Try Not to Care (Too Much)
The side that cares the most about the deal or the potential deal, loses. If you are a buyer, be willing to walk. If you are a seller, be willing to lose the buyer. If you find yourself in a situation where you do care the most, for whatever reason, remain calm. And try not to communicate this to the other side.
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As a broker and someone who grew up in the real estate business, I confess, I have a bit of a cavalier attitude: There is always another house. But if you can come to accept this gentle admonition, it will serve you well.
So don’t fall in love with any particular house such that you might agree to something unreasonable or not in your best interest. And I do think this is mostly a question of attitude. Does the perfect house exist? And have you found it? We see this far too often. And when we do, more often than not, it is simply not true.
Rather, have a broader attitude: Any number of houses will probably work for us. This attitude gives you so much more leeway when it comes to negotiating. It gives you the freedom to walk away from any deal. That is real value.
Now sellers don’t fall in love with buyers the way buyers fall in love with houses. Where we see this on the sell side is when a house is not moving and the seller says: Whatever we do, we don’t want to lose this buyer. And that is understandable. But I would just caution sellers to not accommodate a buyer more than would be necessary to attract other buyers.
A simple example: You have a house that is not selling. And finally, you get a buyer asking for a $50,000 price reduction. But a $25,000 price reduction would more than meet the indicated value of all of the comps. Or some similar situation. You see what I mean.
Regardless of which side you are on, this factor can be hidden. And your broker may not have an incentive to bring it to your attention. A buyer gets into a bidding war and wants to overpay for his perfect house? That’s fine with his broker. A seller is fed up with his house not selling and wants to take $25,000 less than he should? Again, fine with his broker. The buyer may not discover his error until he sells. The seller may never know.
Now, does it happen that a buyer finds, or thinks he has found, the perfect house? And he just has to have it. Of course. Let’s be honest, this can happen to any of us. In this case, I think it is more important than ever to have a broker who will be honest with you. The broker should say: Look I understand the situation, but you must as well. If you want to proceed, we are both going to do this with our eyes open. Again, find an honest and objective broker.
So if you are a buyer who has found the perfect house or a seller with one and only one buyer, stop and reassess. And if you choose to proceed, do your best to not communicate this to the other side. That’s really all you can do.
Finally, sometimes it is not about price. Maybe there is something unique about the property or the location that really just works for the buyer. But might be off-putting to most people. We see that. Or, and this is more frequent, a buyer is totally indifferent to some unattractive feature of the property. A common example here is: A small back yard. A particular buyer with no children may not care, but if it is a four-bedroom single-family house, most buyers will care a great deal.
In these cases, I like to remind the buyer, that one day, sooner or later, he will be the seller. Everybody sells. And if you don’t sell, odds are your children will. So one day you will have to contend with that unattractive feature as a seller.
And I then ask: So, do you still want to buy it?
I tell buyers that overpaying for real estate is not a moral dilemma. It is perfectly okay to do so, so long as you know it in advance. It is not the broker’s job to talk you out of buying it. Or, to stop you from overpaying. Or, taking less than you should as a seller. But it certainly is the broker’s job to make sure you do so with your eyes open.