09 Sep 3 Rounds in a Home Negotiation
“Is less than a dollar a day worth letting this offer go?”
Buying a home is one of the few purchases where Americans get to negotiate. In several other countries haggling is common in even small purchases like groceries or transportation fair. America however, is a place were the price is what you pay unless it’s a big ticket item like a car or home. There are 3 rounds that take place in a Home Negotiation.
Round 1
In this round it’s all about the house! The buyer makes their initial offer. Both the Buyer and Seller are excited about the future and are imagining themselves living in their new homes. The Buyer thinks about how great the location is, how much they love the kitchen, and lay out of the home. The Seller is thinking about what house they will be moving to or how great it will be to close! Then the seller gets the offer and negotiation begins…
Round 2
This is where is becomes about the money! Buyers begin to second guess if the home is right for them. They start to crunch the numbers and look hard at what their new mortgage will be and how that will effect their lifestyle. They start to think about whether they can afford the home or if they should be looking for a less expensive home. Unsurprisingly Buyers rarely wonder whether they should be buying a more expensive home! Sellers see the offer and think about the money they thought they would be getting to use on their next home and all that they spent on upgrades.
Round 3
This is where is gets personal! I see it time and time again. First it’s about the house, then about the money, and finally it becomes about the other person. Often people on both sides of the transaction think the other is not being cooperative. The Seller thinks the Buyer is trying to get their home for a steal and the Buyer thinks the Seller is trying to squeeze way too much out of them.
It seems strange any many think that a house negotiation may continue for six to seven rounds but often after round four the transaction will fall apart. Part of this is due to the lack of experience us Americans have with negotiating and part of it is due to the high stakes and expensive nature of the purchase. Ideally you want to close in one round and try your hardest not to let things get to the personal point.
When it gets down to a couple thousand dollar difference, as a Buyer it’s important to think how long you’re going to be in this house, ten years, fifteen years? Even a three thousand dollar difference is less than a dollar a day over ten years and your home is appreciating over that time. As a Seller, if you’re planning to use the equity to purchase your next home, current low interest rates still make a lower downpayment affordable. There is one question you should ask yourself, “Is less than a dollar a day worth letting this offer go?”
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