| Many of us subscribe to the Old West credo | | | | with a roof, and $35,000 to accommodate a |
| that a deal is finished when both parties | | | | problem with the structure. |
| shake hands on it. If that's your way of | | | | |
| thinking, then be prepared to get skinned | | | | Why would the sellers be so accommodating? |
| alive when you buy real estate. The modern | | | | It's not that they want to. |
| credo is "Never stop negotiating"--even after | | | | |
| the deal is signed, even after escrow has | | | | It's just that once a problem is revealed, it |
| opened, even after escrow has closed and | | | | will have to be dealt with one way or |
| title has passed to you. If you truly want to | | | | another, either with you or with other |
| look out for your own interests, you won't | | | | buyers. It might as well be you,since you're |
| stop negotiating! | | | | already involved in the deal. |
| | | | |
| Yes, this is a bit of an exaggeration. | | | | Further, seller sometimes simply get |
| Nevertheless, those who do get the best deals | | | | desperate to sell, Although they were |
| in real estate are often those who keep right | | | | adamantly against loweringtheir price or |
| on negotiating as long as, so to speak, | | | | giving you a better deal during the initial |
| there's anything left on the table. | | | | negotiations, now they simply lay down and |
| | | | roll over. I've seen it happen. |
| Negotiate as Part of Making an Offer | | | | |
| | | | You may negotiate a cash settlement without |
| The entire process of making an offer | | | | actually having a disclosure problem |
| involves negotiation. You purchase a home at | | | | corrected, provided the lender doesn't |
| a certain price for specified terms, | | | | object. For example, the seller s maylower |
| including contingencies thatallow you to back | | | | the price $5,000 over a leaking roof. |
| out in certain circumstances. The sellers | | | | However, instead of replacing the roof, you |
| read you offer and then either accept or, | | | | have it patched for $500 and pocket the |
| more likely, counter at a different price and | | | | difference (at least until the next |
| withdifferent terms, perhaps eliminating some | | | | rainstorm). |
| of your contingencies and modifying others by | | | | |
| limiting them for example, in terms of time. | | | | Negotiate During Escrow |
| Thus the sellers mayagree that you can have | | | | |
| an inspection, but you must approve the | | | | Some buyers with a lot of what might be |
| report within, say, 14 days. | | | | called gallnegotiate right through escrow. As |
| | | | the sellers get more and more used to the |
| Back and forth it goes with counteroffers, | | | | idea of their home being sold, the buyers |
| and counters to the counteroffers and | | | | keep coming up with new concerns that can be |
| counters to the counter to the counteroffers. | | | | resolved only by further concessions from the |
| This is the negotiation process and, | | | | sellers. |
| depending on how good you are at it, you'll | | | | |
| get a better or worse deal. | | | | I've heard buyers say that they drove by and |
| | | | became aware that the window trim was |
| If you get a deal that's acceptable to you | | | | damaged. |
| andis the best you feel you can get, and if | | | | |
| the same is true for the sellers, there's | | | | They then wanted several hundred dollars off |
| agreement and everyone signs. The presumption | | | | the price to have it fixed. If not, they |
| is that the deal is made. | | | | would simply hold off on buying the home. |
| | | | Yes, these buyers stand a chance of losing |
| Don't count on it. | | | | their deposit (and more), but the sellers |
| | | | won't get it either without going to court. |
| Negotiate Over the Disclosures | | | | In the meantime, the sellers' house is tied |
| | | | up. It simply becomes easier for the sellers |
| A wise buyer knows that the really tough | | | | toacquiesce than to fight. |
| negotiations frequently don't start until | | | | |
| after the deal is signed. Usually the next | | | | In a very slow market, buyers may demand a |
| negotiation takes place over the disclosures. | | | | reduction in price because of market |
| Within a few days of signing,you should | | | | conditions. They simply tell the sellers that |
| receive a list of defects in the property as | | | | prices are going down. The house is no longer |
| revealed by the sellers. | | | | worth what is was when the offer was |
| | | | accepted. Either the sellers accommodate with |
| (If you get the list before negotiation | | | | a lower price or the buyers refuse the deal. |
| start, then this point is moot.) | | | | |
| | | | Once again, the sellers have options, none of |
| If your offer was properly filled out (or if | | | | them particularly good in a down market. And |
| your state gives you rights here), you now | | | | many will acquiesce to placate an irritable |
| can back out of the deal without penalty. If | | | | buyer. |
| something seriouslywrong is revealed, you may | | | | |
