Putting up 20% for a down payment on a home is a big ask, especially for a Millennial. These last ten years have been rough, and have left many Millennials burdened with enormous college debt,
Tricks Of The Trade June 2019
After more than a decade of negotiating deals on behalf of my clients I've noticed that many people make the same mistakes when angling for the respective property of their choice. In this Tricks of the Trade blog series, I will identify some of these common mistakes so that you can avoid them in your next transaction.
To a certain extent, it's only natural to believe that negotiating real estate deals is similar to other circumstances where you've had to negotiate before, such as at a car dealership, at an open-air market, or during a quarrel with your significant other. While there are some common threads that run through these situations, negotiating a real estate deal is a slightly different animal--or at least, there are enough nuances to where you would greatly benefit from working with an experienced realtor.
With that in mind, let's discuss Common Mistake #1: Being too focused on sales price at the expense of other aspects of the deal.
Sure, you want to get the best price possible whether you are a buyer or seller. In fact, one of your realtor's primary jobs is to get you the best price possible for the home. But I have seen too many people get hung up haggling over a few hundred dollars that ultimately cost them a deal that would have net them several thousands of dollars based on market conditions and other provisions that were being offered in the deal.
These other provisions are almost limitless, and each one carries some kind of value with it: When is the closing date? Who is paying for the closing costs? Is the buyer offering a lease-back to allow more time for the sellers to move out--and are the terms of that lease-back provision competitive? Does the lender the buyer is proposing to use (via the Third Party Financing Addendum) have a poor reputation for hitting closing dates in that particular real estate market? Is the seller prepared to re-market the property if the buyer is unable to secure financing (due to poor credit, not enough money for a down payment, etc.)--and how much are they willing to invest in re-marketing the property (because the next buyer's leverage will only increase the longer the property sits on the market)? Is the buyer offering to pay the difference if the home does not appraise at a high enough value to meet lender requirements? What about appliances? Is the seller offering to include those as part of the deal--and does the buyer value not having to arrange for getting a new refrigerator, washer/ dryer, etc?
The list goes on and on, and an experienced realtor will be able to evaluate the relative strength of an offer by factoring in a myriad of these considerations. But I've seen too many buyers and sellers get myopic about the number in the purchase price box and fail to see that the entirety of the offer was extremely advantageous with respect to their own interests (both financial and otherwise).
So as you start searching for properties (or as you start considering whether to sell your current home), I would strongly encourage you to consider your priorities not just in terms of pricing, but also in terms of convenience, risk management, and the rest of your financial picture. If you partner with an experienced realtor, they will know what strategies to employ to address these priorities and achieve a desirable outcome. Remember, we do it several times per day whereas you may only do it a handful of times in your entire lifetime.
Have a question related to this topic? Please don't hesitate to contact me directly at 512-677-7750 or by email at firstname.lastname@example.org.
Simply put, the Texas Hill Country is in my blood. I grew up in Boerne, TX, graduated from Texas Tech University and the University of Georgia, and I have seen enough of the country to know that there....
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