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When to Walk Away From a Home Negotiation

Walk Away From Homebuying Negotiation

Great tips on when to walk away from a home negotiation.

House hunting is like finding your life partner. You go on a bunch of bad dates. Get your hopes up, have your heart-broken over and over, but then you find “the one.” There’s nothing like finding your Disney-perfect happy ending. The price is good, it’s in a respectable neighborhood, there’s a world-renowned sushi restaurant just down the street. Everything you would need to call this house your home.

However, it’s a well-known fact that, just as home values can fluctuate, there is never a fixed price on a house, so there is always room for negotiation. You’ll need every trick to win the negotiating game – especially when your dream house is on the line. And if negotiations aren’t going your way, you may need to just walk away.

There are lots of reasons to walk away from negotiations when buying a house, but the art is in the timing – and in your willingness to walk away.

Be Willing to Walk Away

Do not under any circumstances fall in love with a house that you want to buy. Don’t even fall in lust. Before you even start putting your offer together, make a pact with yourself and your partner (if you have one) that you’re willing to walk away from the house. This may be one of the most important home buying tips for negotiating a house price. The willingness to walk away will always strengthen your negotiating position and often will give you the upper hand. It can also prevent you from making big mistakes and spending too much on a property. Once you fall in love, forget about negotiating – you’re toast.

Know Your Ceiling

Before you actually submit an offer, spend some time with your budget and determine what your absolute ceiling is for the property. If a property needs a lot of work to make it livable, take this into consideration. You’ll need cash to fix it up once you move in.

Be Clear on What’s Important to You

In some cases, price is not a primary factor. If you’re willing to bend on price in exchange for other benefits, you could come out a winner. Convenience, cash, location or livability may trump the actual price. If a seller won’t budge on sale price, you may be able to find compromise in other things that are important to you. Maybe if they pay for some improvements or leave the home furnished, you’re fine with paying their asking price. If you’re short on cash, you may be able to ask them to cover closing costs or utilities in exchange for a higher asking price.

Carefully Craft Your Offer Price

Carefully craft your home offer price.

Carefully craft your home offer price.

Negotiation starts during the offer submission process. Take time to carefully craft your offer price. Take into consideration what prices houses have sold for in the neighborhood – is the house you’re considering priced above, at or below market value? Also consider what the conditions of the sale are (is it a foreclosure, short sale or cash only) and how much perceived competition there is for the property.

If you’re trying to buy a house in a depressed market and the property has been on the market much longer than the average time to sell a home, you may offer a price that’s ten or twenty percent below what you are actually willing and able to pay for the property. However, if you’re putting an offer on a highly desirable property where there may be more competition, you want to come up with a number that feels good to you and can help you to secure the property should a multi-offer situation arise.

When to Walk Away From Negotiations When Buying a House

If you’ve made the pact to not fall in love with the house and have determined what your price ceiling is for the house given the circumstances and your budget, have clarity around what factors get the deal done for you, and have spent time to carefully craft your asking price based on research and the condition of real estate market, it is very likely that you’ll know when to walk away from a negotiation.

  • If the sellers are being unreasonable on price or are unwilling to budge and it’s just not satisfying your needs as a buyer, walk away.
  • If you suggest alternative solutions to a lower price and the seller is unresponsive, walk away.
  • If you are pushed into a blind multi-offer situation and asked to make your highest and best offer, but you don’t feel like you have enough information to participate, walk away.
  • If the house moves out of your price range in a multi-offer situation, just walk away.
  • If you feel like something fishy is going on and you don’t have the whole story, then walk away.

Going back to my dating reference, it’s always tough to see “the one that got away.” Yet it’s always darkest before the dawn, and there are plenty of houses in the sea. Remember, getting that perfect house shouldn’t mean you need to sacrifice sleep stressing over it or break your budget. As long as you go into negotiations with Beyonce’s “Irreplaceable” in mind, and be willing to walk away, you’ll always win in the end.

Eric Proulx from Market Leader Eric Proulx is the community manager for Realty101.com and RealEstate.com. He loves all things real estate and believes that real estate doesn’t have to be boring. You can follow him on Twitter.

9 Comments

  1. I love how you compared house hunting with dating. I have to agree with this analogy, the two have much in common. Both require strong boundaries at first, but once a commitment is made, complete acceptance and belief is required.

    I never suggest rushing into big decisions. Take your time, buying a house can be lots of fun, it’s up to your agent to make it that way. :-)
    Michael Lewis White recently posted..Its All About The Points

    • Thanks Michael for the comment! It’s so true, about how whether house hunting is fun is up to your real estate agent. Keeping with my dating theme, I would say they’re like a match maker, or even “Hitch”.

      All in all, even with this economy, people definitely should go into negotiations with this type of mindset. I know there are some who are clamoring back and forth about whether or not is the right time to buy and while each side has a valid point, it still comes down to the experience of an individual home buyer. Which should be enjoyable either way if they follow this advice :)

  2. Great article Eric! I think many buyers, especially first-timers, underestimate the emotional component to the process. It really can be a roller-coaster ride and it’s up to your realtor to keep the highs and lows in check. There’s not much point to having the kitchen of your dreams if the plumbing is shot or bidding on that beautiful heritage home when the foundation is crumbling. Maybe we should be the mandatory 3rd wheel on all first dates too ;)
    Kerri Demski recently posted..Options for Vancouver Home Buyers Grow With September Listing Count

    • Hi Kerri,

      Thanks for the comment! If you would like your photo to show up with your comments, you need to visit http://en.gravatar.com/ and sign-up for an account.

      • Thanks Kerri!

        Chris is such a great guy, letting me guest blog. It is so true though, how many people are deceived about the homebuying process. I’ve always said that a GOOD real estate professional is much more than that, but a sort of counselor to help guide people through this stressful time.

        You make a GREAT point about kitchen vs plumbing! I LOVE that example! :)

  3. Eric,

    Great article. What a great job sharing tips on negotiating. Especially with today’s market, many forget proper skills when putting together offers and negotiating with the seller. It’s tempting to take what you can get, but since a Realtor represents their client, it is essential that they represent their client properly and professionally.

    I personally believe everything is negotiable, and the one who negotiates the best, wins. Thanks for sharing.
    Daren Phillipy recently posted..Get the FUNK out of your Real Estate Business

    • Daren,
      Thanks so much for the positive feedback. Part of the problem you totally hit on the head: people just settling to take what they can get when there are potentially many more opportunities if you just be patient and go in with the mindset that everything is negotiable, you’ll find you have many more options than you initially thought.

      • You bet Eric. Let me know if you ever need help on content on your blog. I would be happy to guest post if you are ever interested.

  4. I would LOVE that. Perhaps we could exchange posts? You can either contact me via email at ericp@marketleader.com or on Twitter at @EricMProulx

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