By Sandra Fleishman
Special to The Washington Post
Saturday, September 29, 2007
When Will Reed bought a two-bedroom condominium in Bowie two years ago, there was no room for negotiating with the sellers -- on price, repairs, closing-cost help or anything else.
"The market was so hot that they could say, 'Here's the price, and either you offer that or more.' And if you didn't, someone else would snatch it up before you knew it," Reed recalled.
The situation was reversed when Reed put the property up for sale this spring: Buyers were in control and demanded to negotiate -- asking sellers to lower prices, pay for renovations, help with closing costs, you name it.
So Reed compromised. And it worked.
"I consider myself very lucky to have actually sold the place, with the market changed so much," said Reed, 25, who works in law enforcement. He got two offers in 3 1/2 months, but discussions with the first would-be buyer dragged on so long that Reed backed out. The second set of potential buyers asked for more concessions than he expected, but not more than he could afford, so he agreed to many of their terms.
The price the buyers finally paid was close to his mid-$300,000s listing price and higher than they had originally offered. They raised their price in the negotiations but asked for more help with closing costs -- about $12,000 -- because they were short on cash.
Price is usually the biggest item on the table, but it's not the only one that comes into play these days, agents and real estate lawyers say.
"Sometimes it's more important to a seller to find a buyer that's qualified so that they can settle sooner," said Kim Spear, an agent with Keller Williams Realty's Dulles North office. For others, "it might be better to find a buyer who will let the sellers stay in their house while a new house is being finished."
And for sellers who are moving up to a more expensive house, "getting their price is usually more important," she said.
For buyers, too, price is often the biggest consideration, Spear said. "Buyers right now just want reassurance that they're buying a property that will increase in value."
But because it's hard to establish price in a slow market, buyers sometimes submit lowball offers to see what happens.
Even though buyers have more leverage than in the hyper-competitive market of two years ago, they can still turn off sellers if they push too hard, warned Andrew R. Berman, director of the New York Law School Center for Real Estate Studies.
"If they're asking $800,000 for the property and you offer $300,000, then you're just going to irritate the sellers unless there are unusual aspects to the property that would make such an offer reasonable," Berman said. "The general rule of thumb is if you make an offer that's more than 10 percent less than the asking price, no one's going to take you seriously."
One extenuating circumstance could be that the property has been on the market for months at the same price, Berman said. Another would be if the property is in poor condition.
Although many buyers are focused on paying the lowest price, others who don't have a lot of cash see an advantage in seeking help with closing costs from sellers or asking for repairs or home improvements. Still others might want to make the purchase contingent on selling their current house because they in turn might have trouble selling.
"Everything's negotiable," said Lee Odems of Buyers Advantage Real Estate in Woodbridge. But buyers "should negotiate according to what's their greatest need. You make a list of everything you need and your priorities. . . . Then you look at the items that are must-haves, that if you don't get you won't do the deal or that if you don't get you can't do the deal. For instance, if you're cash-poor and you don't get closing assistance, then you can't do the deal."
Bidders who try to go too low risk losing a chance at what could be a good deal, he said. "The golden rule should kick in" when deciding how low to go on price, he said: "Do unto others as you would have them do unto you."
Still, Odems said, sellers should understand: "Once you decide to sell your house, you've got to look at it as a business transaction. You have to try to detach yourself from it on an emotional level." That way, it's not a question of being offended if an offer seems too low. It's a question of how to make a potential buyer see the real value in the property.
Reed, the condo seller in Bowie, said, "We started out at a price we were pretty sure it wouldn't sell for, but not astronomically high."
He said, "If a person came in and liked [the condo] and wanted to lower the price or wanted help with closing costs, I thought starting a little bit higher would leave me enough wiggle room so I could make a little bit of money and be able to move."
When the first offer fell through, "it was extremely disheartening," he said. But the second offer, with the request for closing-cost help, was high enough. "They got what they wanted, and I did, too."
Of course, said law school professor Berman, "money is money," and closing-cost help will take money out of the seller's pocket, too. "What matters is how much money they want to walk away from the table with."
Buyers, meanwhile, need to have an idea "not just of 'where do you start' but 'when do you stop,' " in counteroffers, Berman said. "Sometimes buyers get very attached to houses."
Jessica Fyles, who just bought a two-bedroom townhouse in Reston, said she loved the house as soon as she saw it, but she didn't let emotion guide her negotiations.
"I felt that I could negotiate the best deal for myself in the current market," said Fyles, 33, a technology worker who had been renting for five years in Ashburn.
She offered "considerably less than the asking price" and was surprised "and offended, really, when they said it was too low." But after the sellers thought it over on the weekend, "they came back and said they wanted to work with me."
The fact that the couple was divorcing and wanted to stay in the townhouse for a while became something Fyles was able to use in her negotiations. She agreed to raise her bid if they would help more with her closing costs. Over two days, they exchanged counteroffers. Finally, "I agreed to the full listing price, and they agreed to pay 2 1/2 percent [toward] closing costs," Fyles said.
The sellers also agreed to pay Fyles's rent for a month to delay the settlement.
This first purchase "was a big learning experience for me," Fyles said.
All the back and forth on the price and the seller concessions can make a buyer "lose sense of the house," she said.
"But when you get in the house and you see it, you know it is so worth it."