Common Reasons that Real Estate Negotiations Fail
For the past number of years, home sellers have been fortunate to be in
a real seller's market. It has been common for bidding wars to break out
at open houses, and many homes have sold for far more than their asking
prices. In the presence of such a great market, it may seem like the
only thing the home seller needs to do is pound a for sale sign in the
front yard and wait for the offers to come rolling in.
Even in a hot seller's market like the one we have just seen, however,
it is important to negotiate the sale of the home properly. This
negotiation process can be particularly valuable if the seller is
comparing multiple offers. And if the seller's market we are in today
turns into a buyer's market, it will be even more important to negotiate
the best deal.
It is critical for the home seller to understand the negotiating
process, and to understand how the process works. In most cases, the
most successful transactions in the world of real estate are those in
which both the buyer and the seller feel that they are getting a great
deal. It is also necessary to understand why some real estate transactions
fail, and to avoid the major causes of these failures.
Some of the most common reasons that real estate negotiations fall through are:
Allowing emotions to overrule intellect
The buying and selling of a home can be a serious emotional experience
as well as a financial one. It is important, however, to view the
selling of a home as a business transaction, and not to let your
emotions get ahead of your intellect. It is important not to be offended
by potential buyers' criticisms of your decorating style, your
landscaping or other issues. Remember than everyone has different
tastes, and try to take any negative commends in stride. If you are in a
buyer's market, you may wish to make a small price concession to allow
the buyer to redecorate the home as he or she sees fit. If you are in a
seller's market, you may not need to make such a concession. In either
case, however, you should not refuse to do business with a potential
buyer because you feel you have been insulted.
Trying to move things too fast
Many home sellers are tempted to make the negotiations go as quickly as
possible, particularly if they are in a hurry to sell, due to relocation
or financial issues. It is important to avoid this temptation, and to
take the time you need to compare offers. If a buyer offers a low price
because the home needs major repairs, be sure that the estimate the
buyer is using is accurate. Buyers will often provide an overestimate of
the repairs a home needs in order to get a lower price.
Bargaining in bad faith
Bad faith bargaining occurs when either the buyer or the seller is not
negotiating seriously or with the intention of actually buying or
selling the home. In addition to a failed transaction, bad faith
bargaining can even result in legal action. If the seller is not serious
about selling the property, he or she should not put it on the market.
Doing so will not only waste the time of all involved, but it could open
you up to legal liability as well.
On the other hand, serious home sellers must be on the lookout for the
bad faith buyer, who may waste their time with unrealistically low
offers or seemingly endless negotiations. Other bad faith buyers may
misrepresent their ability to afford your home, causing you to hold your
home off the market for weeks, only to fail to secure financing in the end.
Not wanting to counter offer
Many home sellers are reluctant to provide a counter offer, especially
if they feel the potential buyer's offer was way too low. However it is
important to remember that the counter offer is a tradition with a long
history in the world of real estate. Making a counter offer consists of
returning to the buyer with a new price or new terms. Buying and selling
a home is very much a give and take process. Failing to counter offer
can leave a seller accepting a lower price than he or she could
otherwise have gotten.
Letting deadlines slip away
Failure to meet deadlines is a primary reason why real estate negations
fall through. Time can be either a friend or an enemy in the world of
real estate, depending on the situation. It is important, therefore,
that both the seller and the buyer meet the deadlines that have been
established. This does not mean being totally inflexible, but if the
deadlines slip repeatedly it could indicate that there is a problem
looming with the deal.
Avoiding these major pitfalls, and understanding what makes a successful
real estate transaction, is the best way to make sure your home selling
experience is a pleasant and a profitable one.