The housing market in Charlotte, NC. area is no different than it is in other parts of the United States. WE all went through a downturn where buyers were buying homes for significantly less than the sellers bought it for and now we have reached a point in the upswing where it seems like it is balancing off for the long term.
But that leads me to the question. Do you still make a low offer on a house in the current market? And if you do how will that affect your negotiation power? A lot depends on the seller and the type of seller you are dealing with.
For example, if you are dealing with a bank owned home or one owned by an investor then they have no emotional attachment to the house. They are looking at the numbers as strictly a business decision with no ties to the house just a bottom line they are trying to recover from the house. They might be more apt to look at a low offer and negotiate in good faith and not feel insulted by the offer (as long as it is not to low).
But, what if you are dealing with a home owner that still lives in the house? They may have raised their children in the house or this was their first home, or one they did a lot of work to. Then they have more of an emotional bond to the house and their judgment could be clouded by a perception of what they feel is a fair number versus what the numbers should really be.
In those cases your low offer may come with a stigma attached to it and hurt you in negotiating the house. They may feel insulted or like they are giving the house away to you. There are a lot of homes I have negotiated on where the seller believed there house was worth more than the average market value of homes today because of the work they have done and the time they have spent in the house. It does not necessarily mean it is worth more. But some Realtors are taking listings without regard to the value of the house. I talked to one who knew it was overpriced but told me “that is what the seller wanted me to list it for; and I did not want to lose the listing”. So just because it is listed for a certain amount of money does not mean it is worth it.
However; if a Realtor agreed to take the listing overpriced the process of negotiations are going to be tough and tedious task. The seller in their mind have validation that the house is worth more than it actually is because we (Realtors) gave them a listing at their number for the house.
Then you go through the negotiation process with the listing agent on your side. I went through process with a buyer recently. The market said the house was worth X amount of dollars and the seller wanted a substantially larger amount of money for the house than what the value was worth. Thus to get to what we felt would be a fair market value of the house based on current sales we offered a substantially low price that was immediately rejected and after a long conversation and some back and forth we finally reached a fair number. But we could tell the sellers were not happy with the negotiations and tried to get more money out of us because they felt we undervalued their house initially.
This situation worked out. But I have countless other ones where the buyer has walked away from a house because of the price. During that process I have seen some sell and others not sell; and stay on the market substantially longer than need be.... But you need to know before you negotiate on a house what type of seller you are dealing with. It could have an impact on your negotiations and whether you get the house of your dreams or not.
Dave diCecco
Realtor/Broker
Coldwell Banker united
Cell:704-519-7895
ddicecco@cbunited.com
www.davedicecco.com
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