Mortgage rates continued rising in the last week, breaching 4 percent for the first time since last summer, according to Freddie Mac’s latest Primary Mortgage Market Survey. Freddie Mac’s
HARDBALL FOULS 6 HOMESELLING NEGOTIATION STRATEGIES THAT CAN BACKFIRE
HARDBALL FOULS: 6 HOME-SELLING NEGOTIATION STRATEGIES THAT CAN BACKFIRE By: Cathie Ericson
When you're selling your home, you might imagine you hold all the cards. And you do—sort of. But it's easy to become overconfident in a seller's market. If you don't do a reality check, pronto, you could end up sabotaging your sale. So much for that straight flush!
Here are six common home seller negotiation tactics that can totally backfire if you don't approach them carefully.
1. Starting a bidding war
Bidding wars are the stuff of home sellers' dreams. And there's nothing wrong with fueling a little competition among buyers in order to get the best deal for you. But this tactic can easily backfire if you bungle it.
“If mishandled, people may assume the worst, and the best offer may walk away,” says Sep Niakan, owner/broker at Miami-based HB Roswell Realty.
Common bidding war bungles include the following:
Not clearly explaining upfront how you intend to handle multiple offers.
Giving an offer deadline that is too many days away. Some buyers might not want to wait for you to make a decision, especially if other homes are in contention.
Already having a strong offer on the table, but then insisting that all potential buyers come back with their highest and best bid. There's no guarantee buyers will play ball and, if that strong offer walks, you're stuck with lower offers to choose from.
Bottom line: Proceed with caution before turning up the heat on the competition, lest you risk losing out on a dream deal.
2. Haggling over repairs
What if the buyer completes an inspection and comes back with a long list of requested repairs? If sellers get too tough here, they might send a buyer walking.
The sellers should consider how good the overall package is for them before refusing to do repairs, says Lucas Machado, president of House Heroes in Miami. "When the buyer’s offer is high, and the seller tries to negotiate away from legitimate repairs, the buyer may feel the seller is taking advantage of them."
3. Threatening to put your home back on the market
If negotiations aren't quite going your way, you might be tempted to call the buyer's bluff. Hey, if they don't want to ante up, you can always put your home back on the market and find another eager buyer to squeeze. Right?
Yes, you might find another taker quickly. But beware of this move—it might not go according to plan.
That's because there’s often a stigma associated with putting a home back on the market, and it might be harder to get buyers to take a second look, says REALTOR® Michael Hottman, associate broker at Keller Williams Richmond West in Richmond, VA.
"Exercise caution with this tactic, because real estate markets can change quickly from hot to cold, leaving you without all those buyers you were expecting," Hottman says. "And the ones who you had initially thought were legitimate prospects may have moved on to other homes in the time between your property originally going under contract and now coming back on the market."
4. Being stubborn on the closing date
You've decided you're not going to allow the new people to move in until (insert future date) because that’s when the closing date is on your new home. Or, they can’t possibly take possession this spring because your kids are still finishing school.
Guess what? Your buyers have scheduling issues of their own, says John Powell, chief development officer at Help-U-Sell Real Estate in Tucson, AZ.
“Sellers need to understand that they may have to move twice, since buyer and seller schedules seldom work out perfectly.”
5. Getting greedy over what comes with the house
Planning to take your beautiful custom light fixtures with you? Not so fast, Hottman warns. Often, he finds that sellers have expensive fixtures in place to show the home, but plan on taking them when they move. And that can cause trouble at the negotiating table.
The buyer "might have decided to buy the ceiling fan, and the house happens to come with it, or they get so upset that a fixture they fell in love with is now missing that they won't buy the home,” Hottman says.
Avoid this confusion by replacing anything that won't be staying with the house before you show it. If that's not possible, be prepared to leave the prized fixture behind, or negotiate a comparable replacement.
6. Refusing to pay closing costs
So, you're coming down the home stretch and this deal is almost done. Congratulations! But the buyer asked you to cover their closing costs.
Before you say "no way," consider it this way: Buyers sometimes roll the amount of those closing costs into their offer. For instance, let's say your home is listed for $200,000. A buyer might then submit an offer for $204,000, but ask you to cover the $4,000 in closing costs.
“Some sellers will hold firm at the $204,000 offer and refuse to pay the closing costs because they want this higher price the buyer offered,” Hottman says. “Some sellers can't see the net is nearly identical between a $200,000 offer with no closing costs and $204,000 with $4,000 in seller-paid closing costs, and they miss out.” A good deal comes down to doing the math, keeping your ego in check, and putting yourself in the buyer's shoes. After all, when you sell your house, you'll probably be buying one, too.
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