How Homebuyers Spoil their own Negotiations
How Homebuyers Spoil their Own Negotiations
Home Buying negotiations are inevitable and super important when looking to purchase Tampa Real Estate…or any real estate.
It starts from the moment the buyer sees a property, relays their interest, decides what terms they need for the offer, what inspections are necessary and ends with a satisfactory closing…that is the only time that negotiations really do end.
Believe it or not, home buyers can shape their own negotiation experience and outcome. When buyers take the time to prepare themself to purchase a home, they are likely to come out ahead, instead of being left in the dust when it is “showtime”.
As a home buyer you do not want to kill your negotiation power or blow any home buying leverage you may have, so listen close…
Tips for what a Home Buyer should not do
Don’t be Underqualified or Overqualified with your Pre-Qualification letter or Proof of Funds.
You don’t want to appear barely qualified or too rich… Every seller wants to know that a home buyer is actually qualified to close on their property. However a home buyer does not need to show they are overqualified. For example, if the property is listed for $500,000, you do not need to have a Pre-Qualification (PQ) for double the amount or Proof of Funds (POF) that show you have $2 Million in the bank...
Showing that you have too much money may make the seller ask for more on a counter offer or refuse to fix anything. Appearing overqualified may also affect negotiations after an offer is accepted.
For example if during the transaction you request a credit for repairs or a price reduction due to a short appraisal, the seller may think you can afford to pay out of pocket, because you verified that you have lots of extra money. It’s best to show your financial qualifications as solid for the purchase price, but not a bunch more.
Your loan Pre-Qualification letter (which comes from your lender), should be as detailed as possible, showing that your financial information has been verified for accuracy which will give the seller and sellers agent confidence in your ability to actually close in a timely manner. Don’t forget that the information verified must be the same as the name on the contract.
Don’t Profess your Love for the Property to the Sellers Representative
No kidding…many times home buyers get too excited and spill the beans to the seller or builders agent that this is their dream home.They tell everyone how much they “love, love, love” the house and how badly they want it. Occasionally they will go as far as to tell the seller's rep that they are willing to pay full price or more…
PLEASE NO! Don’t do that. You are not helping yourself.
Then after the home buyer spills the beans, they privately tell their Tampa Buyer Agent, to get them a “good deal”. Really? It does not work that way because the buyer has already talked too much and raised the cost.
Anytime the other side knows that this is the only property you are considering or how much you love it, it's highly unlikely that they will give you the sweet deal they are looking for.
Don’t Criticize the Property in front of Sellers or Seller's Agent…even if it is a dump.
True story. My buyer and I visited a property before other showings were allowed, as we were first in the door. After losing out to 4 other offers, our buyers thought they had a good shot at getting this one because they were the first ones in to see the property and we submitted the offer quickly.
The buyer did not get the bid. The seller elected to take a different offer because our buyer criticized the water heater in front of the seller's agent and she told the seller. This turned off the seller because they thought the buyers would make repair requests, if they accepted their offer and let's face it most sellers also think there is nothing wrong with their property.
The time to truly size up a property is during a home inspection and not before your offer is accepted and never in front of the seller's agent or seller...
This goes along with listening devices, such as a Ring Doorbell. Yes, the seller can see and hear what you have to say. In Florida, it is recommended that surveillance devices be disclosed, but most are not, so you cannot count on that. Home Buyers should refrain from any comments until they are in a private location away from the home, so the seller does not misjudge them before an offer is submitted.
Don’t Confess your thoughts to the Wrong Person
A home buyer needs to “read the room” to determine who are the players on their side. The “white hats” are only the people you handpicked, such as your Tampa Buyers Agent, your attorney, your home inspector, your title company or your lender. That's it, no more.
Home buyers that have a true buyer agent advocate working for them, will always make better decisions. Other home buyers will be all alone, wondering what to do because they really don’t know what the smarter decision is.The State of Florida has no mandatory agency disclosures, so an agent does not have to tell you who they really work for.
So unless you're working with an Exclusive Buyer Brokerage office (like ours) never assume that any real estate agent is your buddy.
In fact, in order to be represented you must have a written agreement that spells out the broker's duty to you. We always have a written agreement, so feel free to ask us for a copy.
Another true story: The buyer uses the builder’s lender and learns that the appraisal is short by $25,000. Instead of discussing the short appraisal, with their buyer agent, the buyers confesses to the builder’s lender that despite the short appraisal, they still thought the property was worth the purchase price.
I was unaware that the buyers stated this to the builder's lender, so I attempted to negotiate a reduced price with the Sales Manager. I knew I had some leverage because the builder raised the price 13 times in one year!
What I did not know was that the builder's lender ended up telling the builder Sales Manager what the buyer said. At that point, I had no leverage to get the price reduced as it was too late…the buyer talked to the wrong person and said the wrong thing.
The lesson here is that the home buyer needs to discuss contractual items first and only with their Tampa Buyer Agent or attorney. No one else is the buyer's friend because everyone else works for the seller.
Don’t attempt to Negotiate behind your Tampa Buyer Agents Back
Another story: How the buyers killed their own deal on a new construction purchase. I was working with the sales agent to secure a discount on 2 homes;one for the buyer and another for his friend. The buyer mistakenly thought he knew better, so he negotiated a tiny discount with the builders rep that amounted to miniscule “peanuts”. Had he discussed it with me before he tried to do it on his own he would have learned that I had a better plan and I could have negotiated a much better settlement. Not only was my strategy to bargain for 2 home purchases, not just one… I am also a professional negotiator.
Another buyer made the huge mistake of first putting down a deposit with the seller on a vacant lot.
Then he called me to negotiate the price… Buyers don’t know what they don’t know…you negotiate first, and only if you get what you want, do you give money.
This buyer killed his own negotiating power by paying money first and then expecting the seller to now negotiate a discount…that is not how it works. If the seller knows you are already “all in” to buy his property, because you already plunked down your money, there will be no concessions in your favor.
Don’t attempt a side agreement with the seller, let your Tampa Buyers Agent do it correctly
During inspections, I had a buyer ask the seller about things staying in the home even though those items were already in the contract. These were things that the seller did not have the option to take.. Luckily, nothing was taken that had been agreed upon in the contract, but it was not over.
Buyer also professed her love for the property directly to the seller, so it was almost impossible to negotiate a repair credit. In addition, the seller failed to do the repairs he verbally promised the buyer. I had no idea there was a side deal and guess what? What the seller told the buyer he would do, he didn’t do. No surprise, right?
Loose lips do not belong in a real estate transaction…
Don’t Go Off Script; talk to your Buyers Agent.
Want to save money? Put on your Poker Face and let your Tampa Buyers Agent do the talking.
Sure you can ask questions about the home, but leave the terms and negotiations to your Tampa Buyers Agent. Do not reveal too much information because a seller may view you as loaded with money, or under qualified, or too accommodating, all which can kill future negotiations or even a chance at buying the property...
Use your Tampa Buyers Agent as your guide. We are experienced and always on your side as we do not play on both sides of the fence.
Buyers Broker of Florida is the most experienced Buyer Brokerage Office in Florida with over 30+ years of looking out for the homebuyers best interest. We have been involved with every complex situation and heard every excuse which has given us extraordinary experience in understanding how and what to negotiate when our client is buying a Tampa home.
Tampa Buyers Agents are experienced at navigating problems and this is why you have them, so be careful not to go off script and talk too much.
Like our office Broker always says:
“The less the seller knows about you the easier it is for us to negotiate for you.”
Buyers Broker of Florida 727-202-9130.