So you have navigated finding your dream house, now it comes time to enter the negotiations. This time period is certainly fraught with anxiety and stress even in the best situation. Laws vary from state to state and traditions vary from region to region on how negotiations are to be carried out so this info is based on California Law and Southern California practice, particularly Sherman Oaks and the San Fernando Valley.
1) banks, distressed properties, short pays, and any other non-conventional sales follow their own rules
-you may never understand their reasoning and it may make absolutely no sense. The unpredictable nature of these sales wreaks havoc on the orderly process an experienced agent prefers to use. Even though it seems as if the buyer should have an advantage over the entities that want to sell these assets, the truth is the “seller” is completely unemotional, completely detached from the sale and is just as interested in protecting themselves as getting the property sold.
2) Sellers don’t always base their decisions on market influences or sound reasoning
-they often put more value on their needs than what the realities of the market are. If this is the approach they are taking you as the buyer may never convince them that their house is worth less than the much superior house down the street. This leaves you 2 choices, walk away from the property, or compromise with them for some combination of market value and their needs. If you like the house enough, it may be worth it. And that really is the definition of market value after all
3) Escrow period and occupancy are sometimes the most difficult terms to reconcile
-most of the other factors in a contract are fundamentally financial based. This deals with the roof over the sellers head and they have objectives you may not know about. It is difficult to compromise when the 2 sides have conflicting needs. Often one party simply needs to swallow their pride and give in.
4) Time Frames are important
-good agents, both buyers and sellers agents, understand the importance of keeping a deal moving. Each offer and counter offer (as well as contingencies) has an “expiration date and time”. Not responding in a timely way or responding too quickly can send a message to the seller. Your experienced agent needs to carefully strategize your response and you need to follow that advice.
5) A deal is not done until it is signed by everyone
– in California oral agreements are worthless in real estate transactions. Your agent may go thru complicated acrobatic moves to get a “fully executed purchase contract”. Cooperate with them and realize it only takes the blink of an eye for a seller to change their mind or for another offer to get submitted. It is a shame when all parties have worked hard to come to an agreement just to have the whole ball game changed by delaying or just plain lack of attention to this detail.
Understanding some of these pitfalls can help make the process much easier on all parties involved. Select your agent carefully and follow their advice. Be prompt and conscientious in doing what they suggest.
About Guy Violas
