Seconds count... Hire an experienced buyers agent and have power over the pace of the negotiation.
1. The Pressure is ON
Sellers tactic: "Final offers due by Sunday at 6 pm." Buyers waiting for the price to drop feel the pressure and even undisclosed low ball offers submitted can raise the price above asking in a bidding war. A sellers agent is supposed to be truthful about other offers but does not have to disclose the amount of the offer. (I have seen sellers agents lie about having competing offers and then suffer the consequences when my client walks away)
Give them a deadline: “We want an answer now so we can cancel our other showings for today.” (Even if you don't have any showings, it signifies you have other options)
Offer an Escalation clause: If the seller will agree to it... Offer your minimum, with a clause that states you will go $XXXX over the next highest offer up to your maximum, with provided proof of that competing offer.
Example: A house is for sale at $300,000 and there is a bidding war. Rather than offer your highest of $310,000, I offer an Escalation Clause that states (Offering $280,000 with a maximum of $310,000, outbidding the next highest offer by $2000). Now when a competing offer of $295,000 comes in... your offer is now automatically $297,000... saving $13,000 with that winning bid, compared to just blindly submitting the maximum offer of $310,000.
Note: Seller may not agree to the escalation clause as he now can not counter offer the other bidders and loses $13,000 selling to you this way.
2. The Money
Use a real estate agent to acquire information and remove the emotional and even discriminatory interaction possible between the buyer and seller. Our agents are 100% FREE for buyers, unlike some agencies that charge up-front retainer fees and extra % at closing.
Go after more, even after you negotiated the price, especially if hidden defects were not disclosed prior to your showing. When and if issues come up on the inspection, don't be afraid to ask for a concession or repair. At this point, the worst they can say is NO.
3. The Inquisition
Like a good investigative reporter, even if they refuse to answer, you can learn a lot by judging their reaction to your questions. Don’t limit your information gathering by asking only questions that you know sellers will answer. The seller's agent will be more likely to share this information with another agent than with you directly.
- Take your time inspecting the property. Look at every detail and ask as many questions about the property as you can think of. Bring a tape measure, measure some of the rooms, and note down the measurements. Also, pace off the back yard and write the measurements down.
- Are there any current offers on the property?
- Have they turned down any offers and if so, for how much?
- Are there contingencies on the seller finding suitable housing?
- Where are the sellers are currently living? / When did they move? (if the house is empty)
- Where is the seller moving to and when? (They may be under contract to buy another house, making them anxious to accept your offer)
- Is the seller downsizing?
- How long have they owned the property?
- How long has the property been for sale?
- What do they plan to do with the money from the sale?
- How much do they owe on the property?
- Are they under any pressure to sell?
- Are the payments current?
- Why do they want to sell?
- When does the listing expire?
- When was the last inspection of the house?
- What recent updates were made?
- Are there any hidden problems with the property? Failing septic / contaminated well / radon in air and water / lead / asbestos / mold / flooding...
- Are there any nearby problems or future problems that affect the value of the property? (Power plants, mining, shopping centers, convenience stores, hoarders, landfill, etc.)
Homes don't lie, people do. Trust your inspector and agent to make sure those are the “real” reasons for selling.
Even though there are privacy laws in place, sellers can easily hide cameras and/or recorders. Saying the wrong thing can get you in trouble when you get to the negotiating table. As we are asking the sellers agent to reveal their client's position, they will be asking you and I questions as well, be polite but vague. When the tour is over, discuss everything with your agent away from prying ears and eyes.
5. Demand a Counter Offer
Some homes won't pass Federal and State housing loan regulations, and if the seller is unwilling or unable to make the upgrades necessary to satisfy the inspector, they will simply reject the offer. I personally ask the sellers agent if the house will meet these requirements beforehand, but their knowledge of what will pass or not is usually limited at best. An FHA, VA or RI Housing home should be the three S's, SAFE, SOUND and SANITARY! Otherwise, buyer or seller, you should always counter and expect one in return, even $100, come back with something, anything! Your mortgage payment is less than $1 per day, per $5000. I always tell clients, if you love this house, don't lose it over a couple of mortgage payments. If the sellers are not countering, their agent is not doing their job and you should demand it.