Friday, June 17, 2011

Buyers: How Not to Kill a Deal

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A Conversation with Fairfield County Real Estate Attorney Robert Murray
 
Though the latest market statistics show volume sales and average housing prices are solidly gaining in Greenwich for the first quarter in 2011 against year ago, the talk of the town—and for that matter in luxury markets across the country—is that real estate is as soft and unpredictable as the flight of a butterfly. 

This kind of talk puts buyers in a decidedly Superman feeling mood.  
 
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“The seller should be THANKFUL to even get an offer!” is the sentiment of some would-be buyers.  Capitalizing on financial distress, family unrest or both is a tempting pastime for buyers who are hoping that the past three year decline will hang around just long enough for them to take advantage of it.  For a purchaser who truly wants to buy the home and is not simply engaging in “bottom-fishing” for the lowest possible price, all of this speculating and general “I am buyer/king” posturing during pre-contract negotiations can actually  negatively impact  your relationship with the seller and ultimately cost you the house.

During a recent breakfast, Attorney Bob Murray of Diserio Martin O’Connor & Castiglioni, LLP and I put together a list of the top 5 things that have seemed to be good markers to kill a deal and how NOT to use them.

1.    Understand the Market’s Current Condition.  There are several indicators that can be helpful in coming up with an opening offer.   Knowing the spread of selling to listing prices of houses in your price category is one such indicator.  If you look at the gains and losses of the past few years, Greenwich homes are currently selling at their 2005 price levels (See www.robinkencel.com Market Statistics for this information).  Knowing what “in the market” means, will enable you to come up with an opening strategy to capture the attention of the seller.

2.    Pick Your Battles.  Some buyers are completing house inspections and expecting the seller to handle many more “concerns” than would have ever made the deal killer list in the past.  Know what your priorities are and focus on them.  While underground oil tanks and asbestos could have long and term short consequences and should be addressed, battling over the sconces in the dining room should probably not.

3.    Have Your Financing In Order.  With more stringent requirements and the longer processing time for banks and mortgage companies to approve loans, taking the time to interview and identify the lender you will want to approach can be enormously helpful prior to even having an accepted offer. 

4.    Be Sensitive to the Seller.  You may or may not know the circumstances surrounding the sale and the degree of stress and distress the Seller may be under.  Respect and courtesy to the owner and their property when you are there  (after all, it is still the seller’s home) will probably go a long way.

5.    Don’t Renegotiate the Terms of the Deal.  Doing so wouldn’t probably sit well with you either, if you were the seller.