Unless you’re a hermit and living somewhere in the Alaskan woods, every day life is full of negotiations–from who gets the remote (my husband watches FOX news; I watch MSNBC), where to go out to dinner (beef or seafood) or even how to proceed into an intersection when the stop lights aren’t working (offensive or defensive drivers). Unfortunately, none of these everyday decisions helps prepare you for negotiating the purchase of your new home.
Some offers will never end in a successful negotiation – like the offer I received this week on a new home where the buyers offered $40,000 less than the asking price. They must have thought they were purchasing a home in Riverside, California. Frankly, my seller/builder was not as offended as I was and made them a reasonable bottom line counter but it’s been 48 hours and we haven’t heard back. Negotiations dead. Then, there was the offer that was approximately 20% less than the asking price on two lots. I wish developers made 20% on the sale of every lot!
But what that buyer needed was more accurate information on what other lots had sold for in the cul-de-sac.Â He wanted a level playing field and so did the seller. For that one, there’s hope.
The first step in a successful home purchase is to know your market. What have other homes sold for on the street; what are the current asking prices of homes in your immediate area and age of similar homes. Anchorage isn’t much of a negotiating town. Homes sell within a couple of percentages of the asking price but it’s that one or two percent where negotiations can get sticky. Egos get hurt. The tone of an email can easily get misinterpreted by the receiver, depending upon what’s going on around her. It’s too easy to push the send button and wham! The deal is dead.
I deplore the negotiations that take place by email. When we receive offers, the first thing we do is try to talk to the buyer/realtor. Find out what part of the offer is most important to them: assistance in closing costs, appliances, purchase price, move-in date. With private party buyers and sellers a deal should never fall apart over $5,000 or less. With interest rates at 4%, $5,000 in additional purchase price is $23 per month. For a private seller, that’s really dollars lost at closing so the give most likely will need to come from the purchaser. For a builder/developer, that reduction can affect appraisals for the next year. Sell one lot or house for $15,000 less and you’ll have to sell every lot/house on the cul-de-sac for the same price because that sale will be used as a comparable.
Buyers need to know more about our unique market conditions in Anchorage before making low ball offers. We do not have an excess of inventory. Homes sell within 2 to 3 % of their current asking price. Our rental vacancy factor is only 2.3%. Renting is becoming more and more an expensive option for those seeking decent shelter. A negotiation should never fail over $23 per month.