As A Home Buyer, When Does Your Negotiation Go Too Far?

By
Real Estate Agent with Rich Life Real Estate Team GA#242237

As A Home Buyer, When Does Your Negotiation Go Too Far?

Today I received an offer on a property that is fully renovated and in spectacular shape from an immigrant family that culturally may have different negotiating tactics than what we are used to here.  Having dealt with people from all parts of the United States as well as investors and home buyers from many parts of the world, I understand the importance of understanding cultures and not being offended during the offer process if someone sees the transaction in a different way.

On the first call their agent acknowledges that they have already tried to call me without them, having not told me that they were working with an agent.  When she started describing her client I immediately remembered the call, and was so glad that she was working with them (and that they weren't my client).  During their call they immediately asked, "How low can I buy this property for." They mentioned that they knew what we had bought the property for ($17,000) and that they knew there had been sales for $25,000 in the community.  They had not even been through the property.

In response, I asked them if they had an agent, which they said they did, and I asked that they have their agent call me to work out details.  I further explained that my client had done $20,000 in renovation and that the properties they mentioned were foreclosures with one less bedroom and were in rough shape.

When their agent called me, in an apologetic tone, she quickly relayed a bunch of negotiating points for a property that was in excellent condition and far nicer than any of the other homes that  had sold for close to our price or more.  Her client was in the background coaching her on what to say and I could feel her frustration coming through the phone.  HOW FAR IS TOO FAR WHEN YOU ARE THE BUYER?

  • First, never call the listing agent if you have entered into an exclusive buyer brokerage agreement with another agent.  The listing agent represents the seller, and they really don't want to talk to you.  Any strong arm tactics you try to take without your agent being on the phone may rub the agent wrong and may lead to a portrayal to the seller that is less favorable and hurts your negotiation position.
  • Always walk through the property and be prepared to have your agent present why you feel the property is overpriced due to condition or comparable sales.  
  • Make sure the comparable sales are, well....COMPARABLE, don't use foreclosed properties in rough shape that have less square footage and less bedrooms to try and beef up your contention that the property you want should be cheaper.
  • Have your agent ask about sellers motivations and what type of offers they have received, because if the seller has authorized the listing agent to share some of this information, you may be able to get some value, but at least it makes you look much more reasonable.
  • Find out what renovations have been done, and walk through the other properties on the market so you can explain why other options may be better, and know the condition of past sales, even if it is from pictures.  NEVER USE OTHER SALES THAT WERE WAY INFERIOR AND SMALLER TO NEGOTIATE ON PROPERTIES THAT ARE FAR SUPERIOR.
  • Try to figure out how much renovation you will have to make to the foreclosed properties to get them into the same condition as the property you are offering on.
  • Explain your budget, or your desired rate of return and why the sellers offered price won't meet your needs or desired return, but never attack the property or it's condition.
  • If lowballing due to condition, share rehab estimates and comps that were in comparable condition to justify why you are offering where you are, and have your agent attatch a letter from you explaining that you know your offer may be disappointing and that you hope they will understand your objectives and why your offer is where it is, due to the following reasons, but that you understand that if they have better offers that yours might not work.

Sometimes a sellers motivation may encourage them to look past negotiation tactics that have gone too far, but many times you may end up losing a great property and regret your tactics later, especially in a sellers market where there may be multiple offers, and the seller may choose to deal with someone who is more pleasant and less difficult to deal with.

If you are a potential buyer and are not winning properties in a competitive sellers market, I hope that as a home buyer that this will help your negotiations to not go too far, but actually win the home you want!  In either case, if this advice is followed it will make the world a better place for the listing agent, buyers agent and home seller you are seeking to deal with, and your likelihood of winning the deal will go up!

If you are a seller, buyer or investor in the Atlanta, Georgia or Birmingham, Alabama markets, we would love to help you!

Comments (47)

Jared Garfield
Rich Life Real Estate Team - Buford, GA
Invest With The Best For The Highest Returns!

Laura,

LOL, if only buyers like that were so easy to see coming!  I think for this buyers agent they are a repeat client, and from a referral source that gives her a lot of leads, and that makes it a little more difficult to cut them loose.

Nina, 

That's true, and a good buyers agent certainly has to be good at coaxing and always full of facts, figures and data that you hope will eventually get the buyer to a reasonable offer that at least has a small chance of acceptance.

Tina and Terry,

The story is still unfolding.  We countered their offer, and they said they were firm and not coming up, so we informed them that we had another offer and asked if it was their highest offer.  They remained firm, so the buyers agent went and showed them much lesser quality properties that were more expensive and smaller for more money, and they came up $750 and said that was their final offer.  The agent offered a concession on her commission to get the price up even further because she wanted to be done with the buyer, and we are now under contract.  It will be interesting to see if they come back with more concessions during the due diligence period.

