Rocky Financial Times Create Negotiating Power For Buyers?
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CNN has an interesting article out discussing how buyers are asking for even more concessions after the home has gone to contract. Now I do not have a problem with negotiating and negotiating hard. But there comes a point where asking for the moon will hurt all the parties.
Other buyers are demanding sweeteners before they close a deal during such a rocky time. San Francisco agent Jim Holt had clients go into contract on Sept. 29, on a $750,000 home in town. But by the end of the week the Dow had lost over 800 points and the buyer demanded a whopping $50,000 price cut.
“Buyers are seeing the [market implosion] as an opportunity to get concessions,” said Holt. In the end, the seller only agreed to reduce the price by $5,000 - but that’s better than nothing. via CNN
As agents how do you recommend negotiating for buyers in this market? Do you want more concessions right up to the final signing of the documents or do you try to get the original contract enforced?
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Comment by David Knudsen on 15 October 2008:
In my market, the rural Catskills of upstate New York, closings take about 60 days from accepted offer. In more ‘normal’ times, there wouldn’t be any substantial change in the economy or the local real estate market which would materially affect the value of a home during the contract peirod. But these times are very different. I don’t blame buyers for trying to renegotiate if they decide to go through with a deal in an environment where buyer demand has dried up (which, in my area, has happened post-Lehman.) But its a test of wills, because buyers do have contractual obligations and if they don’t proceed are likely to lose their deposit. (I’m also noticing that some buyers are hedging their bets, and looking to bind with a deposit of less than 10%.)