When you make an offer on a home, there are always a multitude of reasons why it may not work out. Sometimes it goes smoothly, other times you have to walk away.
This series on walking away from a home purchase will look at a few of those reasons, drawing on the experiences I’ve had first hand. This first entry into the series will look at walking away before you even have the home under contract: during negotiations.
I’ve recently been involved in two purchases where the buyer has walked away during negotiations and ultimately come back to that home. One which just closed, and one that is currently under contract and therefore I’m unable to go into the details just yet.
Shift from a Seller’s Market
Chicago has been a seller’s market for several years now, and this is the first year we are seeing that shift toward more of a buyer’s market. What that means is that we are seeing less multiple offer situations, longer market times for sellers, and more frequent price adjustments.
Sellers are no longer having complete control over the sale, having buyers bend to their whims. And buyers are being pickier since some sellers are more willing to negotiate than others in this shifting market. If you’re selling, you need to be open to working with the buyers that put in offers – the first offer is usually your best offer you’ll receive.
Portage Park Purchase
The recent sale I had that emphasized this point was in Portage Park. My buyer clients were looking for an investment property, for their sons to live in presently. We saw a handful the first day out and decided on one of those which was priced at $124,900.
The price was okay. It was clearly above market value since an identical condo had sold earlier this year, one street over, at $118,000. It had a slightly better kitchen. Another sold at $118,500 a few blocks away, same style albeit a bit smaller, but with central air. Both of these were clearly above the value in the home my buyers were considering.
Our offer was about $10,000 under these comps, perfectly reasonable. But the seller was adamant about getting $120,000 and would not accept less. We raised our offer, she persisted. The list agent agreed with me on value, somewhere in the mid-$110s. With other options out there and an obviously stubborn seller, we decided to let it go.
We continued our search, but the buyers kept considering this place. I was confident it was overpriced and they agreed with me. Additionally, buyers these days are fairly savvy, and I was confident no one else would come in and give the seller her $120,000. The place showed ok, it was vacant, and this is the end of summer when showings are scarcer.
Time Heals All Deals
A few weeks later we decided to try again. I spoke with the list agent who divulged they had no other bonafide offers in that time, and that another buyer had considered offering the same amount we did, but ultimately didn’t when she had let them know about the seller’s position.
The seller had softened a bit during this time as well. So we came back and said we would only go as high as $115,000 (cash deal, quick close). After some small details in the negotiations, the seller agreed to our terms and we were able to get the price we wanted.
Fredrik Eklund of Million Dollar Listing New York fame has a saying: Time heals all deals. And it’s very much true. Give a transaction enough time and it will come together. By walking away, confident in our assessment of value, we were able to save another $5,000. For a home that’s priced at $125,000, that’s a whole 4 percentage points! Plus, that was more than enough to cover the buyer’s closing costs.
In the end, the buyer got the home they wanted and I was happy that I assessed the situation well and had my buyer onboard with our plan of attack.
If you or someone you know is planning to buy or sell in 2020 (or 2019 still!), feel free to send them my contact info! I treat all clients equally, pushing to get the best deal possible.
Andrew Hasdal – 847.373.8114