Pictured property: 2300 Puia Rd. Hilo, HI 96720
Whether buying or selling in today’s busy market, there are a few “tricks and tips” you may want to consider.
A professional inspection is part of almost every residential sale. While we want buyers to inspect away, sellers should know that buyers sometimes make higher offers than they normally would have in hopes that they can renegotiate a lower price based on (sometimes subjective) deficiencies found in an inspection. While the same strategy is sometimes used with an appraisal, we have less control over the appraisal than the inspection. How so, you ask?
All inspections are not created equal, and while no house is perfect, each inspector will likely find something. But when it comes to major issues, inspectors normally find the same things. Addressing the major issues upfront and reminding the buyer that major repairs were already addressed should mitigate this. Remember, either buyer or seller can walk away when repairs (or price concessions) fail.
In today’s rising market (yes, it’s still rising), low appraisals still happen. Remember, appraisers look back in time while pricing these days normally takes future appreciation into account. Make sense? So, what’s a buyer to do?
Generally, in a rising market, sellers don’t need to renegotiate price. With aggressive pricing, a seller’s agent will likely recommend the seller consider a buyer with the highest down payment or best cash reserves. This makes it more likely that a buyer can restructure their purchase to cover any deficiency.
Making an Offer
Buyers looking to buy today should come in strong. Don’t make willy-nilly offers and hope the seller will counter. Well-priced properties are receiving multiple offers. Many are cash.
Buyers should use a local lender. Not only are off-island lenders often unaware of Big Island issues such as lava and catchment, chances are also they are an unknown quantity. I’ve been watching an ad on one of our local stations from a lender promising the world. Chances they can perform are slim. I don’t want to wait 45-60 days to find out. As a seller’s agent, I’m more inclined to trust local knowledge.
Next nugget for buyers is to put your best foot forward! Earnest money shows the seller you are serious. Even a zero-down loan product requires buyer-paid loan fees. Use those fees to bolster the earnest money. While I always recommend that sellers do a survey, waiving this along with a termite inspection (yes, they are negotiable) may help.
An escalation clause which states a buyer is willing to pay “up to” a certain amount over the highest offer sometimes helps. However, a cap on the price often triggers a counter at that stated price. A buyer benefiting from an escalation clause must often be prepared to pay over appraised value.
We were all new agents at one time, but experience does count. New agents tend to be timid and are sometimes defensive. Those agents working under the watchful eye of a mentor have great success as they learn to be firm with their buyers and cooperative with the seller’s agent.
So, there you have it. May all your negotiations be happy, healthy, and hugely successful!