June
2007
Buyers gain negotiation leverage with these 5 key questions3
If you are a seller, be prepared to answer these strategically.
If you are a buyer, these questions will put you in control of the process immediately.
1. Why are you selling?
2. How flexible is the price?
3. What did you pay for this house?
4. What have you done to this house in the last five years and do you have all the receipts? (including home owner insurance claims)
5. What problems have you had with this house?
Why are you selling?
It’s a buyer’s market. Buyers are more aggressive when it comes to maneuvering into position to gain an advantage in the negotiation process. Buyers always want to know why you are selling. If the buyer is coached by a good agent, these questions will be asked. Buyers are looking for the seller’s motivation. Is this a financially distressed situation? A divorce? Is the seller being transferred and is dealing with a timeline? Is there a problem with the house or neighborhood and the seller wants to get out? Is this a short sale?
If I am buying, or represent that buyer, I will probe to get answers to all the above. If I represent the seller, I coach them to handle these questions. I wrap the probe. If you are selling and I am representing the buyer and we are touring the home; this is how I may address these questions: “This seems like a really nice house, why did you decide to sell it?†Sellers will often reveal motivation when it is put to them this way.
How flexible is the price?
Again, the smart agent will wrap the question: “Great floor plan. Love the neighborhood, any flexibility in the price?†Listing agents often stumble when I ask them this as well. Regardless of what they say, I follow with: “Have you had any offers? Lots of inventory right now.†If you are my seller, I will coach you to have these questions slide right off and smile at the same time.
What did you pay for this house?
What a seller paid is public record, but this is still a very awkward question to field if you are a seller. It often puts a seller on their heels. When I show property to buyers, I am armed with this information as well as their mortgage data so I know it already.
Buyers should be a bit careful asking sellers this because it may tend to isolate them.
What have you done to this house in the last five years and do you have all the receipts? (Including home owner insurance claims)
Sellers have to disclosure all homeowners insurance claims so if asked so you might as well be forthright. If the buyer is smart, he/she will ask about the repairs, stepping the seller through the list. When the list is revealed, the subtext of the conversation might color the home as problematic giving the buyer leverage so be aware of this technique if you are selling.
It is now required that a seller reveal defects to the listing agent when the home is listed. Full disclosure is required in all real estate transactions so each side should be open to this conversation. Sellers can spin the conversation that they have been responsible caretakers of the home.
What problems have you had with this house?
Notice that this is an open-ended question implying that there have been problems. Sellers will want to answer this as a list of improvements and enhancements made and buyers will look for recurring issues.
Summary
Buyers: You and your agent should ask the right questions at the right time to obtain critical information from the seller giving you an advantage.
Sellers: You better have a really smart listing agent that will coach you to field these questions easily, quickly and to your advantage. If you need coaching in this regard, call me. I will be glad to help you.