Last year, a Piedmont, Calif., home seller agreed to sell his home to a buyer for what he thought was a reasonable price. In fact, the price he accepted was lower than he felt was fair market value for the home.
The seller agreed to the price because the buyer had carefully reviewed the seller’s disclosures and reports on the property. The buyer’s agent insisted that the price was “as-is” with regard to the defects that had already been disclosed in the seller’s documentation on the property.
However, when the buyer removed his inspection contingency, he requested a drastic price concession based on the findings of his inspectors. Not only did he ask for money off the price to compensate for defects that had previously been unknown, he also wanted a concession for the items that he had already agreed to accept as is.
The seller responded with an emphatic no. It wasn’t just that he felt the new price was ludicrous. More importantly, he thought that the buyer had negotiated in bad faith. The seller happily put his house back on the market and sold it for a much higher price to another buyer within a couple of weeks after the first deal fell apart.
HOME SELLER TIP: Some times the best way to deal with an unreasonable buyer is to simply say no. This is often easier to do at the offer stage than after you are already in contract with the buyer.
Recently, buyers tried to renegotiate the purchase price after inspections revealed that the property needed more work than they’d originally anticipated. The sellers again had accepted a price that was considerably lower than they had been anticipating. They were reluctant to negotiate further.
The buyers did not remove their inspection contingency on time. They wouldn’t budge from their position; they wanted a significant price concession in exchange for removing the inspection contingency. The negotiation was at a stalemate.
Finally, the sellers made use of a provision in their purchase contract that was designed for situations where either the buyers or sellers don’t meet their contractual obligations, like removing a contingency on time.
They issued a 24-hour notice to the buyers to remove their inspection contingency; otherwise the sellers would cancel the contract. At just this time, another buyer appeared on the scene, ready to make an offer. The first buyers removed their inspection contingency within the 24 hours and went through with the sale.
Sometimes it’s not easy to determine which party to the contract is behaving unreasonably. Sellers typically put more value on their home than others might. With a changing market, the gap between seller’s expectations and what buyers will be willing to pay could widen.
So, before giving a buyer an ultimatum, carefully consider the pros and cons of the transaction. Is the buyer financially able and willing to close the sale in a time frame that works with your schedule? Can you easily replace this buyer with another one? Or will you need to play the waiting game? If so, and the market softens for your home, you could be stuck selling for less at a later date.
There is a lot of emotion involved in selling a home. Even though you might not approve of a buyer’s tactic, don’t let this interfere with closing a sale that ultimately works to your advantage.
On the other hand, there are insincere buyers who would be better off buying someone else’s house, not yours. If buyers start missing one deadline after another, this could be a sign that the transaction might not make it to closing.
THE CLOSING: Don’t waste precious time holding out hope for a buyer that may never perform.
Dian Hymer is author of, “House Hunting, The Take-Along Workbook for Home Buyers,” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.