The Home Sale that Never Happened–What’s the Mindset of Home Buyers and Sellers?

The Home Sale that Never Happened–What’s the Mindset of Home Buyers and Sellers?

I have a beautiful home listed in a popular Ballantyne neighborhood. The home is in exceptional condition and only a couple of years old. After about three weeks on the market with good showings, we received an offer to purchase from a buyer. SALE!!!

Well, not exactly. The offer was about 15 per cent less than the list price of the home. The seller was willing to negotiate, but in the end, we were unable to bridge the price differences. If you want to negotiate, it helps to know the answer to this question: “what is the mindset of buyers and sellers?”

The news media, talking heads and others have portrayed the market as a huge buyers market in which the sellers are willing to GIVE you their property if you will just make them an offer. It’s here that the disconnect between buyers and sellers occurs. Most sellers have gotten the message that their home is not worth as much today as it was previously. And most have priced their property to reflect the decline in order to be competitive with other homes on the market.

Knowing the four current types of buyer will help you understand how aggressive you can be in negotiations.

Right now, there are four “types” of selling scenario.

1.  The  Foreclosure – These are properties owned by a bank. Typically, these homes are priced at a discount to the local market. There are potential pitfalls in these type of homes because you are purchasing them “as is” with no repairs being made by the bank. Don’t just think “paint and carpet.” Some of these homes have been stripped of appliances, fixtures, heating units, etc. The previous owners may have been disgruntled when they were foreclosed on and decided to take pieces of the house with them. From a negotiating standpoint, the banks know they are priced very aggressively but most are still willing to make a deal to get the property off their books.

2.  The Pre-Foreclosure—these people have the bank knocking on the door. Desperation has set in. But the seller still needs an offer that will let them pay off the mortgage. Some owners had bad luck; others made their bad luck with poor financial decisions. In order to get a good deal on a pre-foreclosure, you have to find someone who has a lot of cash in the bank who can sell the house at market value and then bring the difference of what is owed to the closing table.

3.  The Corporate Relocation. There are two types of corporate relocation seller. The first is a seller who remains in the house and is trying to sell it while also taking on new job responsibilities in another city. This type of seller still has their money tied up in the house and is going to be a little more sensitive about selling their house at a discount. The second type is where the corporation has moved the employee to the new city and the company has purchased the house.  You can get a great deal on this type of house. The company does not want the liability of owning a home and is motivated get their cash out of the property.

4.  The In-Town Relocation. These are people who are looking to sell their home in one Charlotte neighborhood in order to move to another neighborhood. They aren’t as motivated as the other sellers and will be patient. They don’t necessarily HAVE to move. They just WANT to move. Don’t expect a huge discount off the list price.

So…back to the original property.  The potential buyer was looking for a steal of a deal. Unfortunately, they came to the wrong place. The property was owned by an individual who had priced his property aggressively but is not desperate. The seller wants the children to finish the school year in Charlotte. The house had only been on the market a short period plus there were numerous showings.

The agent representing the buyers should have educated the buyers about the different types of sellers and how this affects negotiations. It’s clear this was not a foreclosure or a corporate-owned property. At minimum, the agent should have done a market analysis to show the buyer that the property was a good deal at the list price and definitely a good deal at the price the seller was willing to negotiate to in order to move the property.

It makes a big difference when you know the motivation and background of the seller.

For my listings and other information, visit my website here.

Call me at 704-543-5892 or email David at david.huss@allentate.com.