For several years, first-time homebuyers have found market conditions in popular neighborhoods extremely frustrating. Not only have prices risen steadily, but affordable properties have been in very short supply, often resulting in multiple bidding wars and arrogant sellers.
Fortunately for buyers, the pace of price increases has slowed, and inventories are gradually rebuilding. Yet even now, wannabe homeowners can face indifferent sellers, cautions Eve Alexander, a longtime Florida real estate broker.
How can buyers avoid the needless aggravation of trying to deal with indifferent sellers? Alexander says there are several red flags that can help identify them from the outset. One is a listing containing multiple exclusions for items that would normally be included in a sale.
“I’ve seen sellers demanding to keep all their light fixtures, ceiling fans, window treatments, rosebushes and pool accessories. This greedy attitude tells me they could care less about negotiating a fair deal with buyers,” she says.
Why do some ambivalent buyers put their property on the market if they’re not serious about selling? Alexander says one explanation is that they own the property free and clear and have no financial urgency to let go. This includes retirees who have mixed feelings about moving.
“People who’ve lived in a house for many years and raised their kids there can have powerful emotional ties to the place,” she says.
Another category of ambivalent sellers includes people who are easily able to rent out their place to either short- or long-term tenants. They know they can still keep up a strong cash flow if they don’t receive an offer to their liking.
“These people might try a ridiculously high list price and then bail out if they don’t get all the money they’re seeking,” says Alexander, who’s affiliated with the National Association of Exclusive Buyer Agents (naeba.org).
Though a few owners lack serious motivation to sell, many others are eager, perhaps because they’re getting divorced, have gotten a job in a distant area or need to trade up because of a growing family. Here are a few pointers on finding truly motivated sellers:
-- Rule out properties offered by “market testers.”
How can you identify sellers who are merely testing the market and will never negotiate seriously with anyone who bids even a dollar under their lofty list price?
Eric Tyson, co-author of “Home Buying for Dummies,” recommends you ask your agent to find out if previous offers have come in on the property you want. If the owners have already rebuffed one or more decent offers without so much as a counterbid, this indicates they’ll probably resist reason with you, too.
The good news for buyers is that information on past offers is often readily available through the listing agent.
While there’s no harm in trying to reason with market testers, Tyson says you can waste a lot of time and energy trying to budge people who won’t even entertain a fair offer. Better to look for someone who’s eager to sell.
-- Seek all you can learn about the sellers’ equity position.
If you’re zeroing in on a particular property, Alexander says it’s wise to inform yourself on the sellers’ ownership stake before you bid. As she says, those with more equity have more potential room for compromise.
“What you’re looking for are insights into the mindset of the sellers,” Alexander says.
One source of clues on the owners’ equity position can be found by searching local government land records. At the minimum, these records (usually available online) should tell you when the current owners purchased the property and the original price they paid.
“If the sellers bought the house 25 years ago and haven’t refinanced, they should have a lot more equity than if they bought it at the height of the market and maybe still have an underwater mortgage,” Alexander says.
-- Request that your agent question the seller’s listing agent.
When owners have an urgent need to sell, it’s normally against their interest for that information to be broadcast to the world, because it could weaken their bargaining position. Even so, Alexander says many listing agents will readily disclose such client information in response to questions.
Another way prospective buyers can gauge the sellers’ level of motivation is to ask nearby neighbors. Alexander recommends that the buyers pick a Saturday to walk through the community, chatting with a few residents about the pros and cons of living there. In the course of the conversation, they’ll likely tell you the reasons why homes on their street are for sale.
“The neighbors usually know everything -- like why the owners of a house want to leave or have to do so. This info is golden when it comes time to shaping your offer,” Alexander says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)