Plenty of forces, from overly cautious lenders to inaccurate appraisals, are ruining real estate deals at the moment. But one of the greatest barriers to getting a home sold these days is the disconnection between buyers and sellers.
Generally, sellers have become more truthful in pricing their houses than they were right after the housing bubble burst, but real estate agents state that numerous still don't comprehend how much they must concede to close a deal. And buyers are nevertheless spraying lowball offers around in hopes that sellers will be desperate enough to bite.
Accept such unreasonable expectations, multiply by two, and what do you get? "A standoff," says Glenn Kelman, CEO of real estate brokerage Redfin.
With the busy and hectic summertime home-sale season reaching a close, there is still little time to waste. Whether you are attempting to unload your place or land a new one, follow these dos and don'ts to negotiate the absolute best deal and fast.
If you are buying a home
Don't say: "I will pay 85% of your asking price and not a cent more."
As an alternative: Search homes that are moderately priced and make a reasonable offer. "Coming in around 10% below list is a safe beginning place for negotiations nowadays," says Denver real estate broker Jeff Fogler. Yes, you have the upper hand in nearly most markets, but the ordinary homebuyer is paying only 2.7% below list price (see the chart). Adjust your expectations accordingly. You will be able to always ask if the seller is willing to bridge a price gap in other fashions -- for instance, by picking up your closing costs (which can run $7,500 on a $300,000 house).
Don't say: "I have not put my own place on the market yet."
As an alternative: List your current house prior to you beginning shopping seriously for the future one. Since it takes just about 3 months to move a home these days, sellers are loath to write home-sales contingencies into purchase contracts. You'll have far more leverage if you've gotten rid of your house before you start negotiating: Sellers know there's a lower probability of the deal diminishing apart. (Prequalifying for a mortgage helpsout a ton as well.) What's more, you will recognize precisely how much money you are able to put into your new digs.
Don't say: "This is my dream home."
As an alternative: Lay off imagining the smashing parties you will throw there and arm yourself to walk away if the seller will not make reasonable concessions. Your ability to give up negotiations is your heftiest bargaining chip. Given that good deal of other houses are on the market at present, finding a different place to love should not be too difficult. You may let the seller acknowledge that. Nicely.
If you're selling
Don't say: "You're offering how much? Forget you!"
As an alternative: while bidders lob low-balls at you, thank them for their interest -- and ask that they counter with earnest offers. "If you get offended, angered, or absurd, you have blown any opportunity at negotiation," says Warwick, R.I., real estate agent Ron Phipps. These days numerous buyers are simply testing you to determine how large a discount they may get. Direct the bidder to comparable recent sales that confirm your list price. (Experienced numerous super-low offers? Check the comps to make certain your price Is not excessively high.)
Don't say: "I didn't know the deck was rotting."
As an alternative: Pay a few hundred bucks to get your home inspected before you place it on the market. Then set up to make any essential repairs yourself. (In most states the law requires you to disclose to potential buyers any defects of which you are aware.) "Taking care of any inspection issues upfront aids sellers limit the points that buyers could negotiate on," says Pat Lashinsky, CEO of the national brokerage ZipRealty.
Don't say: "It might take us a while to move out."
As an alternative: Make sure to tell buyers -- particularly those who may have children beginning school this month -- that you are willing to scram promptly, if possible. That will help you stand out from any short sales in your region, which could experience lower list prices but could take months to close. "If the buyers have a strict time limit, they're going to pay more money to get into a house quickly," says Ellen Klein, a realtor in Rockaway, N.J. More money plus more speed: That's what it's all about.