Price only one factor to consider in real estate sales
Special to the Tribune Chronicle
Buying and selling a home is a transaction that may easily take money, but the results of that purchase will have a lasting effect for many years.
The problem with most negotiations comes from focusing on the obvious the price. There are so many facets to the transaction that sometimes price can be far less important than most people think.
Let’s start with the loan. What is the difference in payments on a $100,000 home financed 30 years for 4.75 percent, and a $103,000 home at 4.5 percent? Nothing. The monthly payments over 30 years is virtually the same. Immediately this tells you that negotiating your loan rate is at least as important as negotiating the sale price.
Let’s talk about time on market. If the payment on your home is $1,000 per month, and it takes you four additional months to get it sold at $104,000 versus $100,000, what have you gained? Wouldn’t you have been better off to accept the $100,000 offer four months ago?
Buyers and sellers typically value different things. Price is important to both, but maybe a seller has a new home to move into, and the buyer needs instant possession. Here it is easy to see that a quick closing and possession might benefit both parties. Maybe a buyer wants to close to register children in the local school district. In commercial real estate sales, many closings are driven by tight time schedules. Maybe the buyer must move out of their old home and doesn’t want to spend months in an apartment to move into your home.
The point here is to look well beyond money to see what factors are important. An old negotiating saying is “give them the sleeves from your vest.” This simply means giving the buyer something with no value to you (as seller) but lots of value to them. We have seen many transactions where a seller dreaded moving a piano, and the buyer had a small child taking piano lessons. The piano became the sleeves from the vest.
The same thing can be true of closing or possession times, allowing a buyer to drop a POD of furniture off a week before closing might save them hundreds in moving costs, or spending a couple hours with a new buyer to show them how to take care of the swimming pool or hot tub saved them the cost of a pool service.
The old saying “Money isn’t everything” is true for a home sale. Take a minute to look deep into what you need in a transaction. Some hard-negotiated price transactions leave both buyer and seller saying “I would have done it differently.”
Talented Realtors help buyers look beyond price to sometimes find the small things that make a sale enjoyable, helping both buyers and sellers exchange the sleeves off their vests.
This article was provided by the Warren Area Board of Realtors.