Yesterday at an Open House, I had a prospective buyer ask if the sellers might be willing to negotiate. And my first thought was, “What planet does this nice fellow live on?” But the answer is really a bit more nuanced.
This house had been on the market for all of three days, and my colleague who is the listing agent did a really great job of pricing and preparing it for the market. The list price is just below the automated estimates on Zillow and Redfin, and the house is in totally pristine condition inside and out. And to make it totally irresistable, it has a large lot that backs to woods and hides any homes that might otherwise be visible. Oh, and it made Redfin’s Hot House list! Even with really crummy weather, we had a great turn out.
While I am pretty sure this house will fly off the shelf, there are homes out there that provide an opportunity to play “Let’s Make a Deal”. What are the tell-tale signs?
- The biggest is the time on the market. When a home is new to the market, the agent and the sellers are full of optimism. But once a listing has passed the two-week mark, the sellers may start to get a little nervous and might be ready to entertain an offer. But trying to wait the market out is a little risky, because you never know when another buyer will show up and beat you to the punch.
- Pricing strategy is important. Most of us now recommend putting a number on the house that is just below what we feel is the market value. But some sellers insist on starting off at the price where the last nearby home sold in a particularly bloody bidding war. And this can put the brakes on showing and offer activity. When a house is priced on the high side, you should make an offer. There is a reasonable chance of getting the place for less than the asking price.
- Property condition is another factor. If the house is ready for prime time, refreshed with a coat of paint, a good floor refinishing job, curb appeal and a great floor plan, the negotiating opportunities are slim to none. But if you have a shaggy yard, peeling paint, scuffed flooring, tobacco or pet smells or signs of deferred maintenance, you might be the only buyers in sight if you decide to take the place on.
In addition to these factors, it’s important to be the only offer on the table. Once any competition shows up, the dynamic changes completely. First, you don’t know what the other offer is. Is it full price with great terms for the sellers, or is it even less than what you are offering? Even if the other offer is less than full price, it could be better than yours – or not. And whatever it is, if you’ve had a lot of back and forth with the seller without reaching an agreement, they might be sick of you. They may go for the second guys because you’ve softened them up a bit.
It’s important to be represented by an agent who is an experienced negotiator – and negotiation muscles are something that a lot agents in this market have not had a chance to exercise in a long time. How do you get the sellers to compromise without offending them by going too far? When you are deciding which buyer agent you will work with, a serious conversation about negotiating skills and background is important.