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Home Seller Beware

By - 2006

As a home seller, you might think that you have the upper hand in negotiations. In fact, even the common saying "buyer beware" implies that the buyer is the one who has to watch out in any transaction. But buyers have their tricks too. Some of them are good negotiating techniques, while others are unfair "dirty tricks." Either way, you need to know what they are.

Lowball Offers

Low offers, sometimes referred to as lowball offers, are usually just a classic negotiating technique, but you may not be aware of how these are supposed to work. You see, the buyer never expects to get a $190,000 home for $150,000. But the low offer alters your expectations, and so when he later offers $170,000, you might say yes - even though $179,000 was the lowest you thought you would go.

Some buyers resort to sneakier tactics. Imagine if an offer comes in for $149,000, which you reject. Then another buyer comes along and offers $169,000. With two different buyers going low, the idea that you have over-priced the house seems more credible, so you accept the second offer. What you'll never know is that the two buyers were working together. Get an appraisal if you aren't sure about your price.

Buyer's Scare Tactics

The buyer looks at the roof line for a long time and frowns, leaving you wondering what he saw. He pokes his pen into the one piece of rotten wood under the porch, and mentions carpenter ants. He gets you thinking that your home has a lot more problems than you thought, and you better sell it fast. Be ready for the low offer that is coming - or get a second opinion.

Contingencies in the Contract

Sometimes called "weasel clauses" by investors, there are always clauses in an offer that give the buyer a way to back out of the deal. Some of these are unavoidable. A bank won't say yes to a loan until there is an actual offer, so a buyer needs to make the offer contingent on receiving the loan. A buyer isn't a home inspector, so it is reasonable that the offer have a clause that allows for an inspection that shows everything to be okay.

On the other hand, there are contingencies that seem reasonable, but are simply intended to provide a way out of the deal. For example, the offer comes in with, "This offer subject to approval of the house by buyers wife, within three days." Now if a better deal comes along, he can dump yours by having the wife walk through the house and say no. You might still want to accept such an offer, but be wary of any that have long deadlines that can waste your time (10 days is common for an inspection, while 30 is just an attempt to buy time for some other reason).

Unfortunately, contract contingencies are sometimes meant to be negotiating tools. A buyer sees the old shingles on the roof, for example, but when the inspection comes back ten days later saying "Roofing shingles are old and worn," he acts surprised. He reminds you that he has the right to approve the results of the inspection or back out of the deal, and then asks for another $8,000 off the price. You have invested weeks into this offer now, so you sigh and agree.

This could be seen as good negotiating or dishonesty, but either way you want to avoid the situation. To do so, have every possible problem in the house documented in a disclosure form that the buyer sees before making an offer. And have him sign it!

Home Buyer Delay Tactics

You may have a deadline of some sort. Perhaps you want to sell before the school year starts, so the kids can be in their new school in time. Maybe your new job starts in a month. Whatever time constraints you have, don't mention them! Savvy buyer will use this knowledge against you.

How? Suppose you need to move in two weeks. The buyer is just having his inspections done, and closing is tentatively scheduled for a week from now. The buyer knows your schedule, and using the pretext of some small problem found by the inspector, he asks for an additional inspection. You have a choice. Say no and let him walk - in which case you can't possibly find a new buyer and close in two weeks - or agree, which you reluctantly do.

By the time the new inspection is done, and the buyer has delayed in other ways, you are desperate. Now he hits you with the news that he can't buy your house unless you drop the price a few thousand more. Otherwise he walks away, as he can by not "approving" of the inspection results, and you have to try to sell your home from far away. You might agree, right? To avoid this situation, keep quiet abut deadlines, try not to get too close to them, and use your intuition to judge the intentions of buyers.

Brute Force Tactics

I was a real estate agent briefly many years ago. On one sale, the buyer - a lawyer - kept making every excuse possible to delay the closing and reduce the price. Even though the seller had been trying to sell his home for two years (something the buyer knew, of course), he was so tired of this guy that he was ready to throw away the whole deal. Then the buyer arbitrarily asked for another $5,000 off the price, with no justification, but with the understanding that neither the seller nor the agents involved wanted to go to court. We all just wanted to be done with the deal.

The seller said no, but the brokers and agent involved decided to take the $5,000 out of our commissions. This was months after the offer was first made, and the buyer was already living in the home as a renter, and nobody wanted to try evicting him and start the whole sale's process over. That's what is sometimes called a "brute force" tactic. Intuition may be the only way to avoid a home buyer like this (and watch out for lawyers).

Another page to check out:

How to Sell a House

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