We are in uncharted territory with today’s market: post-recession but still recovering; interest rates are historically low; and our political climate is unstable on a day-to-date, even hour-to-hour basis. As a result, the market sometimes reacts with trends that I’ve never encountered before and it becomes a learning moment for everyone.
The trend I have seen emerge over the past several weeks is a near complete and utter rejection of negotiation on both sides--buyers and sellers. For me this behavior is unprecedented! I’m not entirely sure where it stems from, but I think it is a combination of the factors above in addition to the moderate amount of inventory we have currently--this at least explains buyer’s avoidance of the matter.
One of two situations has played out several times in the recent past. In the first scenario, I write a strong offer for buyers, and submit to sellers in hopes of making a deal. When we hear back from sellers, their offer is down just a few thousand dollars from list. My buyers, frustrated by the lack of real negotiation, walk away from the deal entirely.
In the second scenario, I receive an offer for one of my listings. I present the offer to my clients, and we respond with a strong counter-offer, again in the spirit of coming to a meeting of the minds. The buyers come back and reject our counter, retroactively claiming that their initial offer was their highest and best. What happened to old fashioned negotiating?!
My advice to buyers and sellers:
Buyers: Two pieces of advice here. First, properly label your offer. If it is indeed your highest and best, state that upfront so that sellers have solid footing on what they are reacting to, and also don’t waste time coming up with a counter offer. And second, unless sellers are actually calling for highest and best, this is not a good place to start. I always recommend leaving room for one round of negotiation at the very least. Most of the time when you submit an initial offer, you are doing so “blind.” You have no idea what is motivating the seller to sell--is it a fast close they are after, or no inspection? You have no idea. Give sellers a chance to tell you what they want, so you can decide whether or not you are willing to agree.
Sellers: Our market right now is filled with very price-sensitive buyers. They know their budget, and have blinders on to anything higher. So, when you are listing your home, price to the market--do NOT over price. The price-sensitive buyer would sooner not look at an overpriced home than negotiate. There is a general lack of urgency to the market right now, so the only way to stir up activity is to price conservatively. And, you have to stay on top of your price. If you live in a condo building and other units are listing under your’s, unfortunately this means you need to quickly adjust.
At the end of the day, I totally get it--negotiating can be exhausting. But, it is also the means to an end in the truest sense, and it really shouldn’t be avoided as a matter of course.