In some areas there is a shortage of desirable, well-priced listings. Sellers who don’t need to sell now are waiting for a better market. Many sellers who would like to sell now have unrealistic expectations about what a buyer would be willing to pay for their home.
If you like a listing that is overpriced for the market, one approach is to keep your eye on it and wait for a price reduction. The risk of this approach is that another buyer might come along and start a negotiation with the seller. It would be unfortunate if you were to find out later that the listing sold for a price that you would have been willing to pay.
A better approach would be to start the negotiation process and hope to find a price that is mutually acceptable to both you and the seller. Be prepared for a protracted negotiation if the property is listed considerably over a fair market price.
Recently, a pair of buyers made a very low offer on a listing that was priced a little higher than market price. The sellers wouldn’t even respond to the buyers’ initial offer. The buyers waited a week or so and offered a higher price, but one that was still unacceptable to the seller. Finally, after six weeks the buyers and sellers came to a mutually agreeable price and the sale closed.
HOUSE HUNTING TIP: When you are dealing with an unrealistic seller, don’t play all your cards at once. If you offer your best price initially, and it’s quite a bit lower than the asking price, you have no room to move up pricewise.
The purchase price isn’t the only item to consider when negotiating. For example, if you don’t need to take possession of the property right away, you might offer the seller the option to rent back after closing. This would be particularly attractive to sellers who can’t get into their next home right away and would have to rent elsewhere for a while.
In a case like this, consider not including this perk in your initial offer. You can add this benefit in future rounds of negation to sweeten your offer. …CONTINUED
For example, recently sellers of a home in the hills above Oakland, Calif., received an offer that didn’t meet their expectations. It was a clean offer and not contingent on the sale of another property. The sellers wanted a higher price.
The buyers were willing to accept a higher price but only if their offer was made contingent on the sale of their current home. The sellers, who were in contract to buy another house, decided to accept the offer with the lower price that was not contingent on the sale of the buyers’ home. Presenting sellers with an either/or option can bring positive results.
The closing date can be used as a bargaining chip. A seller who has already closed on another home and is now paying mortgages on two properties would benefit financially from a relatively short closing. If you have this flexibility, you might offer to close in 60 days or so, but agree to a shorter close in exchange for a price reduction.
It’s always a good idea to be preapproved by a lender before you make an offer. If you include a preapproval letter with your low-priced offer, at least the seller knows he is dealing with someone who is qualified to buy.
THE CLOSING: It is a good idea to find out as much about the sellers’ situation as possible so that you can tailor your offer and subsequent counteroffers to your best advantage.
Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer’s Guide."
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