Jun. 14, 2011
Copyright © Las Vegas Review-Journal
Sealing the Deal
To get buyers to the closing table, sellers are making more concessions, from cash to the big screen, but they don't have to lose leverage in process. Here's how to keep the listing attractive and negotiating power intact
ERIK J. MARTIN
A lower price is always nice, but homebuyers today are increasingly enticed by extras that sellers are more willing to throw in the deal.
Based on the latest Spending and Saving Tracker survey from American Express, to unload their residences in the current market, 44 percent of homeowners said they would be interested in including appliances, and 28 percent would contemplate offering to make requested repairs or permitting an allocation for repairs.
"Sellers are having to make more sacrifices today versus a year ago," says Ruth Miron-Schleider, broker-owner of Miron Properties, Bergen County, N.J. "To help seal the deal, nowadays they often have to throw in more appliances, window treatments, draperies, fixtures and personal property items. That can include a plasma TV, patio furniture, backyard swing set - virtually anything."
In a recent transaction involving a $2 million home in her territory, for example, Miron-Schleider's seller had to concede a prized large mirror, worth thousands of dollars, that the buyer requested.
Common give-ins among sellers continue to be assisting with the buyer's down payment funds and closing costs and being flexible on the closing date.
"I try to get my sellers to throw in things that may appeal to the buyers, yet may not cost them as much," says Bill Golden, an agent with RE/MAX Metro Atlanta Cityside in Atlanta. "Buyers are stretching it to purchase a house now, so they usually can't afford things like closing costs and new appliances."
Closing costs may come off the seller's bottom line but are often tax-deductible. Often, a buyer would prefer paying slightly more in the purchase price if they don't have to scrape up any more out-of-pocket expenses.
If the home is in need of some fixing up, Michael Walden, professor and economist at North Carolina State University in Raleigh, says sellers should give monetary concessions on needed repairs rather than delay the sale until unexpected needed repairs are done.
It's also a smart idea for the seller to have a home inspection completed before putting the home on the market to prevent unexpected holdups to a potential sale that can result from a buyer's home inspection.
"Sellers should also research how much home prices have fallen in their area and use this information to set a realistic price that will move the property," Walden says. "This price discount will vary. In more stable markets, it may only be 10 to 15 percent below prices from three years ago; in markets more devastated by the recession, it may need to be as high as 40 percent."
Above all, while it's probably wise to compromise and sweeten the deal for the seller, proper timing and a shrewd strategy are important.
"To give in too much too soon may send the wrong message that the seller is desperate, and can be a bad negotiating tactic," says Miron-Schleider. "No negotiation is successful unless every party walks away feeling like they got something out of it."
While this may be a tough market for sellers to walk away feeling even slightly victorious, Leah Gerstner, vice president of public affairs at American Express, says that there are some signs of optimism. Although two-thirds of those polled in the Amex survey feel that a seller's market is more than a year away, affluent and young professional respondents' confidence in their ability to get their desired asking price in today's market has increased from 40 percent in 2010 to 50 percent in 2011.