Negotiating Tactics/Strategy for Buyers

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etheran_IHB

etheran_IHB

New member
Please respond if you have actually purchased a place using your strategy. I am of course a first time home buyer. I found a place that we believe is overvalued still. Let's use an example: Asking $1mm but we believe the value is more like $850,000. How do we get the seller to arrive at my price?



The seller has fallen out of escrow before and the house has been in the market for at least 3 months. The seller also owns another property.



Question is, "Where would you first bid at?" Would you provide an analysis justifying iyour valuation estimate using some sort of price/rent?



I have been negotiating with this seller for a month now and the last three weeks have been radio silent. We appear to be $100k apart.



I am just trying to figure out what I did wrong and curious how other buyers with experience would have done it. What would you do now if it has been radio silent for so long?
 
<em>"How do we get the seller to arrive at my price?"</em>





You don't. You can't. All you can do is put in your offers and wait -- probably 2 years.
 
You don't. Why would you? 100k? It is like going into a Ferarri dealer and saying you want the car, but are only willing to pay half price. Either look at homes you can afford or wait. It is completely immaterial what you think the house is worth. All that matters is what you are willing to pay and what the seller is willing to take.
 
I could actually afford to pay her listing and still have a very comfortable cushion but I do not want to. Financing is not a problem for me. I'll probably use a LTV of 70% or a bit less if I want but I think liquidity is important now.



Awgee - I do not understand your comment. I do not believe that you just continuously look at list prices and never try to find out how low one is willing to go. You telling me that you did not negotiate to buy your car?



Has anyone gone thru the early 70s, and early 90s housing decline and actually purchased a house during that time? What strategy did you use? Any way to get the seller to see the light that offloading the house now is better than later?
 
From the numbers you indicated in the first post you started negotiations 15% apart. I'm no expert, but it seems like most home sales negotiations don't have that much wiggle room in them.





My advice would be to keep looking/waiting until you find a place that was listed closer (~5%) to what you would be willing to pay because as far as I know there is no way to negotiate common sense into an owner that has listed at a wishing price.
 
etheran:

I've never accepted lowball offers, but have gotten a few in my time.



First you need to find a real estate agent willing to present a lowball offer and not be ashamed of it. The agent has to present to the owner directly with the listing agent of course.



And the agent needs to make the case, come up with comparables, so the price doesn't look so low. Asking price is irrelevant.



You, as the buyer need to have something going for you, either rent back options, cash buyer, or a long/short escrow. Whatever the buyer wants, that isn't quantifiable by money.



The trick is to make the offer sincerely, they will likely not accept but will definitely counter offer. If you reject them, they may consider you again, when the time is right.



irvinefsbo
 
<i>"Awgee - I do not understand your comment. I do not believe that you just continuously look at list prices and never try to find out how low one is willing to go. You telling me that you did not negotiate to buy your car?"</i><p>

Sorry. I should have been more clear.<p>

There is such a huge difference in your bid/ask, that it does not make sense. Aren't you just wasting your energy and time? It seems to me that if somone is asking $1M, they are not going to be open to $850,000. If comps are $850,000, then the seller is unrealistic and you are not going to change their mind. If comps are $1M, then you are unrealistic.<p>

Of course I negotiate, but isn't a part of negotiating being realistic about what is possible? By the way, I am not a good negotiator. But I am good at discernment.
 
<p>etheran - if you look at the list and closing prices on my site, you won't find anything 15% below list. awgee is right, the spread between bid/ask is too great to close unless they drop list price. </p>

<p>There are plenty of $1M list homes I would buy for $850K today but I don't waste my energy on them. It's not gonna happen... Wait until they drop list and come with an offer 10% below ask if you are willing to pay that.</p>

<p>Have made offers on a number of homes last year, I found many unrealistic and unmotivated sellers that didn't care about comps or the declining market. They want what they want or sometimes need what they need and your realtor will have shot at convincing them otherwise until they arrive at that conclusion on their own terms.</p>
 
<p>Here's my "experiments" with making an offer. I saw this really bad looking, bank-owned SFR in a really bad part of the county. It listed for $390k. In my view, I wouldn't pay $200k for it. But just to try it out. I contacted the listing agent and made an offer. I said, "I want to offer $300k." She replied, "Uhh, we have 17 offers currently. So no, we're not going to lower the price. Thanks."</p>

<p>Then a week later, I saw another bank-owned property with grass growing 4 feet high in the front yard. Listed price $360K. I left a voicemail to the listing broker with an offer of $300k. He replied to me via email with these exact words, "Thanks but not thanks. We already have 5 offers. You can't find that kind of bargains in OC." I can almost sense he was laughing as he typed those words. It seems as though he was telling me to F. off. Hahaha! What an unprofessional character. </p>

<p>But it's interesting how I perceive something to be worthless. Yet, another person think it's worth more. Oh, well. Hey wait a minute. Have you IHB members been calling around making low ball offers to realtors? Is that why they're so mad when it was my turn to make an offer? Hahaha!</p>
 
I think you are trying to bridge to big of a gap. I just checked the stats on closed sales in Irvine from 1/1/08 until now, in the 800K to 1.2M price range. The average house sold at 95% of the final list price and 90% of the original list price. I've had lots of recent experience with rejected offers and many sellers are not that motivated, just yet. Even the banks.
 
<em>>>I have been negotiating with this seller for a month now and the last three weeks have been radio silent. We appear to be $100k apart. I am just trying to figure out what I did wrong and curious how other buyers with experience would have done it.





</em> Your behavior is telling the seller that you really like the place and would be willing to pay more than your offer. With a spread of $100K and the fact that you're still willing to talk about buying that house, the seller thinks he/she can wait you out. Had you told the seller, "Thanks, but no thanks. Call me when you drop your price and we'll talk if I haven't bought something else by then," the seller would know that they would have to choose between the bird in the hand versus whatever might be in the bush. At this point, it would appear that the seller has the upper hand in the negotiation.





Houses are not soulmates. There is more than one out there that is right for you. Sure, you may periodically think about the one that got away, but the one you eventually buy will have its good points, too.





<em>What would you do now if it has been radio silent for so long?</em>





Walk, or, perhaps, run.
 
<p>Also be very appologetic. Gosh Mr Seller I really like your house and I'd love to buy it and I absolutely don't want to insult you but really, this is all I can afford. I know your house is really worth more that this, but this is the best I can do.</p>

<p>Or once you get him down as far as he's going, you use the magic words (used in litigation a lot here): let's split the difference. This really works a lot. You can even use no 1 and then no 2, and usually they won't even think there is a contradiction here. Frankly, I don't think that showing a stubborn seller comps does anything other than convince them that their house is "more unique" than the comps, and make them dig their heels in. It's logical, but you are not dealing with logic here.</p>
 
Thank you all for your comments. I am just going to wait it out. I thought quite about my missteps.



I am effectively building equity everyday by not buying a house!
 
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