I've been reminded again today of one of the biggest mistakes that a buyer can make when offering to purchase a house. I'll give you an example. You see if you can figure out the mistake. Sam seller is selling his home that he's been in for several years now. He has it listed for $110,000. Bonnie buyer views the house and wants to make an offer on the house. They sit down with their agent and make an offer of $85,000 or $25,000 less than asking price. It's submitted and rejected with the instructions to bring your highest and best offer. The buyers now offer $95,000 and Seller Sam counters back at $100,000. Bonnie Buyer rejects and walks away.
Did you see it? Buyer's need to try and place themselves in the shoes of the sellers. By offering $25,000 less than the asking price the buyer's are, in essence, telling the seller's "you're stupid and I want to take advantage of that." Seller's are called sellers because they want to sell their homes but they also want to feel good about it. By offering so much less for the house the seller's are now defensive and unwilling to negotiate in good faith. They get rigid in their negotiations and thus the buyer's end up paying more than they would have had they just made a reasonable offer to begin the negotiations.
I don't know how many times I've seen a low offer like the example above and the seller's simple just dropped the price $1,000 or not at all. In the example had the seller's simply started closer to their offering price they could have been the one being firm they could have inched it up to their best and make the seller come down. Let's say the buyers offered 93,000 or $17,000 less than asking. Still a lot less but a little easier to work with. The sellers may not have rejected it but countered back at lets say 105,000 or $5,000 less than asking. The buyer's then could have countered back at 94,000 The sellers would have then noticed that buyers were getting close to their top and would have had to make some real decisions about what they wanted to do. They could have come down maybe to $100,000 or $102,000. Then the buyers could have come it at 95,000 and said that's top. This deal may not have worked but it would have put the buyer's in the driver's seat. It also would have possibly kept the seller's from getting on the defensive straight from the beginning.
The other aspect of this deal that buyer's need to be aware of is whether or not they should be looking at homes that are priced $20,000+ over what they are able and willing to pay for a house. If they are not willing to pay that much then they probably shouldn't be looking at them simply because if they fall in love with a property they won't be able to purchase it if the seller's are not willing to come down in price.
If you're thinking about buying a house, try and think about what it is that you really want and are willing to pay for a house. If it's not a reasonable price be prepared to not get that house of your dreams.
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