In a buyers’ market, there is a lot more room for negotiation
Joanne Cleaver – Milwaukee Journal Sentinel
You should hear what people say behind Scott LeMarr’s back.
He’s a Muskego, Wis.-based home inspector who operates Honest Home Inspections LLC. House hunters call him in to examine a house they want to buy, and his job is to sniff out impending collapse of expensive necessities like the heating system, major appliances, the roof and so on.
While he’s inspecting away, the buyers often speculate about what they’d like to change about the house and how they might get the sellers to cave in to their demands.
“I look at structural and mechanical, but I hear them talking: ‘This carpet is the wrong color, maybe we can get them to put new carpet in,'” says LeMarr. “Women run around with a tape measure saying, ‘we can change this’ and men are concerned with the mechanicals.”
And more often than not these days, the buyers assume that they can force the sellers to swallow the cost of anything that LeMarr flags.
Real estate agents put on a polite face when they talk about the attitudes of today’s buyers. It’s a buyer’s market, they say, citing the backlog of houses on the market. But privately, agents say that some buyers are out of control.
Some buyers flagellate sellers at every step in the process with demands for improvements to suit their decorating preferences; for givebacks to cover closing costs, taxes, homeowners’ association fees, even down payments. They declare that if sellers don’t cave in, they’ll move on to the next house.
“Clearly, buyers are in the driver’s seat and so they’re able to get away with that sort of conduct,” says Milwaukee real estate attorney Richard Frederick. “Nowadays it’s almost expected to get an inspection report and use that as leverage to reduce the price.”
Attorneys, agents and inspectors say that buyers openly brag about their leverage during the inspection and financing phases, saying that if they don’t press buyers for concessions then, they’ll lose one of their best negotiating tools.
“They’ll make an offer low, generally 10 percent below asking, and then they’ll play the counteroffer game,” says Dave Schmidt, owner of Dave Schmidt Realty in Milwaukee. “Some look at the inspection process as a chance to renegotiate the deal.
“Things that would have slid, now they’re making the sellers go back and fix – a drippy faucet or a cracked window. Little things that in the past aren’t a big deal, now are a big deal. They want to move into a perfect house.”
New homeowner Cassandra Downey was a demanding buyer, and she has no apologies for it.
She and husband Jeffrey pursued homeownership for five years, much of that time spent topping off their down payment fund to keep up with rising home prices. The couple also strove to improve their credit scores.
In early 2007, they finally received a mortgage preapproval for a purchase price of $150,000 to $187,000 and started house-hunting in earnest.
“I knew it was going to be a headache because I’m very finicky. It was our first time, but I wanted to be sure it would be comfortable. I refused to get a home that needed gutter work,” says Downey, who works full-time as a teacher, is earning a master’s degree in the evening and helps care for her grandchildren. “I eliminated a lot of houses because they did not meet my standards. A lot of them had leaky faucets. One needed electrical work, the garage was falling over, the landscaping needed to be done.”
Thirty houses later, the couple made an offer, but the sellers refused to fix some minor electrical and plumbing problems, landscape and repair the gutters. That deal fell through.
Then, the Downeys found a $170,000 Milwaukee house in good condition with new appliances. The seller agreed to replace the main electrical box, and the Downeys conceded that repainting was their responsibility. Their offer of $167,000 was accepted and the deal closed.
“We’re asking quite a bit, and we’re getting it, too,” gloats Michael Nencka, with First Weber. He specializes as a buyer’s broker – an agent who contracts with buyers and represents only their interests in negotiations.
His laundry list of demands includes “gap insurance,” to cover the house while it is under contract, at a typical cost of $150; a one-year home warranty, which usually costs about $425; and the closing costs, which can reach $3,000, and translates to lower mortgage payments for the buyers.
“That’s $3,500 in concessions on top of the negotiated price,” rejoices Nencka. “In this market, sellers will do anything.”
