On a few real estate deals over the past years, I have had times where the buyer's make an offer with a series of counteroffers following. Suddenly, we are just a few thousand dollars or so apart. Most times we negotiate back and forth and come to an agreeable price.
However, in a few cases neither side will budge. Whether I am the listing or buyers agent, we often hear the same things over and over. The seller of course says their home is worth every penny and then some, and they just are not going to take any further loss, and they say why can't the buyer come up a bit, while the buyer can't figure out why any seller would be willing to lose a deal over a few thousand.
It is important in cases such as this is to look at what the $10,000 difference means to the seller and buyer at the closing table.
First, with the seller it means the seller will receive $10,000 less at the closing table. Especially in times where the home values have declined $10,000 can make a huge difference to the seller. When the listing agent gives the seller their net sheet showing what they will net when the sale goes through, they see in black and white how much $10,000 can impact their bottom line.
Now let's look at the typical buyer. What does the $10,000 mean to them at the closing table. If they are putting 20% down, then this translates into having to bring $2,000 more to the closing table.
At the closing table, it would cost the seller $10,000 while it would cost the buyer $2,000. Of course, after the closing, the mortgage payment would at 6% interest go up by $47.96 per month. At $47.96 per month it would take 14 years for the buyer to actually pay out the $10,000 that the seller would lose in one day. That also includes the original $2,000 the buyer would have to bring to the closing table.
From the sellers viewpoint they have more to lose, at least at the closing table.
For the buyer, it really comes down to how much you love the home, are there others just at nice that you can get for less, is the home worth the price and how long do you plan on living in the home.
Ultimately, in a situation where a relatively small amount separates deal or no deal the buyer can decide to wait out the seller to see if they will eventually come down in price, move onto something else, or agree to pay the higher price. Only you as the buyer can make that decision.
Please note that in the example above I used a figure of $10,000. Obviously, the $10,000 would be a relatively small difference if the home is listed at $500,000 whereas it would be a huge difference in a home that is valued at $100,000. Therefore, often in a home that is $100,000 or $200,000 we are often looking at differences between buyers and sellers of $2,000 or so. For each $1,000 with a 6% mortgage rate you are looking at paying approximately $6.00 more per month. With rates now around 5% it would be $5.37 per month per each $1,000 of mortgage.
Comments(0)