The prime example of competing buyer and seller interests is this: the buyer wants to pay as little as possible, while the seller wants to get top dollar for the place. But there is another way to look at this entirely. In fact, there’s a point of view from which the buyer and the seller want exactly the same thing: the buyer wants to buy the place, and the seller wants to sell it to them! And I’ve seen many buyers and sellers act cooperatively to achieve just that result.
Nevertheless, there are things that sellers can see from their side of the table that you cannot. Sellers have insights into their own mindsets that, if revealed, can be very powerful tools in helping buyers optimize their approach, offer and interactions with the seller to both buyer’s and seller’s benefit. So, in the interest of helping both buyers and sellers move closer to an outcome that helps them both achieve their mutual goal, here are a few of the insider secrets from the seller’s side of the bargaining table that they would tell buyers, if they could.
1. Trashing my house doesn’t make me want to sell it to you at a discount. To a seller, their home is their castle. It’s the place where they’ve raised their children, and has been the backdrop for many of their memories. It’s the asset into which they’ve invested the lion’s share of their time and money, sometimes for years. It’s an intensive expression of their personal tastes. And it’s also the asset they must convert into as much money as possible to move forward with the next phase of their lives.
All that said, the average seller knows most things about their home that you can see with the naked eye. So if you, as a buyer, think trash talking a home, pointing out obvious flaws or issues is a good strategy for getting the price down, rest assured that you are not telling the seller anything they didn’t already know when they set the list price. In fact, you might very well be doing your case more harm than good, as this “strategy” is highly likely to alienate and insult the seller whose cooperation you seek.
If you feel strongly that something about a place makes it less valuable than the comparables the seller seems to have based the list price on, work with your agent on how best to communicate your offer price rationale to the listing agent in a way that is diplomatic and fact-based.
2. Knowing that you have cash makes me feel comfortable taking your offer. With distressed properties, over-asking multiple offers, and the generally warm-to-hot seller’s market in many areas, it has become increasingly common for sellers to request proof of a buyer’s “cash to close.” (This usually takes the form of bank or other asset account statements, with the sensitive account number information blacked out for security purposes.)
Some buyers in competitive situations have begun to proactively offer such proof, even when it hasn’t been requested, and even for non-cash offers.
Other buyers, though, take offense. Why shouldn’t the mortgage pre-approval letter be enough? Why should you have to jump through yet one more documentation hoop? Is the seller just plain nosy? Why are they all in your business?
One word: comfort. Over the last few years, the number of home sale transactions that went into – and fell out of – escrow due to last minute loan problems of pre-approved buyers hit a record high. While this is awful for buyers to go through, it’s even more disruptive for sellers, who are relying on the transaction to close in the time frame the buyer provided to move forward with their own lives. It’s also a worst case scenario for a seller who had 5 offers on the table to choose one and then have it fall out of escrow later on.
And sellers’ agents know this – often, the issues which derail a buyer’s loan can be resolved with money, extra cash down, extra cash at closing, extra cash to put in escrow for post-closing repairs required by the lender or the city. So, proving that you have more cash than you appear to need to close the deal doesn’t necessarily set you up for the seller to ask for more cash – but it might help them feel that you’re the buyer most likely to sidestep mortgage obstacles and seal the deal.
3. It’s all about the Benjamins – but close-ability is a close second. Buyers be on notice – all the love letters, cute dog pics and cookies in the world will not make your offer win out over others that are offering significantly higher than yours, financially speaking. Now, please don’t write in telling me about the case of your cousin’s dog groomer’s tarot card reader who got a home for less than 10 other offers because she helped the little old lady seller take her garbage cans to the curb – most little old ladies need cash to get through their later years.
There is always an exception to the rule, and it does sometimes happen that a seller will take a slightly lower offer than the highest for one reason or another. But if you’re trying to create a plan that stacks the decks in your favor in a multiple offer situation, your first priority should be to offer as much as you can, without spending beyond what is affordable for you and beyond the home’s fair market value.
That said, sellers also care – a lot – about how likely the offer they accept is to close escrow. And when multiple offers get so numerous and so frenzied that buyers seem to be throwing money at a home, smart sellers pay attention to the fact that their home might very well not appraise at a crazily high price and focus on offers that seem realistic and close-able, which can mean offers below the highest.
Approval letters, proof of cash to close, the professionalism with which the offer is prepared and presented (see below), and even things like your credit score, your choice of mortgage broker/professional – all these things contribute to or detract from a seller’s estimation of how close-able your offer is. If you’re competing against other offers, you should be maxing out both your price and your offer’s close-ability, as evidenced by these characteristics. 4. Your agent represents you to the world of sellers. Choose wisely. See above. A buyer’s broker or agent has a lot of influence on whether the transaction closes, and how smooth or bumpy the ride is. If your agent’s level of professionalism is lacking, it will show – and listing agents might actually rank your offer below others, in terms of close-ability. If your agent’s level of professionalism is stellar, the opposite can occur.
Before you choose an agent, ask around your circle of friends and do a little online searching or even calls to past clients to see what you can find out about their reputation for professionalism. 5. Ask nicely – the old “flies with honey” adage is true. The conventional narrative about buyers and sellers is that they are adversaries. But I’ve been around this block a few times, and I think the average buyer would be absolutely gobsmacked at the number of times sellers are actually ready, willing and able to agree to their requests throughout a transaction. This is especially the case where:
- the buyers’ requests are reasonable and not nickel-and-dime nitpicks
- the buyers phrase their requests nicely, and
- the buyers have been living up to their end of the bargain throughout the course of the transaction.
Compare this with buyers who try to hold sellers hostage to their requests with the threat that they’ll kill the deal if the seller doesn’t do every single penny-ante thing the buyer wants.
I’ve seen sellers agree to leave valuable personal property behind, have repairs made, give thousands of dollars in repair credits or price reductions after a concerning inspection report – despite a hot seller’s market – all because they were good people, could afford to, and the buyer’s approach was more sweet than it was sour.
SELLERS, past and present: It’s your turn – what advice have you always wanted to give home buyers?