Don’t assume your Realtor or the Seller’s Realtor will do this.
No joking, this is serious business. Have fun when you are talking to the Seller but keep the frivolity out of the transaction and off the house. Remember this is their home and even though they are leaving they may still have great pride in it. This is stressful for them and for their family and a poorly placed joke can be a real barrier to getting what you want in the business of buying this home.
Story: I was watching a TV show, maybe Million Dollar Listing. The Seller kept asking the male Buyer to throw in his girlfriend as part of the deal. The Buyer was noticeably disturbed by this comment. The Seller did it THREE TIMES and never picked up on his stupid error. He thought he was being complimentary, but he was just being a jerk. The Buyer was not complimented or humored and it probably cost the Seller plenty.
Asking the Sellers to leave behind their draperies is one thing. Asking them to give you their grandmother’s desk is quite another. Be careful what you ask for. Here is a perfectly clean transaction. List price $200,000. You buy it with no contingencies at $200,000 all cash and close in 7 days. EVERY OTHER TYPE OF TRANSACTION IS LESS APPEALING TO THE SELLER.
So, as in any negotiation, you need to find out what the Seller is trying to accomplish. There is a big difference between one who has already started work in a new city and needs to move and a couple that has decided to retire but don’t even know where they are moving more accurately than “a desert climate.” What is the ideal move out date for the Seller? How much equity do they have in the home versus how much debt? What do they want to take with them, versus what would they prefer to leave behind and not pay to move? Have they purchased their next home yet? What work on the house would they rather not bother with since their hearts have “moved on” already?
There is a term to remember. The Passover Lamb. That is the one that is sacrificed and then eaten. Here is an example. If you know that the washer and dryer are brand new then the Seller probably wants to take them to their new place. If you ask for them to be included in the deal even though you don’t really need them and they say no then they feel like they have a little win. If you were asking for a change in terms at the same time, like a delay in timing or for them to kick in another $1,000 to help with an unexpected closing costs, then the loss of the Lamb helps you accomplish the more important request – the $1,000.
Whenever possible combine elements in your requests so that the Seller can say no to one and yes to the one you really want.
Negotiating the price is an art. Warning – in any negotiation you must be prepared to lose the deal if you are not giving the Seller exactly what they are asking. That is always their option. If there is very little supply of the type of home you want available, you are usually better off to give the Seller their price and terms. If you think you will be in competition with other bidders, you may want to offer a bid over the price they are asking.
There is a term called “nibbling.” It is when the deal is completed agreed upon, probably in writing too, and then one party comes back and asks for a little something more. And maybe even does it again. If you absolutely have to nibble, only do it once. If the property has been on the market for a long time, say over 60 days, and it has not sold or had a price change, then you might not expect competition. The Seller will also be more open to offers. If they have a compelling need for a certain amount of money then you may not be able to get it for less than they are asking. You should try to find out, probably through your Realtor.
Think carefully about what you can offer the Seller that will help them but not cost you anything. Example – you are now renting. Even though your lease runs through May 30th you could close escrow on April 30th. That would mean you have to pay rent and mortgage for one month. But you had planned on doing some painting, door replacement and appliance upgrades before you moved anyway. You don’t have to tell the Seller this, maybe not even your Realtor. These are the words you would use. “Well, our lease is through May 30th. We know you want to close as soon as possible. We would have to be paying our rent and for the mortgage at the same time. If you could credit us another $1,000 toward our closing costs we could probably do that.” They say yes because they get to leave on schedule and you just pocketed another $1,000.
Never back a Seller into a corner. Whenever possible have something to offer them in exchange for what you are asking. Example – moving from an apartment to a house you would probably to own any patio furniture. Their old patio set is sitting in the back of the house. You intend asking for them to pay $4,000 in closing cost credits and think they may not accept that. Tell them, “We can’t afford to buy patio furniture and summer is coming. One of the main reasons we want to get this house is to enjoy meals outside with our family and friends. How about we buy the patio furniture as part of the deal at say $500 and raise the price to cover that?” If the patio furniture is worth $200 they will think they made a killing and be more likely to accept your request for the closing costs credit. That is very different from just asking for the credit with a take it or leave it attitude.
Every time an adjustment in price, terms or conditions is negotiated you must time your responses. If you wait too long to give an answer, they might accept an offer from someone else. But, if you answer too quickly, they will think they offered too much to you. So try to time your responses in a way that says you carefully considered this huge burden and just barely agreed to it.
You will not be face to face with the Seller through all this but if you are, here is how to handle it. Do not react one way or the other to what they are proposing on the spot. If they ask for something that you find disagreeable, then “Hmmm” is a perfectly good response. Follow that with a long pause while you think about thinking about it. If you can, say “Well, we will have to get back to you about that. We need to think about that.”
Story – I was negotiating a transaction some years ago. The Buyer offered a good price and excellent terms. When I sat down at the Seller’s kitchen table with the listing agent to present the offer, the agent kept objecting to almost everything. This situation always worries me, when the agent won’t let the client speak for themselves. He said, “that isn’t enough for us.” My Buyer was offering list price. “We want a quicker escrow.” My Buyer was offering a 30 day escrow. I finally got so frustrated that I asked the agent to come to my car because I had “forgotten something.” When we got outside I asked, “Don’t you want your client to sell this house?” He responded, “No, not really. This is my only listing. If it sells my Broker will be all over me to go get another one.”
Make sure you understand all the players and their motivation. This will be the single most important part of the process of negotiating a deal that everyone considers a win.
And when you finish, tell the other players that they did a good job. Make them feel like they negotiated hard and you suffered. Even if you got 9 of your 10 requests, let them know how badly they whipped you on the 10th one. “You are really a good negotiator. You sure worked me over. I learned a few things from you.” Don’t ever ask if they think they got a good deal. Down the road you may need something from them and you don’t ever want them to feel like they got the worst of it. (Things you might need – the combination to the padlock on the back gate, the key to the community pool, the mailbox key they forgot to leave, the warranty on the stucco coat, etc.) Leave them feeling good about the deal.
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