Negotiating The Offer Part 1 – The “Homeless” Seller

[photopress:250px_Tug_of_war.jpg,thumb,alignright]It is a popular perception that every seller wants top dollar as their primary objective.  In my experience that is not always true, and in fact is often not true at all, at the time the offer is being presented.  Let’s take a step back first to see where the perception comes from. 

When a seller is speaking with agents before the home goes on market, it is true that the discussion focuses on selling the property at the highest price, in the shortest amount of time and with as little inconvenience to those occupying the home, as possible.  Agents are trained to speak in these terms, and so that is how the discussion generally goes.

At the time the offer is presented however, if there is a lengthy discussion, that discussion is often not about the price at all.  Even when the discussion is about price, the underlying pressure on the price is often about something else entirely, like the cost of temporary housing for the seller.

For many sellers, the minute they accept an offer on their home, they are immediately, though temporarily, homeless.  I can’t tell you how many times a seller has looked up at me after signing the offer and said, “I guess I’m homeless now”.

Often when a seller is picking on every minutae detail of the offer, it is because they do not know where they are going.  This is a dangerous situation for a buyer, as the seller often wants them to “make it worth their while” to leave.  You might think it was obvious to them when they listed their home for sale, that they would have to leave.  Trust me, the reality in that moment when they pick up the pen to sign your offer, that the minute they sign it they will behomeless”, hits them like a ton of bricks IF they do not know where they are going.

Any good negotiatior considers the factors on the other side of the table when preparing the offer, or during the give and take of the negotiation process as new information becomes available. While 30 day escrows have become the norm, does that really give a seller the time they need to find their next home?  Often the seller can’t make an offer on their next home until their home is sold, or at least in escrow. If you are willing to give them the time they need to know where they are going, and match up the closing dates so they don’t have to go to temporary housing, you often will win out on price.

If you are currently renting, adding an extra couple of weeks or more to the escrow time can actually save you money.  Go out to the date where you will not be paying rent and interest on your mortgage simultaneously.  Giving the seller time to negotiate the offer on his next home can be a winning strategy in multiple offer situations and even get you the house you want at a lesser price than other offers on the table.  Consider a longer close or a post occupancy agreement when writing your offer. (Some lenders will not permit a post occupancy to exceed 30 days on “owner occupied” financing, so check with your lender before agreeing to anything longer than 30 days past close of escrow, even if longer is only by a couple of days.)

Giving the seller the peace of mind that they can stay in their current home until they are moving into their new home is generally worth up to at least $5,000 in price and sometimes as much as $10,000.  If the seller has two offers on the table, one with an escalator up to $460,000 and one at $450,000 straight up with no escalator, they often will accept or counter the lower offer, if it provides them with the ability to find their next home before having to leave the house.  Sometimes something as simple as letting the seller keep some things in the garage for a week or two can make the difference.  Sometimes giving them the entire weekend to move can make the difference.  Sometimes splitting the weekend, giving them all day Saturday to move out and leaving you all day Sunday to move in is sufficient.  Often these little things prevent the seller from pulling extra had on the price to compensate for his uneasiness and inconvenience.

The perception that the highest price on the table always wins out, is erroneous.  A seller who faces being “homeless”, will often select the offer that affords him the option to stay until he closes and can move his belongings into his new home, even if that offer is not the highest price on the table.

2 thoughts on “Negotiating The Offer Part 1 – The “Homeless” Seller

  1. Pingback: Great post for buyers on Rain City Guide at eugene real estate

Leave a Reply