When buyers attempt lengthy negotiations, they open themselves up to losing the home they are trying to buy. Learn more about one of the counteroffer mistakes homebuyers make during negotiations.
Don’t Haggle Over the Price
Days on the market don’t always make a difference in the sales price. Many homes that have been on the market for three months or longer sell at list price. In fact, in 2019, buyers typically bought their homes for 98% of the asking price, regardless of the time on the market. However, homes that are a new listing will rarely sell at less than list price when they sell within the first week. This means the price was at fair market value. It is why it’s not always a good idea to try to haggle and expect the seller to counter the offer on a new listing. There is another very good reason not to negotiate, which is often overlooked. The reason is most counteroffers take a while to process. Even if these negotiations only take a few days, it can feel like an eternity for many homebuyers. When you consider that this precious time could open up a window for another buyer to tour the home and write a full-price offer, you can see that trying to get the lowest price on a home might cost you the home. If you’re a buyer trying to get a home in a seller’s market, you are not the only buyer in the marketplace. Your tastes in a home are probably not that different from any other home buyer’s. If you’re in love with a home, it’s safe to assume that another buyer will be, too.
Process and Time Involved
Here is a breakdown of how negotiations can turn against you if you take too long:
The listing agent and seller discuss the terms of your offer over the phone or via email. The seller tells the listing agent to draw up a counteroffer. The agent might suggest that other issues are included in the counter as well. These might be issues that both parties would have let pass if the buyer’s offer was accepted as written, but since the seller wants to counter, they are included. The listing agent sends the counteroffer to the seller for signature, who has since gone out to dinner and does not check their email until the following morning. Upon receipt of the signed counter from the seller, the listing agent emails the counteroffer to the buyer’s agent, who is attending their son’s soccer game for the afternoon. Later in the afternoon, the buyer’s agent calls the buyer to discuss the terms of the counteroffer. They talk about whether the buyer should accept the terms and conditions in the counteroffer or if the buyer should issue a second counteroffer. More often than not, the buyer accepts the terms of the counteroffer. Meanwhile, another buyer has sent an offer to the listing agent for the seller’s asking price. Before the buyer’s agent can get the documentation prepared, the listing agent notifies them that a better offer has arrived and that the seller is withdrawing the counter to their offer.
Too much time has passed in this scenario. Twenty-four hours is plenty of time for another buyer to write a full-price offer. The first buyer could have used this tactic used instead of trying to negotiate in a seller’s market. The buyer probably wanted to “save” $5,000 or $10,000 by offering less, and did not view this strategy as a counteroffer mistake. If the seller has no intention of accepting a lower offer, there are no “savings” to be gained. Do not believe an agent who tells you the seller will always counter the offer. Even if the seller does, you can still lose the house if the home is still getting showings.
