnoxious. I’m not saying you have to tell the seller exactly what your top dollar is, but making offers with terms designed to intentionally mislead is really, really bad form – and can result in losing the home entirely if and when your bluff gets called

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33 Responses

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