Understanding the importance of negotiations
[SPONSORED]
The personal stories of one Realtor’s battles and triumphs in the highly-competitive Bay Area Real Estate Market, seeking to illuminate and humanize the very real ups-and-downs of homeownership.
There are few sports I enjoy watching more than tennis. Having grown up on hard courts in Sacramento, I’ve followed the game religiously for years, and I try never to miss the BIG FOUR: the Australian, French, Wimbledon, and US Open. Even as a young mother, I found time to play fairly regularly on a ladies’ team in SF and I LOVED it. (Although I am still a mother, sadly, I’m no longer young.) Currently, the French Open is underway, and with the inevitable changing of the guards (aging and injuries happen even to the best), there’s been a slew of talented young players to watch this year – especially on the men’s side. The matches have been nothing short of spectacular with this new generation of players.
Nowadays, the only volleying I do is when Sarah and I negotiate contracts – both on the listing and the selling side – and frankly, none of it is easy. Successful negotiation often means pushing others beyond their comfort zone while at the same time, trying to find an acceptable compromise. Under such conditions, perceptions can become highly charged (please remember, it isn’t personal). Is it possible to achieve a “solution” among the emotional back and forth? Absolutely. Can we achieve resolution? For sure – especially if all parties work with good intentions and goodwill. (Intentions are key.)
But let’s start at the beginning . . .
When an offer is received on a property, the Seller has three choices:
- Accept
- Reject
- Counter
Likewise, when the Buyer receives a counteroffer, they too, have the same three choices:
- Accept
- Reject
- Counter
However, the Buyer has one more choice that’s worth mentioning which is to walk away . . . Thus, if we can work with the offer(s) in hand, it’s to a Seller’s distinct advantage. The truth is that the longer a property stays on the market, the more likely it is to chase the market DOWN, and that’s a tough position to be in.
Please note: Counteroffers render the offer in hand essentially NULL AND VOID! Consequently, if you decide you’d like to circle back and take the previously rejected offer, it’s entirely up to the Buyers to decide IF they’d still like to move forward, assuming they haven’t moved on . . . . (and they often have. There’s an emotional moment in a deal that wanes quickly and let’s be clear, Buyers have short attention spans.)
Let’s not forget that countering was easier when several Buyers vied for the property and Sellers held all the cards. That’s no longer the case. Now that we’re presented with just one or two offers (if that), Sellers have far less leverage than they previously had when interest rates hovered around 3% and insurance was far easier (and cheaper) to obtain. Those two changes alone have created a perceptible shift in the marketplace, and to no one’s surprise, Sellers are none too happy at finding themselves in a world where Buyers are now setting more realistic values on the properties they are considering. (Take heed, demand is in decline.)
And no wonder, given that it was far easier to carry the PITI (principal, interest, taxes and insurance) at a higher selling price with a much lower interest rate, than it is to carry the cost at a lower selling price but at more than DOUBLE the interest rate! In other words, softening values ARE the natural consequence of higher costs to buy. (Not for nuthin’ but this is what the Feds have been actively engineering for the past few years.) Buyers can only be pushed so far before they are broken. At which point, they’ll walk away or choose to wait it out. (Many of our previous Buyers have elected to rent instead.)
So while Sellers may not like this new game, until interest rates come down and insurance carriers return to the state, this is the market doing what markets do – adjusting and responding accordingly. If you’re not up for these new market realities, we suggest you hang on to your property and wait for rates to come down. But if you DO plan to sell in the next few years, get ready to trade shots and pound it out from the baseline. Selling is going be a strategic battle for the foreseeable future, and there are going to be very few free points to be had.
Game, set, match!
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Julie Gardner & Sarah Abel | Compass Realty
Not just Realtors, but consultants in all things house and home, we’re here to educate, explore, examine and refer . . . In short, you may count on us to take care of your home as if it were our own and anyone who knows us, knows we take pretty darn good care of our homes.
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