As a homebuyer, unless you are buying direct from the owner, you’ll not negotiate directly with the seller of the home you have your eye on.
That’s your real estate agent’s job, but he or she negotiates on your behalf. So, when we talk about buyer negotiations with sellers, we’re referring to indirect negotiations through your agent.
Unless you’re an attorney, salesperson, or in another occupation that requires negotiating skills, we think it’s safe to say that it’s not something you do on a regular basis.
Textbook negotiations requires subtlety and the ability and willingness to find a point where both parties both feel like they won and also simultaneously feel they gave up “too much.” Yet, when negotiating for my clients I like to feel that in the end my client had the advantage and that the other party moved more in our direction.
Certain negotiating tactics however may railroad a real estate deal, instantly. Let’s take a look at some of these to help you avoid losing out on that home you want.
Using the home inspection as a negotiation excuse
The one blanket statement that we feel safe in making to all homebuyers is that they must get the home professionally inspected. Yes, even recently-built and new homes.
After the inspection, the inspector will issue a report, listing all of the problems or potential problems found during a visual inspection of the home.
Some of the problems may be significant but most are not. If you find the report somewhat acceptable, but would like a few items repaired or replaced, we will put together an amendment addressing concerns and negotiate with the seller on those repairs important to you during your due diligence timeframe.
This is where some homebuyers become might become a bit unreasonable, using nit-picking in an attempt to drive down the price of the home.
Keep in mind that, unless the home was listed for sale “as-is,” homeowners are only obligated to remedy defects that your lender or insurer will require (typically those of a health and safety nature) up to a certain dollar amount.
The seller is not required to adjust the price instead of making repairs. And, most sellers won’t even consider replacing or repairing defects that can be remedied easily and inexpensively.
Everything, however, is negotiable and your choices in the deal include:
- Asking the seller to make the repairs
- Asking the seller to decrease the price of the home to compensate for the cost of repairs
- Walk away from the deal
The homeowner’s choices include saying yes or no to the first two, coming up with a list of what he or she is willing to deal on, or you may decide not to continue with the sale.
A good practice if you do want to ask the seller for a decrease in the price of the home or for more closing costs (to reduce your out of pocket at closing so you may do the repairs yourself) would be to have your agent provide a general contractor who can bid out those repair needs that are of most concern to you. I find that actual cost of ‘what we think’ repairs should cost are normally much lower than the dollar amount we pad in our minds to cover ourselves when we don’t know the actual cost. I also find that sellers are more responsive to a dollar figure that’s an actual real number quoted by a contractor and not just some made up figure ‘in the air’ that has no potential basis in the reality to making those repairs.
The “lowball” offer
We understand that you want the best deal possible, but a very low offer on a home you truly want to purchase is not typically the best negotiating tactic.
In a buyers’ market, when there are lots of homes for sale but few buyers, you may get away with an offer under asking price. In our market within Metro Atlanta to Athens though, we’ve been in a seller’s market for the past 5-6 years however! All a low ball offers does is give other buyers in a competitive market, more time to get other offers in and leaves the door open to multiple offers. In that case, you either end up paying more for the house than you wanted or get beat out by another buyer. A ridiculously low offer many times can be taken as an insult by the seller. They and their agent feels you aren’t a serious buyer.
It also makes you appear like a bargain hunter, ruining your credibility in the eyes of the seller.
A homeowner has several choices when confronted by a low offer. Unfortunately, many of them feel so insulted they won’t even respond.
So, instead of getting a chance to haggle on the price of the home, you’re shut out. Completely.
Assuming the seller wants to part with personal belongings to get the home sold
Sure, in slow markets, sellers may do almost anything if their home has been sitting on the market and they need it sold quickly.
Before you request that they leave their furniture, appliances, and the dog please keep in mind that desperation on the seller’s part is the exception, not the rule. I had a family member tell me one time that an agent call her who lived in her neighborhood. She was not attempting to sell her home, but it was commonly known that she and her husband would sell if the deal was right.
This agent brought a potential home buyer to see the house. They spent two hours there walking the property and taking it all in, and do mean literally! She relayed that the buyer made an offer $100,000 lower than she wanted plus added in all the furniture in the basement, pool table, media equipment, and even the desk in her husband’s office. Needless to say, they still talk badly about these ‘unreasonable’ home buyers to this day who actually made two of these negotiating blunders in one offer!
Unless expressly stated in the contract, the homeowner is selling their home, not their personal belongings. Yes, we can always come back and ask in the form of a personal property bill of sale later while in escrow if the seller might consider selling (or leaving) some furniture piece that you have an interest. I’ve always felt however whether it’s the seller’s personal property you’d like to include in the sale or a home warranty (or even repairs), let’s not muddy up the offer. Let’s keep it clean. There’s ample opportunity to get those things negotiated into the deal after we are under contract and holding hands in escrow.
Ask for too much upfront in your offer and it might make you appear greedy to the seller. They may get the impression quickly that you are someone they don’t want to negotiate with on the sale of their home.
The most important thing to remember, especially in a market that favors sellers, is that the seller may very well be negotiating with other buyers. Try to keep it as “clean” as possible. Then let’s negotiate while in due diligence for those additional items or concerns that really sweeten the deal for you!
We’re happy to show you how.