Thursday, October 25, 2012

7. "The Tango" (Offers and Counteroffers)

So, you Submitted your first offer, and they came back with a counter offer.

This is NORMAL.

If they accepted it outright... you'd probably feel a bit ripped off. "Could I have gone lower?"

Be happy. You have opened a dialog with the seller. They want to sell, you want to buy. Now, as long as nobody gets pissed off, You can come to an agreement. It takes two to tango, and now you're both on the dance floor. Just don't step on their feet!

Now that they have opened your offer, they can only deal with YOUR offer until they reject it, or your counteroffers. Only once you or they have rejected your offer, can they accept offers from other people.

Hopefully you and your Realtor plays hardball and came in at an aggressive price. Now you and the seller work your way to a (hopefully) happy medium. I was surprised how many times the offers went back and forth during both of our "tangos"  Here's the first one:

Note: I just made $0.00 the "asking price" and I've only listed things that have changed between offers to make it simple.

  1. US: First offer: -$15,000, Include ALL appliances, Including mini bar fridge Closing Date of Friday July XX
  2. They: Counter offered, all accepted except: -$5000, All Appliances except Washer and Dryer
  3. US: Counter Offer: $-10,000, ALL Appliances
  4. They: Counter: -$7500, All Appliances Except Washer and Dryer, threw in free Muskoka Chairs
  5. Us: Counter: -$7500, ALL appliances. Also told the Realtor that this was the last offer.
  6. They: Accepted
  7. Us: Signed acceptance

All this happened in 24 hours.

(we ended up walking away on one of our conditions (Inspection), but yes, it went back and forth, and there were tense moments about that stupid washer and dryer

Don't show all your cards to your Realtor...

So here's where I have the potential to get some people mad at me, but I'm going to shoot from the hip for your benefit. I am naturally frugal (aka I spend money on "stupid" things, but I don't like spending a LOT of money) so I am a bit aggressive when it comes to haggling.

So, While you should use and trust your Realtor  I wouldn't necessarily show them all the cards in your hand. I had to look my Realtor in the eye and tell him: "I will NOT buy this house without appliances" Simply because I really WANTED the appliances, not because I had to have them.  At the end of the day, he told me we may lose the house over this, and I looked at him and said "That's fine, we can't afford to buy new appliances" Because he believed me, He was able to effectively convey that, and the Realtors (both sellers and Mine) were able to work on the owners of the house. In the great game of Chicken, They flinched first. It was a risk, but I knew there would be other houses if things fell apart over this.

If you tell your Realtor your Exact price that you'll walk away and not buy the house, you'll find you will more often than not, you'll get THAT exact price. Don't tell them everything, tell them what they really need to know. Just know that If you keep back something important, and you lose the house as a result, they will probably get a bit angry with you. You just don't have to tell them all the little details. It gives you the ability to Bluff and push your price point a little more without getting too much resistance from your Realtor before it even gets to Their Realtor. You gotta keep your game face sometimes. (Megan was the WORST at this. The first things out of her mouth on every counter offer were "I think we should take this. It feels like "the one".") 

Our Realtor was very educational for us, and gave us a lot of information and was great. We would always play a little game of "What do you think this house will sell for" at every viewing.  When it came to a house I actually really liked and was thinking we would put an offer on, I'd always say that the house was worth about $10,000 less than I actually thought it was. This does two things: It compensates for your Emotions, which drive you to say "LETS BUY IT NOW!" and it also sets your price point more aggressively  if its too aggressive...  your Realtor will let you know.

If you're near your Financial Cap when offering on a house, be prepared to walk away if you hit your price limit. My Realtor was pretty good, but I've heard a ton of horror stories where the line "Do you really want to risk losing this house over a couple of thousand dollars?"  and comparing it to "only a couple dollars a month" etc. These are high pressure sales techniques, and if your realtor is doing this to you, You may want think twice about their loyalty to you, vs. their wallet. Realtors are Realtors to make money. 

To set things clear, I do not see Realtors as "evil"

There are people who "hmm and haww" for months, passing on house after house, never willing to make the plunge. These people Do sometimes need a push. A good Realtor will push gently, as it is a HUGE commitment  and will effectively put you in debt (kinda) for the next 25 years. Just don't let ANYONE push you into something that isn't right for you.

I'm just saying: Think of yourself, FIRST.

You are buying your first house. It MUST be a deal, a great value, and be right for you. It must be sellable in the future, Hopefully for more than you paid for it! If this isn't working out, If the price isn't right, Reject the counter offer, and start looking for a better fit. You only get your First Time Homebuyer perks ONCE, and it is literally thousands of dollars of savings. You NEED to make sure you're getting the most house for your money! Do not let anyone push you into buying it.

So Once you've accepted the counter offer (or they've accepted yours) you gotta jump on the Building inspection, getting a Lawyer and a bunch of paperwork.

Next post:

Inspection Time!

1 comment:

  1. Great Blog, really enjoying reading it so far and thinking "man I wish something like this existed when I bought my first place what feels like forever ago".

    One point of clarity, sellers can take multiple offers at the same time. I am sure you know this but the wording of your blog above may lead one to believe that sellers can't do this.

    Just because you are "doing the tango" with the sellers doesn't mean someone else isn't also dancing with them.