| want to simply say no, take back your | | | | The sellers could refuse a buyer's new terms, |
| deposit, and move on. | | | | then demand the deposit, or even demand |
| | | | specific performance (the buyer either goes |
| Or you may want to negotiate some more. | | | | through with the purchase or, more likely, |
| | | | pays damages). But few sellers really want to |
| You do this by letting the sellers know | | | | go to court and fewer actually do. Buyer with |
| (through their agent, if they have one) that | | | | gall and the willingness to risk a lot have |
| you disapprove of the disclosures because of | | | | pulled off some amazing deals in this |
| the problem(s) they reveal. However, you're | | | | fashion. |
| willing to go throughwith the deal if the | | | | |
| sellers either repair the problem or reduce | | | | Negotiate After You Own the Property |
| the price. If it's price you want, you | | | | |
| indicate what you consider to be a fair price | | | | It is possible to get a better deal even |
| | | | after the escrow has closed and you take |
| (sometimes a figure significantly lower than | | | | possession of the property. This frequently |
| what was originally agreed upon), and | | | | happens when buyers findsomething amiss, and |
| negotiations begin again. | | | | demand that sellers make it good. |
| | | | |
| Typically the sellers will balk, but if they | | | | In one case, the buyers discovered after they |
| want to sell and there is a problem, they | | | | moved in that the sellers had allowed their |
| very likely will counter your offer. Back and | | | | pets torun wild over much of the home. A |
| forth it goes until both parties feel they | | | | urine smell permeated the wall-to-wall |
| can live with the same set of terms. If | | | | carpeting in several rooms. The smell had not |
| something significant was revealed in the | | | | been detected earlier because the windows |
| disclosures (or if you said that, in you | | | | were always open when the buyers inspected |
| view, what was revealed was important), you | | | | the property. Further, the sellers had failed |
| may get a significant price reduction or | | | | to disclose this problem. |
| better terms. | | | | |
| | | | It's important to understand that animal |
| Negotiate Over the Home Inspection | | | | urine in carpeting cannot really be removed. |
| | | | The smell will remain, often permeating the |
| The next negotiation frequently occurs over | | | | padding and even the flooring beneath. |
| the results of the home inspection. | | | | |
| | | | The buyers demanded that the sellers replace |
| It's rare that a home inspection, even of a | | | | not just the carpeting in the rooms with the |
| brand new home, will reveal nothing. Usually | | | | problem, but also the carpeting throughout |
| there's something, even if it's just leaking | | | | the house, since it was all of a kind. They |
| faucets. Depending on the severity of the | | | | said it wouldn't look right to have just a |
| problem(s) discovered, savvy buyersnow open | | | | few rooms fixed. After conferring with their |
| negotiations all over again. | | | | agent, the sellers agreed. |
| | | | |
| How can you do this? Remember, a good | | | | Then the buyers picked out the carpeting, |
| inspection clause is actually a contingency | | | | which was valued at close to $15,000, |
| that, in effect, makes the purchase subject | | | | installed. The sellers balked, but when |
| to the buyer's approving the inspection | | | | confronted with the cost and possible outcome |
| report. You don't approve. There's no | | | | if the matter went to litigation, they sent |
| dealunless the seller is willing to come down | | | | the buyers a check for that amount. |
| in price or up in terms. | | | | |
| | | | As long as there are problems, you can |
| Keep in mind that problems such as these | | | | negotiate with the sellers. In some cases, |
| usually arise two weeks or so after the deal | | | | even if the problem is something you imagine, |
| was originally signed. During those two weeks | | | | you can still negotiate and win concessions |
| the sellers have begun making plans to move. | | | | simply because the sellers don't want to |
| They may even have put down a deposit and | | | | bother with the nuisance. |
| made a deal on another home. They are | | | | |
| counting on your deal going through. | | | | Remember, to paraphrase Yogi Berra, the deal |
| | | | isn't over until it's over. |
| Now, suddenly, there's a hitch. As the buyer, | | | | |
| you are balking at something that came up in | | | | Don't pressure sellers too far. If you insist |
| the inspection. You can bet that the sellers | | | | on unreasonable demands, they may simply |
| are going to be eager to smooth over the | | | | refuse and buckle down, ready to fight you |
| problem, if they can. I've seen deals where | | | | legally. That couldmean you'd lose the house |
| the price was knocked down $3,500 to handle a | | | | and have legal problems to boot. |
| problem with paint, $17,000 for a problem | | | | |