Tips and Traps When Negotiating Real Estate: Complications

Negotiating a Successful Deal: Complications

Sondra and Dana immediately put their home up for sale. They listed it with Madeline, who said she would give them a break on the commission since she was getting two deals out of it. They compared five other homes very similar to theirs that had sold in the past three months and selected a price that was just slightly below the average price of the other homes. They wanted a quick sale and were, hope­ fully, pricing it right. Sondra and Dana immediately went through a major cleaning of their home. They painted the front, touched up the walls inside, cleaned the carpets, had a crew come in to do a thorough job on the kitchen and baths, and trimmed and mowed the yard. “We’ve got to get this sold—fast!” Dana said.

The first weekend, Madeline held an Open House and dozens of people came by. Many seemed interested, but none made an offer.

The second weekend, Madeline held a “caravan” at the house, in which other agents both from her office and other offices came by to look at the property. Madeline told Sondra and Dana that getting the word out to other agents was the best way to get a sale.

The third weekend, Madeline held another Open House, and when the final lookers left, she appeared worried. She said, “We haven’t had any offers. I think you should drop your price.”

Sondra shook her head. “We’ve looked at comparable sales and our house is priced fairly. Besides, we paid over asking price for our new home. Why should we accept under market price for this one?”

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“Because,” Madeline said, “you want a quick sale.”

Sondra looked at Dana and he shook his head. “I’m with you on this one,” he replied. “If we can’t sell this house for a fair price, then why even bother looking for another one? We’ll just stay here. Besides, I don’t think cutting the price now will make that big a dif­ference, since our price is already slightly below market. It must just be that the right buyer hasn’t come by yet.”

TIP

Dropping your price will always attract more buyers, but usually they are the ones looking for a bargain,  who will tend to make even lower lowball offers.

“Anyhow,” added Sondra, “we need to get our asking price in order to have enough cash to buy the new property and pay for the move.” Madeline left looking even more worried.

By the fourth week, as their contingency was ready to expire, Sondra and Dana sat down to talk it out. “We gave it our best shot,” he said. She nodded and held his hand. “There will be other houses. We’ll relist with another agent and take our time. After we sell, then we’ll go looking again.”

TRAP

The question of whether to sell first or buy first is a big one. In a hot market where prices are moving up rapidly, it’s often best to lock in the price of the new home before selling the old. In a cold market where prices are steady, it usually works best the other way.

On the last day of their contingency, Madeline called to say she had an offer, a “full price” offer! She was coming right down to show it to them.

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She arrived half an hour later by herself. She said the buyer’s agent didn’t have time to come by. But she could explain the offer perfectly well. The name of the buyers was Love . . . and it was a contingency offer!

Sondra and Dana were flabbergasted. The Loves, the would-be buyers of their home, wanted them to sign a contingency giving the Loves 30 days to sell their own home. The Loves were doing to them, what they had done to the Wilsons!

However, Madeline reported that the Loves’ broker said that he thought he might have a buyer and the house might sell within a week. ‘

“It’s like musical chairs,” said Sondra. “We can’t buy until we sell.

And our buyers can’t purchase until they sell.” “We can’t do it,” said Dana. “We’re on the last day of our own contingency. The Wilsons expect us to be ready to go today.”

“I know,” said Madeline. “It will take some arm twisting, but now that you have a sale, I think the Wilsons will be willing to give you an extension. At least it’s worth a try. What do you have to lose?”

Sondra looked at Dana and they both nodded. So they signed first, making sure that the new agreement was tied to the old. It gave the buyers of their existing home, the Loves, 30 days to sell, pro­ vided the sellers of their new home, the Wilsons, gave Sondra and Dana an additional 30 days.

Madeline drove off and called them an hour later. She was at the Wilson home, and she was having trouble. The Wilsons were already half moved out, having assumed the deal would soon close. Now they were angry about the delay. They wanted an additional $5,000 to compensate them for their troubles. Madeline said she was writing up the new extension and would be right over.

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Dana told her to hold on for a moment while he explained it to Sondra. Sondra said, “If they’re already half moved out, then it will be even more difficult for them if they have to start over, put their home back on the market, and wait for a new buyer. And even after they find that new buyer, which could take weeks, they’ll have to wait another 30 days or more for the deal to close. We still offer them the fastest deal, particularly now that our house has sold. We’re in a bet­ter position than Madeline thinks. I don’t believe we should agree to pay an additional $5,000.”

TIP

It’s important to know when to stick to your guns. As in poker, if you have the winning hand, you don’t want to fold or back down on a bet.

Dana got back on the phone and explained to Madeline what his wife had said. He then told her, “Tell them that we’re within the terms of our original agreement. We found a buyer for our home within 30 days. It’s just going to take a bit longer to close the deal. We already gave them an additional $5,000 for the con­tingency. We don’t feel we should have to pay for it twice. And we won’t.”

Madeline said it wouldn’t fly, but she’d try. She called back half an hour later saying the Wilsons had agreed. They were a nice older couple and really wanted Sondra and Dana to have their home, so they were willing to wait an additional 30 days. But they were mov­ing out over the weekend. She’d be right over with the changes for Sondra and Dana to sign.

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TIP

It’s important to know what motivates the other party to a negotiation. If you can show them how doing it your way is to their advantage, they might just go along.