The playing field has improved for home buyers. But, many sellers have yet to wake up to the new reality.
This means that buyers may run up against sellers whose dreams are out of sync with the market. If you’re crazy about their house, what can you do to convince the sellers that you’re the right buyer without paying an over-inflated price?
First, realize that pride-of-ownership is firmly ingrained in some sellers, particularly if they’ve owned and cared for their home for many years. Also keep in mind that many sellers may have unrealistic expectations. They may have friends who received multiple offers and wild overbidding only six months ago. But, that was then and now is different.
It will take time for some sellers to realign their objectives. For example, a seller in the Oakland Hills, Calif., area listed his home for sale a couple of months ago. He received multiple offers soon after listing. However, the offers came in at the asking price. The seller countered the offers with a much higher price. The buyers walked away.
About a month or so later, one of the buyers surfaced and started a verbal negotiation through his agent and the seller’s agent. Finally, a formal offer was made for less than the asking price. The seller accepted.
HOUSE HUNTING TIP: Sometimes, the best approach to a seller who’s wedded to an unrealistic price is the play the waiting game. You could lose the listing to another buyer who’s willing to pay more. But, if you’re only able or willing to pay a price that’s less than the seller’s asking price, what have you got to lose?
Ask your agent to let the seller’s agent know that you’re seriously interested in the property, just not at the list price. Make sure that you’re the first to know if there’s a price reduction.
But don’t stop looking at other new listings that come on the market. As much as you might love an over-priced listing, some of these properties aren’t for sale at market value. Sellers who have no urgency to move do have the option of taking their properties off the market if they don’t get their price.
It’s always a good idea to find out as much as you can about the seller’s situation and his motivation to sell. If the seller has been transferred, there’s a good change that the property will be sold even though the initial asking price might be too high.
Try not to get caught up in a protracted negotiation with a seller who’s only willing to sell if he can realize a stratospheric price. This can take up a lot of time and energy for nothing.
On the other hand, don’t expect a split-second change of heart even if the seller is motivated. Recently, a San Francisco listing sold after eight rounds of counteroffers. Anticipate more negotiation in the new market than was the case in recent years. With this in mind, it pays to find an agent with good communication and negotiation skills.
Rather than put all your cards on the table in your first round of negotiations with a stubborn seller, you might want to hold back a few perks that you can throw in later to sweeten the deal. For example, if you know the seller wants a quick close, you might offer a 45- to 60-day close initially and shorten to a 21- or 30-day close as the negotiations progress.
THE CLOSING: Have a clear sense of where you can be flexible in your negotiations. But, know where to draw the line.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers,” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.
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