Tips to Avoid Last-Minute Home Price Negotiations
It’s been months of searching. At last, you’ve finally found your dream home, and you’ve come to terms with the seller. But you’re not home yet, as there can still be another round of talks even when the contract is signed. Here’s what sellers and buyers need to know about last-minute home price negotiations and credits.
Property inspections can trigger more negotiations from the buyer
Usually, a real estate contract provides for a property inspection. Or buyers arrange for an inspection before signing. A buyer might also get a particular type of inspection—for the sewer line, septic, pool or roof. These inspections can bring to light issues the buyer couldn’t possibly have known about before making an offer. Once inspected, the buyer may still be interested in pursuing the sale. But given the needed repairs, it’s likely the buyer will want to re-negotiate the price by asking for credits or a reduction in the purchase price.
Why sellers should have a property inspection before listing
For sellers, the goal is to avoid negotiations after you’re under contract—because they’re not going to be in your favor. If you know the roof is near the end of its life or the furnace breaks from time to time, let it be known upfront, because rarely can you “sneak” something past the buyer.
You might even go as far as having your property inspected before listing your home. An inspection report can help you address any issues identified, and you can make the inspection report available to buyers. They can come up with their best offer upfront, knowing what they’re getting.
If you have an inspection report or are otherwise assured your property is in top shape, you could even ask for an “as-is” clause in the contract. Although it’s not necessarily enforceable, it will send a strong message to the buyers that you aren’t open to further negotiations.
Sellers may try to avoid offering credits by getting work done before escrow closes
After inspections, the seller might agree to have work done before the closing. Or the seller may require that a payment is given directly to a contractor for the purpose of performing the specific, required work and nothing else.
These agreements help protect the seller. Sometimes, buyers ask for credits just to help offset the closing costs — and they never intend to do the repair work.
It also protects the seller if initial estimates for needed work turn out to have been overstated.
Buyers who ask for credits just to get the price down are taking a chance
Sometimes, the buyer concedes on the purchase price thinking they can come back after the property inspection and ask for an additional concession.
The buyer may even feel empowered now that they’ve completed inspections and are just weeks away from closing. The seller isn’t going to go back to the drawing board with a new buyer over a few more dollars, right?
Actually, they might. If it’s a strong buyer’s market, there’s a good chance the buyer can pull it off, but if it’s more of a neutral or a seller’s market, the seller may call your bluff. They’re assuming that you’re the one who, having invested all this time and money on inspections and an appraisal, isn’t going to walk away over a few dollars.
Buyers nearly always ask for credits, so sellers should give themselves some cushion.
You should also leave some room for negotiation in escrow. Always assume the buyer will ask for minor repair work—they nearly always do, even if there are no major issues. If you leave some cushion for yourself, you’ll feel better about the deal. And you’ll have protected yourself against the inevitable.