Home > Negotiation > When buyers lose out because of poor negotiating.

When buyers lose out because of poor negotiating.

Last weekend I was working with a family who wanted to buy a home. They found the home they wanted and were going to pay full price when another family member got involved and said they should make an offer below the asking price because it had been on the market for a while and it's a buyer's market.

I warned them about everything that could go wrong but they still made an offer [only $1500 low]. Murphy's Law, another couple made a full price offer after our offer was submitted but before the Seller responded and they got the home. The people I was working with lost out because they wanted to get a better deal.

What would you say to someone like this? - by Thomas
What would you say to someone like this?
Mr. Prospect now that you've found the home you want and at a price that is fair are you willing to risk losing all of that just to see if you can get a better price? - by Frankie
Part of Negotiating is that you must be willing to walk away. Once they started negotiating then they gave the appearance that they might walk away.

I would have probably negotiated also. Heck I asked for $1 off a dryer this week because Lowes had the same model for $1 less.

Dang am I cheap!

Good Selling!!!

P.S. Don't fret I am sure you will find them another home that is even better for them. - by Sell4alivn
It is customary in the real estate market to make a 'offer' to the seller that is a lower based on 'comparable' houses that have recently sold.

If you created an environment, where your potential buyer knew the pitfalls of making a lower offer, and was willing to take the chance of 'losing the perfect house' for $1500, then you did all you could do.

Problem is they may have felt that the reason you wanted them to give the seller his full price, is that they thought you were more concerned with your commission or worse that you cared more about the seller getting his full price, than having them get the best price they could for the house they wanted. Even though commission on an extra $1500 is very very little.

In actuality the difference they would have seen in their mortgage payment for the additional $1500 paid for the house would have been pennies each month, AND they would have had the house they loved.

It clearly just wasn't meant to be. - by Paulette Halpern
I expect that after this experience there would be very little necessity to say very much in getting and presenting an offer from this same family on a second property.

If you were wanting to avoid this situation from happening again with another buyer, it may be useful to relate this story (and others like it) to them. After all, you're the expert, and you're the professional with the experience to help them avoid making such mistakes.

When working in such situations having third parties coming in to second guess events is another area you may seek further control over, to mitigate potential disasters happening.

Real estate transactions by their very nature necessitate attention to such details, and since they relate to specific and unique parcels of property, demand the utmost out of the broker(s) involved, and their skills in negotiation.

In your specific instance, I'm going to estimate that the $1,500 involved might have only equated to around $10 extra a month on the mortgage. For $2.50 a week, or around 35 cents a day, I'd have asked my buyers directly "is this going to make a big difference to your lifestyle?"

In conjunction with their family member (the well-meaning third party) whose ideas on 'winning' and negotiation in general were about to torpedo the chances of getting the family that house, I'd have looked at firming up their combined thinking on all of this so that together (through your guidance) the right decision and actions were taken. - by ThirdForceNegotiator
It is customary in the real estate market to make a 'offer' to the seller that is a lower based on 'comparable' houses that have recently sold.

If you created an environment, where your potential buyer knew the pitfalls of making a lower offer, and was willing to take the chance of 'losing the perfect house' for $1500, then you did all you could do.

Problem is they may have felt that the reason you wanted them to give the seller his full price, is that they thought you were more concerned with your commission or worse that you cared more about the seller getting his full price, than having them get the best price they could for the house they wanted. Even though commission on an extra $1500 is very very little.

In actuality the difference they would have seen in their mortgage payment for the additional $1500 paid for the house would have been pennies each month, AND they would have had the house they loved.

It clearly just wasn't meant to be.
There is no rationality where money is concerned. I sold real estate for a brief period. My first listing was for a $30,000 piece of property the owner paid $500 down three weeks earlier. She wanted $55,000.

My broker and a friend of his had two adjoining properties that this would complete three in a row and they could build a 30 unit apartment. Here was the deal. We signed the agreement and the listing was for $85,000 but we told this lady that we'd have her $55,000 in a week. Next day, we had a cash offer, $55,000. My client declined.... WHAT? Hey if I can get $55,000 in a day, I'm selling too cheap. The listing is $85,000... I'll wait.

Long story short, we got an $85,000 offer with $25,000 down and $60,000 over 10 years from another developer who made offers on the three, the only way this project would work for $150,000 more than originally budgeted because of my client. When my client balked at the $60,000 over 10 years, my Broker threatened a lawsuit.

My client signed, had to come up with $5,000 to complete the sale on the original deal, plus now had to come up with an additional $8500 for us, where we had her cash rich by $20,000 for a month of holding paper. $13,500 out of pocket. The irony of all of this, was that while all of this was going on, the new developer ran into financing difficulties and filed bankruptcy shortly after closing the deal. I don't know how many years it took my client to get her property back, but she had the audacity to ask us to return $5,000 of commission. What a pity we had no heart to entertain her.

Don't know the moral of this story... except when it comes to money, who knows what goes on in the mind of buyers or sellers, or brokers.

Aloha... :cool: - by rattus58
I think the couple who offered the full amount...may have been the couple who missed out on a previous house when they offered $1,500 below the ask price.

You just need to make sure you get the customers who have made the mistake once before.....

Just joking of course.

Use this story with your next customers as ThirdForce says.....
you need to become their 'trusted' advisors. - by helisell
All buyers, of any product what to get the best value for the money they are investing. Sellers want to get the most money. Regardless of what side you are on, both sides rationalize their position as it regards the 'value of the money' on the table.

In the sellers market a few years ago, it was common for competition to drive up prices.

Now the real estate market has returned to more of a normal 'strategy'. If a house is in a 'hot' and well sought after neighborhood, there may be little negotiating, especially if the seller has multiple offers.

If the house has been on the market longer and there are no offers on the table or few, the buyer may have more leverage depending on other important items. But as the buyer, if the price offered isn't accepted or someone offers more, you need to be prepared to lose out. As long as they know what is at stake and can live with that outcome, that is all as the buyers representative you can do.

Knowing when and HOW to negotiate is part of the selling process. I did not let my real estate broker 'negotiate' with the real estate broker of the seller, when I was buying. I did it directly with the seller. Not the norm, but if either of the brokers wanted the opportunity to earn commission on the sale, that was what was going to happen. At the end of the day, the deal was done.

Then we let the suits (lawyers) take care of the rest. - by Paulette Halpern
Then we let the suits (lawyers) take care of the rest.
sn; Suits... how appropo....

Much Aloha... shds; ;bg - by rattus58
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