Email Elizabethoffer negotiations
Thoughts About Counter Offers in Sacramento Real Estate
The question for a Sacramento listing agent when working with offer negotiations is often whether sellers should sign purchase offers coupled with counter offers or should sellers sign strictly the counter offers and deal with the rest if and when it comes to fruition? Part of this rests on the urgency of the matter and the situation at hand. For example, if the seller and I might believe the buyer will not accept the counter offer, then it seems sort of pointless to sign all of the other paperwork. Or, if the seller is in a rush and doesn’t have time to sign a bunch of documents, we might just deal with the one-page document in the heat of the moment.
You might read this and wonder why would a listing agent and her seller send a counter offer if they don’t believe the buyer will accept? Many reasons for this. First and foremost, it is almost never a good idea to ignore a purchase offer because it’s an attempt, even if it’s a feeble or ridiculous attempt, to buy a home. My policy is a counter offer is probably a wise idea. Because you never know.
People are freaky weird. I realize this but not everybody does. Every time you think you know exactly what a person will do you are probably proven wrong half the time. You can’t always predict future actions. People will respond however they want, and it could be very different under certain circumstances, and since you don’t possess first-hand information (unless you listen to this person snore at night and, even then, there is no guarantee), you can’t really know how somebody will react until you hand over the ammunition.
Second, the buyers might decide to counter back with different terms but same end result or they might counter with a completely opposite issue. Sending a counter offer shows the seller is willing to negotiate and work with the buyer to sell the home in some manner. It could even be a full-price counter offer, and that’s perfectly acceptable.
Sometimes, it’s a negotiating tactic to send the entire purchase contract signed by the seller, along with a counter offer signed by the seller. That signifies to the buyer that the seller is motivated to move forward and that the seller fully expects the buyer to accept the counter offer. I generally advise my sellers to sign all of the paperwork because it’s a more positive statement to send to the buyer. Especially since it’s a bit subliminal.
How Much of a Deal Do Home Buyers Need to Get?
Ever wonder how much of a deal do home buyers need to get? What is the walking away number? The number that says nobody wants to sell and evidently nobody wants to buy so let’s just forget about the whole thing? If it’s less than one half of a percent, I say everybody in that transaction needs their heads examined. Somebody must be focusing on the wrong things.
When I see some demands from buyers, it doesn’t make sense. For that sake of clarity, I am not talking about any transactions I am personally involved in. Because I’d probably tear out my hair and go screaming into the night if I were. But say, for example, that a home was priced at $400K. And the buyer’s agent, through a series of negotiations and multiple counter offers, gets the seller to agree to a price of $360K.
Any normal, rational person would jump at that. But not the buyer. This particular buyer said no, it’s not low enough. The seller needs to go to $358K. So the parties are $2,000 apart. When the buyer says no . . . this is no longer about buying a house. This is about the game.
Naturally, the easiest solution is for the agents to work out an agreement amongst themselves to either reduce their fees or reduce other costs in the transaction. Or add an unexpected benefit. For the record, it is against the Realtor Code of Ethics for a listing agent to ask a buyer’s agent to reduce the commission just to make the transaction work. Further, why should either of the agents suffer this tragedy and take a loss in income?
Some agents will do it, though, just to stop the standoff and push it through. Others will not. That’s because figuring out how much of a deal do home buyers need to get is not always about the money. It’s about the winning. You can find a way to let the buyer win through some other type of negotiation. Maybe it’s throwing in an extra nicety as icing on the cake.
I could give you more ideas of what to offer when you’re stuck on how much of a deal do home buyers need to get if I knew more specifics of the transaction. A bargaining table like this type of situation that died mid-stream says there is something else wrong. It’s no longer about the money. And it’s certainly NOT about buying a home.
You’re not gonna like my next sentence but I need to write it. It’s about who can be the bigger asshole.
How to Revoke a Cancellation When Buying a Home
Sellers are not always eager to revoke a cancellation when a buyer asks.
Rarely does a buyer decide to revoke a cancellation when buying a home but it seems to happen enough lately. Makes me wonder if there is something in the water. One day the buyer is madly in love with the house; the next day, cold feet. They find some peculiar aspect of the situation to focus on, blow out of proportion, and the next thing you know, they execute a cancellation.
Always for silly insignificant things it seems. Then, for no known reason, they suddenly change their minds. Nope, they really DO want to buy the house, and they regret signing the cancellation. Fortunately, there are several ways to revoke a cancellation. The easiest solution is to sign an addendum agreeing to revoke the cancellation and pick up where the parties left off.
Usually, it is also wise to offer some kind of an incentive to the seller. Buyers need to look at the situation from the seller’s point of view to understand how upset, angry and annoyed sellers can get when buyers flip out and cancel a contract. Few sellers that I know have hearts so big they will overlook the irritation and agree to go back into contract. Especially if other buyers start to sniff around the home and make buying noises.
