The Art of the House Deal
Finding the right house is one thing. Getting it is quite another. I discovered this recently after I made an offer on a house, then faced a year-long week of wringing the skin off my hands, eating antacid tablets by the fistful, and jumping like a kangaroo every time my cell phone rang.
My husband, DC, and I had been half-heartedly house hunting for months. By half-hearted I mean that half our hearts wanted a slightly larger house with a bigger kitchen, an office for me, a fireplace (even though we’re in Florida), and a yard for the dogs, in the same great neighborhood, in our price range. The other half felt ambivalent about leaving our Happy Yellow House and all the comforts it provided.
As we surfed houses online and in person, I looked for reasons to pass. Fortunately, looking at houses online is like sorting through Match profiles and rejecting prospects based on their curb appeal alone. I know that sounds shallow, but when a man’s profile shot features a toilet in the background with the seat up, that’s pretty much a nonstarter. Guys, come on!
Every time I spotted a flaw that ruled the house out, I felt relief. I would rather jam wooden matches under my toenails and light them on fire than go through the hassles of buying, selling and negotiating.
But seek and you will find. One Saturday afternoon a few weeks ago the inevitable happened. DC came home after visiting an open house and delivered these fatal words: “It checks all the boxes.”
“No,” I said. My stomach fell five stories then flipped, like it does on a roller coaster drop. I went to see for myself. He was right, darn it.
Because DC, who’s a lawyer, negotiates for a living, I agree to leave the bargaining to him, which feels like handing my first-born child over to a heart surgeon.
“I have to ask you something first,” DC says in that tone he reserves for topics like liver cancer. “Are you willing to walk away?”
There is only one answer. I nod then strap myself in.
DC makes an offer close to 95 percent of the asking price. The seller counters with a one percent price drop, arguing that he had just dropped his price substantially.
DC tells our agent to tell the seller, “That may be so, but he’s playing with Monopoly money, and I have the checkbook.”
I get out the defib paddles. We raise the offer half a percent, and wait. Eventually, we meet at a place that feels a little painful to each of us, which fits DC’s definition of a good settlement: Everyone walks away a little unhappy.
“It’s a bit of a poker game,” says Denver broker Ed Hardey, owner of Integrity Real Estate Group. “You want as many high cards as you can, and it’s okay to bluff.” He and Atlanta-based real estate broker Rhonda Duffy offer these tips to sweeten your chances of getting the house you want:
Make a supportable offer. If you know the seller will make a counter offer, your first move is to make an offer that you can support with comps that is low enough that it hurts but doesn’t insult, said Hardey. “The ideal offer should give a sting but not a slap.”
Be attractive. The best buyers come in with no strings attached and a bank letter of preapproval. Eliminate contingencies. “A buyer who must sell a home that he hasn’t even listed won’t be as attractive as one who doesn’t have a to home sell,” says Hardey.
Don’t get in a pickle. You lose leverage when you sell your home first and are forced to buy. “If a home is closing behind you, pushing you out, you lose power,” he says. If you can carry two homes, at least temporarily, or be home free, you have more bargaining power.
Soften the sellers. Hold the insults. “The seller wants to know that their beloved house is going to someone who will love it, too,” said Duffy. “If you’re kind and they like you, they may make concessions that they wouldn’t if you were unkind or critical of their home. Many buyers and agents go wrong by not building rapport.”
Write a letter. “Being nice doesn’t mean you can’t negotiate,” adds Hardey, “but don’t slap them up the side of head with all negatives.” Profess your love for the house in a letter, adds Duffy. The letter can say, “We love your house. We can already picture our kids (or grandkids) playing in the yard. We will, however, need to do some updating. And given the comps, and the improvements we will need to make, the most we can offer is X.” You might gently mention, too, that though this house is your first choice, you do have another option in mind.
Reassure sellers. One of the sellers’ biggest fears is that the deal won’t close, says Duffy. Buyers should ask, “What can I do without raising my price that would give my seller more certainty?” Be completely approved. Put more earnest money down, since it will go toward the down payment anyway. Shorten the inspection time.
Look beyond price. Negotiations aren’t all about selling price. Find out what else is important to the seller, and see what more you can offer. Maybe the sellers need a certain close date, or need to stay in the house and rent back for a few months. A more appealing closing date may mean a lot to the seller, and almost nothing to the buyer.
Be able to walk away. That is the single best card a buyer holds.
Join me next week as I share the upside of living in eight homes in six years. Yes, there is one.
CAPTION: The keys, please -- When negotiating to buy a house, keep emotions at bay. Your best bargaining chip is the ability to walk away. Photo courtesy of dreamstime.com.