Successful Home Ownership V – Negotiating with Maturity
by Evan Vanderwey on 24/06/10 at 8:33 am
Negotiating with maturity does not mean that you cannot “low ball” a seller in certain circumstances, but it does mean realizing what it is you’re doing.
If a seller has a home listed for $200,000 and you offer $140,000 – you have just low balled the seller’s number. There is nothing wrong with that, you just need to think it through ahead of time.
The seller has a few options, and a mature negotiator has his response to each one.
1. The seller could accept your offer.
If that happens, the two things that will enter your mind are 1) could I have gotten a better deal? And 2) what might be wrong with this home?
These are legitimate questions, but realize up front that you will want to take this into consideration before you make your offer. Ask yourself: if they accept my offer, will I kick myself for not going lower? There is a price that is too low and will move you to one of the next two options which are more difficult. To deal with the second question ahead of time, you’ll need to have a good home inspection done. You would do this anyway, but make sure you know what the added costs of deferred maintenance might be – costs like a new roof, a furnace, etc.
2. The seller might counter at $197,000 or something very close to their original price.
If the seller does this you can really do only one of two things: You can counter a few thousand higher than your original, or you can walk away for a while (30 days). If you come up more than they came down, then you essentially tipped your hand about one thing – you will come up. And they’ll keep drawing you up.
3. The seller could reject your offer.
Similar to the high counter, this kind of response basically says that you need to wait before you can offer again. Give it 30 days and then offer the same thing you did before. Do this a few times and keep waiting. Again, the obvious risk, especially if the home is a great deal, is that someone else may make a higher offer and take the home off the market.
How bad do you want it?
If you really want the home, then don’t low ball unless the low offer is the most realistic price based on your research. Make a fair offer and acknowledge that you are already getting a great deal. If you can take it or leave it, then you have little to lose if the seller starts playing the counter game with you. You can just walk away.
A good reminder
Also realize that your Buyers Agent has a family and a life too. After your 20th unrealistic offer, you may find yourself looking for a new agent since you’re not acting like you really want to buy a home.
Lastly
Don’t wait this market out simply because you’re new to it. Go for it. If you make a mistake, apologize for it and move on. If you have to ask a ton of questions, then ask a ton of questions. This market is almost fool proof. You will do much better buying a home today than you would have (or did) three years ago.
