5-26-06
Negotiations 2
Welcome back to world of real estate contract negotiations. Last month we covered the ins and outs of obtaining the best possible price for your property – specifically, how to find that point where the price is right. (If you missed the article you can easily find it online at www.performink.com under “Owning a Home.”) In this article, we’ll look at your possible plans of action.
There is more to the negotiation process than just the asking price of the property. Keep in mind your real estate agent deals with these sorts of negotiations for a living and will be beneficial during this stage of the home buying process. For that reason, I decided to bring back my friend and fellow artist, real estate agent Jasen Schrock of Prudential Preferred Properties, to lend some advice throughout this article.
If the Price is Wrong
Well, not so much “wrong” as “not quite as low as you had hoped.” For most people, the primary focus during the negotiation process is the price they will pay for the property, and this is certainly an important consideration. However, there are several other elements of the agreement that can be discussed if you are not satisfied with the price point – everything from the date you close to who keeps the microwave is fair game. Let’s take a look.
Closing Date
According to Jasen, “The second most frequently negotiated piece is the closing date. The timing of your purchase is often very important. You may have a lease that is ending and you need to move at a specific date. This date can also be very important to the seller. They may have to wait for their next house to be finished, their new job to start, etc. Sellers may be willing to concede some money on the sales price if you can be flexible with a closing date that works better for them.” Or vice versa. Obtaining the closing date you want can be even more important than the price point in several cases, as that closing date can lead to you paying for rent and a mortgage for a month or two or can leave you crashing on a friend’s couch for a couple of weeks.
Furniture & More!
Let’s say the seller is not willing to budge on his or her asking price but there was this rockin’ lime green leather couch in the living room that you saw when you viewed the property a couple of weeks ago. This lovely piece of furniture – and much more – can be entered into the contract negotiation process.
Jasen adds, “You would be surprised at what some sellers are willing to leave behind. I’ve seen some sellers part with cars in the garage, couches, beds, even a full hairstyling chair in a basement. In general, you do not want to ask directly for personal items on the contract unless you know beforehand that the seller is willing to play along. However, your realtor usually can let it be known subtly if you are interested in something specific. If it comes up in the process, some sellers are happy to part with personal items.” Technically, anything that’s permanently affixed to or installed in the home is real property. Everything else is the seller’s personal property and is open for discussion.
Repairs & Home Improvements
Suppose the inspection reveals a cracked tile in the corner by the fireplace, and the buyer reports that problem to the seller.
What happens next? The seller may decide to replace the tile – or he may decide not to replace the tile. The buyer decides whether it is worth losing the house over a broken tile or not. The seller decides whether it is worth losing a buyer over a small thing like a broken tile.
That example was purposely minor. The problem could be a faulty roof. That would require more serious thought.
Jasen agrees, “Inspection issues are a vital piece of the negotiation process and occur after you are already under contract. Often your real estate attorney is actively involved in conjunction with your realtor. Each issue that arises from the inspection is addressed. It is either repaired by the seller, waived by the buyer, or a monetary amount is established for the repairs and a credit is given to the buyer at closing.”
These issues are critical to striking a deal with a seller and, whether you’re buying your first home or your 14th, they are always a bit challenging. As I mentioned in last month’s article, the most important question to ask yourself is: How badly do you want this place? Do you consider this property a perfect fit for you and your family or is it one of five or six you really like? To put it very simply, would you be heartbroken if you lost it? If not, it might be worth holding your ground and demanding that vintage coffee table be left behind – or else.
The other key to successfully negotiating a sales contract is communication. Since your realtor will be handling almost all direct correspondence with the seller, it really comes down to you being very clear with your realtor. It is extremely important to differentiate between your must-haves and would-likes. If you are willing to pay market value or more for this home because you don’t want to risk losing it, let your real estate agent know up front. If you won’t have a place to live in three weeks, let your real estate agent know up front. If you really want that that entertainment system the seller has in his or her living room, let your – you get the idea. His or her negotiating tactics will depend heavily on this information.
Jasen concludes, “There is a real advantage to understanding the components that make up a contract negotiation outside of the price. In the end, it can save you time and money in ways that you may not have thought of.”
As always, if you have any questions, even if you already are a homeowner, feel free to call or e-mail me anytime. Pease send me any comments or suggestions about this article, and let me know if there are topics you would like to see discussed.
Mike McNamara has been an actor in Chicago for the past eight years in theatre, commercials, television and film. Mike is also a Mortgage Consultant and Loan Originator with West America Mortgage Company. He can be reached anytime at 773/398-0021 or McNamara310@aol.com. Special thanks to Jasen Schrock of Prudential Preferred Properties for his assistance with this article. Jasen can be contacted at 773/805-7432 or jschrock@prupref.com.