Sellers think: go with the devil I know, which irritated the hell outta me and whom I no longer trust? Or, go with new buyers who seem more promising?
Another way to revoke the cancellation is to write a new offer, clean and straight forward, perhaps with more favorable terms. That could restart the clock, most likely, with the loan. Whereas, with an addendum, if the cancellation was still wet, the closing period is generally shorter.
Either way, buyers may find they will need to sweeten the deal. Buyers need to persuade the seller to grant them another chance. Some of the things buyers can offer is to release the earnest money deposit to the seller. Little speaks louder than handing over non-refundable money. They can offer a higher sales price. They can release all contingencies.
Sometimes you have to make the seller an offer the seller cannot refuse.
The Meaning of Win-Win in Real Estate is Usually Singular
Win-win in real estate doesn’t really exist in seller’s markets.
My second husband, who is dead now, used to talk about win-win in real estate all of the time. He truly believed that transactions could be win-win. His reasoning? The seller would get the home sold at list price, although not necessarily the way they wanted, and the buyer gets everything the buyer wants. That’s not win-win to me. This guy believed in win-win so much because he always believed his own lies. You know, sort of like Trump, when he repeats a lie enough times, he believes his own alternative facts.
In fact, and don’t laugh, we once owned two tiny Yorkshire terriers. He named the dogs win-win. Win-Win 1 and Win-Win 2. We couldn’t housebreak either one of them, so how win-win was that? They got new homes with our friends.
Sometimes I get buyer’s agents asking for a win-win transaction. Which is a myth. I don’t know where they get this crap. Maybe from my dead ex-husband. He was a national seminar speaker. Which means shit. Usually agents mean they want the seller to discount the price so their buyer can afford to buy the home. I say if the buyer can’t pay list price, maybe the buyers should be looking at a listing they can afford.
But of course, I represent sellers, so I would think that way. In my opinion, my sellers should get list price or better. Sellers hire me for that reason. If a buyer wants to buy the home, that’s the price of the home. If they want to get a “deal,” they are barking up the wrong tree.
Some buyer’s agents complain to me. They say I should be “more cooperative.” Meaning I should favor the buyer. That’s not gonna work. It’s a bit audacious for an agent to suggest. Look buddy, do you want to buy the home? Then pay the price the seller has agreed to sell at. Otherwise, mosey on down the road. There is no true win-win in real estate. In my world, one party always makes out a little bit better.
Especially in our Sacramento real estate market of today, it is the buyers who need to conform. Not the sellers. If sellers give away part of their profit, it’s called compromising, not win-win. Rarely do I see sellers willing to give money to the buyer. The team members on the Elizabeth Weintraub Team write offers that get accepted because they are not trying to play the win-win game, either.
Don’t Shoot Yourself in the Foot When You Make an Offer on a Sacramento Home
Buyers who make an offer on a new listing should discuss the price with a Realtor.
The trouble with making an offer on a home is many buyers judge the value of the home by the sales prices of surrounding homes and not the comparable sales. They do not seem to understand that the gray house with the remodeled kitchen and additional 500 square feet is worth many thousands more than the home they can really afford to buy, which is the brown house, two blocks over, without the remodeled kitchen and 500 square feet less.
You might read this and say to yourself: it makes sense, why doesn’t it make sense to the buyer? And it’s because they don’t look at it this way. They see 6 or 7 homes, all of which vary in size, configurations, location and condition, and in their mind those homes are all the same. They are homes for sale in Sacramento, and all they have to do is pick one and make an offer for less. I know agents are chuckling?over this scenario but it’s how buyers’ minds work. I hear it day after day from buyer’s agents who call on my listings.
I can also understand why buyer’s agents might not want to discourage them because to do so could alienate the buyer from the agent. Nobody wants to be told they don’t understand what they are doing. Agents often will urge them to make an offer, any offer, because once they get a signature on the contract, they hope the negotiations will continue.
But you can take a brand new listing in Sacramento that is attracting a lot of attention and buyers will still think it is OK to offer less. The problem is the seller is very unlikely to accept such an offer. Even if the buyer were to make an offer for FULL list price, the seller might not even take that kind of offer, and believe it or not, a seller is not required to. Nope, no law.
Often I get buyer’s agents who say their buyer wants to make an offer just prior to an open house because they are worried another buyer at the open house will want their home and swipe it. Yet, they often make an offer that the seller cannot or will not accept. Talk about shooting yourself in the foot.
Bottom line, if the buyer wants to make an offer, it helps to determine market conditions, assess the competition for the home, and best of all, to consider the comparable sales.
