Richard Harty, a single man of 57, lives in a 3,600-square-foot midcentury modern house on a half-acre in a coveted close-in Chicago suburb. The four-bedroom place has vastly more space than he needs. Yet he’s torn about selling.
As a real estate broker himself, Harty is convinced his house would sell “overnight” for at least twice what he paid for it in 2001.
Even so, he’s reluctant to let the place go. That’s because his current mortgage rate is locked in at 2.65%, which keeps his monthly payments affordable. Given the steep rise in rates recently, any different property he bought would inevitably come with a more costly home loan.
Harty is not alone in his ambivalence about whether to sell or hold. Many owners are struggling with the same issues. This can be a problem for buyers in the current market when they encounter equivocal owners.
“Especially in markets that are still strong this spring, some owners may simply be testing the market to see how high they could go. They overprice and don’t want to negotiate,” says Harty, who heads an independent realty firm with his brother.
How can buyers avoid the needless aggravation of trying to deal with indifferent sellers? Eve Alexander, a longtime Florida real estate broker, says they should look out for red flags that can help identify these sellers from the outset.
“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 owners 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. It’s extremely hard for them to turn it over to strangers. In fact, they might even unconsciously resent people who put in a bid,” 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:
-- Strike from your list properties offered by “market testers.”
Eric Tyson, co-author of “Home Buying for Dummies,” says that even in neighborhoods with a number of properties up for sale, there are still sellers who won’t budge from an unrealistically high price.
“Believe it or not, you can still find unmotivated sellers out there,” he says.
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?
Tyson 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.
-- Attempt to 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.
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.
-- Ask your agent to question the owners’ 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, which could weaken their bargaining position. Even so, Alexander says many listing agents will readily disclose such client information in response to questions.
“You’d be amazed how much listing agents will divulge to a buyer’s agent. For example, they might blab about how the seller must move due to divorce or a job transfer,” she says.
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.
“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 ellenjamesmartin@gmail.com.)