Dealing with buyers who 'nibble'

Flickr photo by *jude*.

Whether you are buying or selling a home, there are some shrewd negotiators out there who want to extract every last possible dime from your pocketbook. One of their most common strategies is "the nibble."

You completed all negotiations, the buyer has removed all the contingencies, and you're set to close in just three days. Every detail concerning the move has been handled. Much to your surprise, you receive a call from your agent telling you the buyers thought the washer, dryer and refrigerator were included in the deal.

They're refusing to close the deal unless you either leave them the appliances or give them a credit for $1,000 to replace the items. While this could be a legitimate misunderstanding, chances are that you have just experienced what is known as "the nibble." A "nibble" is a negotiation ploy where the nibbler attempts to get "just a little bit more" out of the deal.

I once had an REO (bank-owned) listing on the Wilshire Corridor in Los Angeles. The property was in great condition and had new carpets and drapes. We had priced the property to sell. We received two offers and the bank took the highest offer, which was an "all cash" offer.

The buyers were from another country, where bartering is a core cultural value. For my bank clients, the signed contract represented what they expected to receive when the transaction closed. For the buyers, the contract was just the beginning point of the negotiation.

The listing agreement was clear: The buyers were purchasing the property in "as-is" condition. The bank was exempt from the disclosure requirements, although as an agent I still had to provide the buyers with a disclosure statement. I completed my disclosure and included it as part of the offer negotiation. The buyers signed off on the offer.

In normal practice, once the buyer approved the bank's counteroffer including the disclosure items, those items were no longer subject to negotiation.

In most cases, when a buyer purchases an REO there is no physical inspection contingency. This means that the buyer must inspect the property prior to making an offer. It also means that the buyer does not have a legitimate way to back out of the transaction based on the property condition unless that condition changed between the time the property was placed under contract and the time it closed.

Although it was unusual, the bank agreed to the physical inspection contingency since the offer was all cash.

Our contract called for all appliances to be in "normal working order." The appliances all worked properly. The buyers were unhappy that the appliances were seven years old. They asked the bank to replace all of the appliances. The bank refused, but did agree to purchase a home warranty to move the deal forward. This was the first "nibble" in the deal -- getting the bank to pay for the home warranty. ...CONTINUED

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