Mike and Eve, 

I agree, except for new agents who need experience anyway and might not have buyers.  What a headache, and what a great point you make!  Life is short, and we should choose carefully who we wish to work with.

Charita, 

It's funny that you say that, because the seller was somewhat motivated, and the price wasn't actually that far off, it was all the other commentary that was more difficult to take and turned the sellers off.

Amanda and Jared,

Ditto!

Shanna, 

Lack of communication is the biggest problem, and sometimes personalities and cultural differences can be hard to overcome.  If conflict and a very difficult ride are what it looks like you are in store for, it really makes sense to refer the client out doesn't it!

Dec 12, 2013 01:41 AM
Jared Garfield
Rich Life Real Estate Team - Buford, GA
Invest With The Best For The Highest Returns!

Karen, 

That would have been much more understandable, they are buying it as a principal residence.

Liane, 

Yes, and it's fully renovated and in a nice neighborhood with pretty good pride of ownership, not in a war zone, high crime area.  We get a lot of properties like that.

Andrea,

Those are excellent points on things buyers agents can do to communicate with listing agents to make sure their offer isn't rejected or offensive, and also great tips on how listing agents can respond to these kinds of offers!  Sounds like you have a fantastic blog to come!  I'd love to hear about that German Korean deal and how they both were able to feel that they got a great deal!

Dec 12, 2013 01:46 AM
Andrea Curtis United Country Premier Properties Certified Military Relocation Professional
United CountryPremier Properties - Harker Heights, TX
U C INTERNATIONAL DIRECTOR OF MILITARY PROPERTIES

Jared by the time all was said and done what sealed the deal was a fridge and a chandalier.   The German seller said I didn't want to move either one anyway and with the eastern bloc countries open one of her relatives could go there and send her a newer  better one from I think she said Romania.  The Korean buyer wanted it for her formal dining set and didn't want to have to install the chandilier.  Oh and she was moving the fridge to the garage but she could always use another one.   As far as sales price it was a fair deal all the way around.   

Dec 12, 2013 02:34 AM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Only the seller has the power to seal the deal and most, unless the circumstances dictate otherwise, will not negotiate beyond a certain point, so it's dependent on the buyer to be as flexible as he wants the seller to be, otherwise, the deal probably won't close. 

Dec 12, 2013 02:43 AM
Sara Mehrpouyan
Beverly & Co Luxury Properties 818-903-2040 - Sherman Oaks, CA
Sherman Oaks and Woodland Hills Real Estate Agent

Some buyers decide to be proactive however, they don't always have the knowledge or experience. The agent should represent their client. Great blog, Jared. 

Dec 12, 2013 02:52 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

A good list of what buyers should & shouldn't do but to be honest - I'm offended you even had to use the word immigrants.  Doesn't matter where they came from, it should not have been used!

Buyer is a buyer, period!

Dec 12, 2013 02:59 AM
Sylvia Jonathan
Coldwell Banker Platinum Properties - Irvine, CA
Broker Associate, SFR

Even making allowances for different negotiating styles, some buyers don't get it, no matter where they are from. I pity the agents who represent them. Eventually the buyers will fire the poor agent, who spun his or her wheels for them, because they are not able to get a deal.

Dec 12, 2013 04:27 AM
Michael Ha Elmhurst
Rego Park, Forest Hills, Jackson Heights, Corona, Middle Village - Elmhurst, NY
Woodside, Maspeth

As a seller, one should always be flexible. - - -and Yes! that's because of different buyers. Not everybody's perspective is the same and that includes buyers; some can't understand and some worse. Great Post BTW @jared.

Dec 12, 2013 04:49 AM
Aaron Hofmann
Atlanta Communities - Smyrna, GA
aka Mr. Smyrna Vinings

It all comes down to what your local market is like. A couple years ago, sellers had to put up with a bit more and concede on more items. In most areas, that's completely flipped and buyers need to make serious offers otherwise another buyer will get it.

Dec 12, 2013 05:38 AM
Travis "the SOLD man" Parker; Broker/Owner
Travis Realty - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

I just recently dropped a Buyer Client who called the Seller directly after a low-ball offer was turned down. He told him he was asking too much, etc. etc. etc. and the price that he SHOULD take for it. The Seller told him that he had an Agent and to talk to him, then hung up on him. The Agent called me and I fired my Client immediately. Waste of a few months work, but....that's Real Estate.....

