Bob & Barbara Jones listed their home for sale. They were pleased to hear that traffic at their initial open house was brisk. The day afterwards, they received an offer on the home just a little less than their asking price. They accepted the offer and were looking forward to moving on to their next home. However, upon uncovering some issues at home inspection, the buyers asked for $2,500 off the price to deal with these.
The Jones’ initial reaction: We received an offer quickly right away. Why should we negotiate with these people?
Unfortunately, here’s what happened. Although the inspection items were valid issues, the Joneses balked at the $2,500. credit, assuming the buyers would cave or they could go back on the market & get a better offer.? The buyers walked. The home went back on the market. However, no other buyer came forward for the next three months. A few people expressed interest but were a little nervous that the initial deal had come apart during inspection. Although the listing agent assured other potential buyers that there were no major issues during the inspection, they were skeptical.
During this time, the Joneses moved out of state so Barbara could start her new job, so they were now paying the mortgage, real estate taxes, and insurance on an empty house, not to mention money to a house sitter and lawn care service.
By the time another buyer came along, the home had been on the market for quite awhile. Knowing that the homeowners already had one failed offer and were sitting on an empty house, the agent for the new buyers advised them to make a low offer. After some negotiation back and forth, the Joneses felt compelled to accept the second buyer’s offer.? The second home inspector found most of the same issues that the first one had, causing further price negotiation.
Here’s the rough math that resulted:
| Offer #1 | Offer #2 |
| $425,000 | $415,000 |
| -2,500 inspection items | -2,100 inspection items |
| -21,150 realtor commission | -20,645 realtor commission |
| -1,938 real estate stamps | -1,892 real estate stamps |
| -5,250 mortgage payments | |
| -420 homeowner’s insurance | |
| -925 property taxes | |
| $399,412 NET* | $383,768 NET* |
Instead of giving up $2,500 to buyer #1, the Joneses ended up with $15,000 less when they eventually sold their home to buyer #2.
Of course it’s only human nature to feel that another strong buyer will come along quickly if one has already stepped up, but sometimes that’s just not the case. Of course there are many instances where the homeowner should stand firm on their price, but sometimes it’s better to work with the buyer you have instead of hoping for a better one to come along.