This is a great post about seeing the "big picture." I'm seeing many buyers and sellers shooting themselves in the foot over very small amounts. When both sides dig in their heels, everyone loses.
For buyers, it seems as if they are looking for steals not deals. But we don't have that kind of market. Even when its a short sale, the bank insists on getting market value. If you think you are going play games with a large bank ....and actually win, then you are in for months of frustration because it is not going to happen.
Sellers often need every dime out that they can get, but if your market is declining, then there comes a point where you have to cut your losses. Also, statistics show that the longer your home is on the market, the less you will get.
Hold out for a good deal, but getting stuck on an a $500,000 transaction over $5000 is counterproductive. When that happens, it is in the best interest of both parties to break the stalemate and get the transaction moving again.
Why Are Buyers and Sellers Willing to Shoot Themselves in the Foot Over Relatively Small Dollar Amounts?
This was a question I was asked by a close friend of mine the other night. I was recounting the tale of another negotiation between buyer and seller gone wrong. On a home in the $400,000 price range, they were stuck over
$5,000. This is something I am used to seeing, so I guess I consider it normal. Not being in real estate, she just laughed and went on that if you are spending that much money, what's another $5,000?
If you were negotiating to buy a home, at the market interest rates we are seeing in early 2012, you are essentially arguing over adding another $30 a month to your mortgage payment. A mortgage payment in the $400,000 price range with a 5% or less down payment would almost certainly have you well into the mid-$2,000's for a payment. So what's another $30? Is it worth losing the home over?
Sometimes you have to stop the back and forth that gets you in the mindset of "winning" and look at the big picture. And the big picture will often include looking at the monthly picture. Are you really winning if you lose your dream home over $30/month extra in your mortgage payment?
Make logical decisions based on facts when you are negotiating for your home purchase. Don't get caught up in feeling like you have to win. That's a dangerous mindset from which to make decisions when it comes to buying a home.
Chris Ann Cleland, Associate Broker- Licensed in Virginia, GRI, SFR, Northern Virginia Short Sale Specialist. Affiliated with Long & Foster, 7526 Limestone Drive, Gainesville, VA 20155. To contact Chris Ann, call 703-402-0037 or email chrisann@LNF.com. Or you can visit her website: www.nvarealestate.net.
Header is a photo of Braemar in Bristow, VA during one of the blizzards of the 2009-2010 winter season.
very good point about having to win when negotiating - I overcome this by preparing my clients up front and knowing exactly what they want and why (I ask the same question about 7 or 8 times in the initial interview to get the real deep answer) and than I remind them if they seem to be suck on small details - usually that helps them get past it
Only a Win-Win works between agents/clients. We usually have the most problems with the home inspection on relatively small dollar items.
Unfortunately too many people throw logic out the window when the emotions of a negotiation start overwhelming them. People sometimes need to take a step back.
I missed this, thanks for the reblog. It is a frustrating and more common occurance these day.
About all you can do is to point out the illogic of going to the wall over 1% (or less) of the purchase price.
I had a client a few years ago who was ready to walk away from buying what he called his "dream home" because he and his lender were arguing over an eighth of a point on the relatively small mortgage amount. When I pointed out that the amount at issue was around the cost of one "Happy Meal" per week, he stopped arguing and the deal got closed.
I'm wondering if we were paid by the hour how much of that nonsense would STOP - dead in its tracks. The fact that all of this haggling is "free" is part of the problem.