Dec 12, 2013 05:56 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Several years ago I listened to an audio segment by a Mr. Lee, who specializes in helping sales people learn to deal with buyers from different cultures. He explained many of the differences and what to expect from people with different backgrounds. I thought it was fascinating - and thought it was important information for sales people of all kinds.

For instance, it's good to know that reaching out to shake hands with some people is considered a grave insult. It's also good to know that some cultures expect the negotiations to begin AFTER an offer is accepted.

Maybe I'm wrong, but I think we should respect the differences in our cultures and not try to shove everyone into the same mould and expect them to think and behave exactly the same.

Understanding "where they're coming from" could go a long way toward  NOT being insulted by behavior we consider rude.

Dec 12, 2013 07:19 AM
Rafi Footerman
Mid Jersey Inspections - Edison, NJ
Home Inspector, Mold Inspector, Radon and More!

How about when they use Zillow for pricing, even though they state that there prices are 80% accurate?

Dec 12, 2013 07:50 AM
Jared Garfield
Rich Life Real Estate Team - Buford, GA
Invest With The Best For The Highest Returns!

Andrea, 

What an interesting story, isn't it interesting to see what some people will buy or break a deal over?

Kimo,

Wow, wouldn't it be so much easier if every buyers agent recogized this?  One of the most important things is trying to establish a sellers motivation, and if a seller doesn't have to sell, strong arm tactics can surely backfire!  Great point.

Dec 12, 2013 11:51 AM
Jared Garfield
Rich Life Real Estate Team - Buford, GA
Invest With The Best For The Highest Returns!

Sara, 

Thank you, and you make a great point about agents representing their clients, and I think all too often agents on both sides are not straight forward enough!

Lyn, 

Understanding cultures is a very important part of real estate, immigrant is not a dirty word, it simply means that someone has migrated from another country to live here, hopefully for opportunity, sometimes for assylum.  There are no implied overtones in the post, and if you are going to be successful in sales it's very important to understand the cultures people come from as well as how they perceive negotiating.  In the South, many southerners hate bidding wars as buyers, and when selling, they tend to feel put off by negotiating.  My friends from New York however, seem to really enjoy the thrill of negotiating, and they play hard ball.  When I sold real estate in Utah, people were thrifty seeming almost from their Pioneer heritage.  People who survived the depression tend to hold onto everything and like to fix things themselves.  I once helped a friend at his car dealership as I thought of owning one myself.  He was Pakistani, and he told me that if ever dealing with a Pakistani that we had to jack the price up $3,000 more than what he actually wanted, because otherwise if they could not go through the negotiating process, they would walk away in offense that you were inflexible and wouldn't let them get a deal.  This was in spite of the fact that he generally sold all cars at a flat $500 markup and was always close to trade in value.  Because of the value he offered he did extremely well among foreign born clients who wanted excellent deals, and he got a great deal of referral business, but he knew how to treat the situation.

Besides saying immigrant is so much easier than foreign born national who may have been raised with a different cultural background.  By the way, I'm a proud descendant of immigrants.

Dec 12, 2013 12:01 PM
Karen Steed
Tallapoosa, Bremen, Waco, Buchanan, Temple, Carrollton - Tallapoosa, GA
Associate Broker Haralson Realty

I had a buyer client who would serch for houses on the internet and call all the listing agents for info.  She thought she was helping...

Dec 13, 2013 06:26 AM
Jared Garfield
Rich Life Real Estate Team - Buford, GA
Invest With The Best For The Highest Returns!

Karen,

I love the buyers who go searching all over Zillow to ask you to search properties that sold three months ago, but just haven't been updated yet!  Do you have any great investment deals?  I do some buying in West Georgia.

Dec 18, 2013 10:37 AM
Marnie Matarese
DWELL REAL ESTATE - Sarasota, FL
Showing you the best of Sarasota!

This is such a great story and one that we have all experienced.  The cultural differences are such impactors in the negotiations.

Dec 19, 2013 08:15 PM
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

All the back and forth and missed communication stops when it is a list them, sell them approach. 95% of our sales are and no lines of you can't talk to this agent, that one is mine, legal stance. I know up to the minute where each party is at. No delays, no iron curtain. Mediate not litigate and bringing the parties together quickly happens with less layers, players, cooks in the real estate kitchen.

Dec 19, 2013 09:41 PM
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

If  they have not even seen the property, I don't waste my time in "negotiations". Tour the property, send me a contract, and then we can start.

Jan 11, 2014 01:16 PM
Jared Garfield
Rich Life Real Estate Team - Buford, GA
Invest With The Best For The Highest Returns!

Wayne, you are so right, touring the property is s great place to start.

Jan 16, 2014 07:12 AM

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