When to Walk Away From a Home 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.
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.