Tiffany Cloud's Arizona Blog

musings from 35 yr AZ resident and Realtor®

Negotiating: It’s more than just price

Maybe I am just getting old, but it seems that the older <wiser hopefully> I get, the more I realize that some things in life that I thought were black and white, or simplistic are actually multi-faceted, complex organisms.  That is they change, evolve, they rarely lend themselves to the same criteria or result repeatedly.  Kind of a heavy way to start out a blog post, but it seems the perfect backdrop to a discussion on negotiating.

I recently had a listing that was new to the market and a real ‘gem’ of a property.  Pristine condition, superb neighborhood and the seller had equity!   We got two significant offers on this home for consideration.

Offer 1:  Emailed over with no discussion before-hand.  Final net offer (after counters) was $2,500 below asking price (about 1%).  4 week close with a 3 week inspection period.  Seller to pay for buyer’s VA appraisal up front, HOA disclosure fees up front.  Repairs to be completed 3 days prior to close of escrow.  The buyer was putting down less than .5% of the purchase price for their earnest deposit.

Offer 2:  Emailed over with 3 discussions prior to writing offer.  Final net offer (after counters) was $7,500 below asking price (about 3%).  5 week close with a 10 day inspection period.  Earnest money of 1% of purchase price to go hard (be non-refundable) and be released to the seller 1 week prior to close of escrow.

At quick glance the first offer would seem better to most.  After all, the seller would net $5,000 more right?  Now let me tell you about my seller…

My seller is relocating to a retirement community.  She is single now for the first-time in 30 years.  She has never sold a home by herself, she has never moved a home by herself.  She is overwhelmed by the thought of an inspector coming in and finding things wrong with the home that she won’t be able to take care of.  She wonders if she will be able to get everything done in time by herself while working full-time.

We went with the second offer and here is why:  The second offer gave my seller the two things she needed,

  1. A Fair Price for her home and
  2. The highest amount of security.

Offer 1 had my seller taking all the risk hoping the seller would still want the home in 3 weeks when their inspection period was over.  My seller was scared of starting to pack up her household and make plans to secure another place to live (deposits, moving vans, etc – more money risked up front) while the buyer could back out.  Remember my seller works full-time, so packing up her home is a HUGE undertaking for her.  A three week inspection period with a 4 week close left her one week to pack, move, and 4 days to make repair.  Not a very nice thing to do to a sweet little old lady.

The buyer’s agent on offer 2 did an excellent job of asking questions and finding out what was important to my seller. She asked a lot of questions. Let me repeat that, she asked a lot of questions.  Then she …… listened when I answered her.  Now my seller not only has the inspection periods over in a reasonable amount of time, but she had a couple thousand dollars sitting in her bank account before she put money down on moving vans, etc…  She had some S.E.C.U.R.I.T.Y and a considerate buyer that was serious about making the transaction work.

July 28, 2010 Posted by | Arizona, Arizona Housing Market, home buyer, home seller, negotiating, REALTOR, the ART of Real estate | , , , , | Leave a comment