Wednesday, August 25, 2010

Buyer and Seller "Don'ts"

It is tough to get to closing these days.  I previously blogged about the lender obstacles, but Money magazine points out the difficulties caused by buyers and sellers having unrealistic expectations.  This chart dispels the myth that you will get the property for far below asking.  

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Here are a few of the key "don'ts":

Don't say: "I'll pay 85% of your asking price and not a penny more."
Instead: Look for homes that are fairly priced and make a reasonable offer. "Coming in about 10% below list is a good starting place for negotiations now," says Denver real estate broker Jeff Fogler. Yes, you have the upper hand in most markets, but the average homebuyer is paying only 2.7% below list price (see the chart). Set your expectations accordingly. You can always ask if the seller is willing to bridge a price gap in other ways -- for example, by picking up your closing costs (which can run $7,500 on a $300,000 house).
Don't say: "You're offering how much? Forget you!"
Instead: When bidders lob low-balls at you, thank them for their interest -- and ask that they come back with earnest offers. "If you become offended, enraged, or unreasonable, you've blown any chance at negotiation," says Warwick, R.I., real estate agent Ron Phipps. These days many buyers are just testing you to see how big a discount they can get. Point the bidder to comparable recent sales that support your list price. (Received several super-low offers? Check the comps to make sure your price isn't too high.)
Don't say: "I haven't put my own place on the market yet."
Instead: List your current home before you start shopping seriously for the next one. Because it takes almost three months to move a house these days, sellers are loath to write home-sales contingencies into purchase contracts. You'll have far more leverage if you've gotten rid of your house before you start negotiating: Sellers know there's less chance of the deal falling apart. (Prequalifying for a mortgage helps too.) What's more, you'll know exactly how much money you can put into your new digs.

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