Homebuying Bullies Beating Up On Desperate Sellers
We all know that it’s a buyer’s market out there right now, but have the tables turned so much that buyers are taking it to a whole new level? We are seeing buyers turning into veritable schoolyard bullies by taking advantage of their leverage by demanding everything from major home repairs, to cash concessions, to the payment of HOA dues and more from sellers.
Unlike the grade school teacher who would reprimand such a bully, I say go for it. Have a take no prisoners attitude when buying a house today. We all know if the shoe was on the other foot what the sellers would be doing. My how times have changed!
Getting a good deal on a home is hardly the objective these days. That’s a given, merely a starting point.Today’s buyer does not stop there. When looking at a prospective home, we urge our buyers to begin endearing themselves to a term that really makes sellers shudder. That term…”useful lifespan”.
“How long has it been since you’ve replaced the roof? 20 years..well it may be past its useful lifespan and needs to be replaced. We’ll need a $15,000 price reduction.”
“How long has it been since you upgraded your electrical service, how long has it been since you replaced your HVAC system? Well it seems that too has exceeded it’s useful lifespan, it will need to be replaced. That will be another $7,500.00 off”.
Get the picture? The current value of a home is quite easy to determine. In fact it has never been easier. In this market climate, the current value of a home is what an able, ready and willing buyer is willing to pay. CMA? Save it! That’s a wishful thinking, rose colored glass wearing Realtor’s dream number.
According to CNN Money, today’s buyers are in full command in this market and they know it and they should use their power to obtain any advantage that they can. Real estate agents who work on behalf of the buyer (you do know the agent named on the yard sign is looking out for the seller’s best interest don’t you?) are helping buyers pry more and more concessions out of desperate sellers than they ever dreamed of during the bubble.
“‘Now it’s my turn,’ is the attitude,” said Mike Byrd, a real estate agent with SLO Home Store in San Luis Obispo, Calif. “Some buyers are really putting the screws on.”
It used to be that sales contracts had clauses that made a purchase contingent upon whether a home passed inspection, if a buyer was able to get a mortgage, or even if they could sell their own house.
Those safeguards fell by the wayside during the bubble; if a buyer balked, the seller just moved on to the next highest bidder. Buyers who signed deals without these protections and had to back out often lost their deposits.
But lately, buyers have expanded the number of clauses they put into contracts, according to Benjamin Clark, an agent in Salt Lake City with Homebuyer Representation.
“Some of these items include availability of high speed Internet, cost and availability of homeowners insurance,” he said. “They cover environmental aspects of the home and neighborhood, as well as local services and amenities.”
Instead of a single inspector, the home inspection now includes specialists in radon, lead-based paint, roofs and masonry, as well as fireplaces. Sellers must fix any flaw or pay for the buyer to correct it.
“Sellers are much more flexible on issues that come up on the home inspection – and I mean big ticket items like roofs and furnaces,” said Ed Bartlett of Spokane Home Buyers in Washington State. “And this is after they have already been flexible on the price.”
A detailed inspection was a lifesaver for clients of Clark’s, who were buying a six-bedroom, four-bath rambling ranch in Bountiful, Utah, that was listed $344,900.
After the buyers got the price down several thousand dollars and signed a contract, the home inspectors went to work. They turned up some minor issues, which the sellers agreed to fix, including $875 for some electric work, $150 for plumbing, $242 for a new kitchen faucet and $735 for chimney pointing and repair.
But bigger problems emerged. “There were termites,” said Clark, “and masonry issues. The deck needed to be demolished.” Based on these findings, he got the price down to $324,000.
For some buyers, the negotiations don’t stop right up until the closing.
Don Plourde, a Coldwell Banker broker in Waterville, Maine, recently had a client squeeze a last minute concession out of a seller on a three bedroom starter home that needed some work. The asking price was very low – just $75,000 – but even so, the buyer was able to negotiate that down to $72,500.
But just before the closing, the buyer demanded that the seller leave behind three quarters of a tank of heating oil – 200 gallons worth $800 – for free. The seller caved.
“He just wanted to move on,” said Plourde.
These days, sellers almost always pay the closing costs instead of the buyers, according to John Rygiol, an Exclusive Home Buyer Brokerage agent in Orange County, Calif.
“It’s hard to ask for that after already getting a price reduction,” said the agent, who recently got a seller to pony up $10,000 for closing. “But it’s a buyer’s market and sellers are attuned to that.”
Even local taxes are on the table these days, according to Adele Hrovat, the owner of The Buyer’s Realty of Las Vegas. She got the bank that was selling a four-bedroom, three-bath, house to pay an $11,000 tax assessment on top of $6,000 in closing costs. And that was after the price was slashed from $489,900 to $399,000.
With the housing market bad as it is – slow sales, dropping prices and inventories rising – sellers are going to have to stay flexible.
“We’re finding that buyers make an offer and if it’s not accepted, they just go on to the next seller,” said Don Plourde.
So there you have it buyers. Don’t worry about being merciless. Get what you can and do so with a smile.
Comments
Got something to say?