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We've covered the top blunders buyers can make during the negotiation process, but what about sellers, and their brokers? Here are some of the worst, from the experts.
[Note: This story was originally published in 2012, and was updated in 2017. We're presenting it again here as part of our end-of-year Best of Brick week.]
1. Don't blab about personal information
This negotiating gaffe is typically committed by the seller’s agent, and buttoning your own lips may be the best way to prevent it.
“A seller’s broker needs to keep a lot of the personal reasons for selling confidential, because a well-prepared buyer’s broker will use all such information against the sellers when negotiating,” says Rodrigo Guzman of Reuveni Real Estate.
Though it violates a selling broker's fiduciary responsibility to the seller, brokers leak personal information “often,” according to Victoria Shtainer of Compass. She explains, “The sellers are getting divorced. The owner lost his job. They need to move because of job relocation... As soon as I hear that, I think, ‘Desperate. I can negotiate and I can low-ball.'"
When you’re buying a co-op, condo or townhouse in New York City, expert legal representation is as critical as light, air, and water. “Protect yourself, your investment and quality of life by working with an independent lawyer who has deep experience in New York City real estate, and not necessarily the one who is referred to you by a broker involved in the transaction,” says New York City real estate attorney Steven Wagner of Wagner Berkow & Brandt.
Among other things, your lawyer should read the minutes for issues affecting your apartment or that may increase the carrying charges, review the financials to see if the coop or condo is financially sound and check to see if there is any litigation or contingent liabilities that may result in large assessments. To schedule a free 15 minute telephone consultation with Steve Wagner, click here or call 646-780-7272.
2. Don't take a low-ball offer as an insult—or fail to respond to one
Yes, this sounds suspiciously like broker spin, but it's worth mentioning as it was by far the most repeated lament of the brokers we spoke to. And really, what have you got to lose by seeing if you can get a low offer up to an acceptable level?
“Probably 75 to 85 percent of low-ball offers end up being the deals that get done, and they get done within 5 to 10 percent of list price,” says Ariel Cohen of Douglas Elliman.
Moral of the story: Always counter a low-ball offer—even if your counter is your asking price.
“This shows a willingness to say, ‘I am serious about my price,’” says Brad Malow of Douglas Elliman. “’Please come back with a bit more of a serious offer.’”
3. Don't make a counteroffer that’s too small
While sticking to your asking price can be an appropriately strategic response to a low-ball offer, counteroffers that are too small can backfire.
When responding to an initial offer, a reduction of less than 1 percent of the asking price (for example, a $5,000 reduction on an $800,000 asking price) “is actually an insult to the buyer” that may drive him or her away, says Bevan Versfeld of DJK Residential, whereas a reduction of 1-3 percent “shows your willingness to play ball.”
4. Don't focus exclusively on price
If you’re deadlocked on price, it’s time to get creative. There’s a lot more to a real estate deal than sticker price.
“The seller wants to sell,” Malow says, so “What are the other issues that might be adjusted to yield a common ground? Closing costs? The purchasing timeline? Adding or dropping contingencies?”
5. Don't accept the first offer as is
No matter whether it's a buyer's or a seller's market (there's currently a bit of wiggle room for buyers at the high end), the selling process is a negotiation. Accept the first offer as is and you may be leaving money on the table, says Kevin Kurland of The Spire Group.
6. Be careful in how you handle multiple offers
"Qualify your buyers, first and foremost," Malow says. "Calling for 'best and highest' offers for a group of non-qualified purchasers won't get you anywhere near the closing table."
Beyond that, it's easy to get lost in the excitement of having multiple offers and fail to capitalize on the situation, he says. Don't be that guy or gal.
"There are often purchasers who simply refuse to get involved in bidding wars but who can be negotiated with individually," Malow explains. "Individual negotiations versus a mass call for final bids is a matter of having a keen awareness on what is going to serve the seller best."