Friday, February 23, 2007

Buyer's Market? Not always..

Most people will agree that today's market favors buyers over sellers. However, that assumes you have an average buyer negotiating with an average seller in an average neighborhood.  This stems from the basic laws of supply & demand; an average neighborhood may have five houses which are fairly similar, and the average buyer is flexible in choosing among them.  He might have a favorite one, but he's willing to look at his second and third choices if the price is right.  But not all buyers and sellers are average.

Some buyers are very particular.  For example, a buyer might be looking for a home in an average subdivision that meets some given criteria, but that also:  has a pool, has an oversized lot for the neighborhood, is not within one block of a major street, and does not have any two-story homes surrounding it.  This is no longer a flexible buyer; out of the 20 homes that meet this buyer's initial criteria, only one or two might meet all the criteria.  This becomes a case where any leverage the buyer has during negotiations comes from bluffing; if the seller calls his bluff he won't have an option but to agree with the seller's terms.  (or he can begin searching through another set of homes and waiting for more to come up for sale.)

A good realtor will still present this buyer's case from a position of strength - after all, the seller's don't know they're the only house our buyer likes.  But the buyer should also understand going in that he might not be able to push as hard as he would have liked.  Any time you push hard during negotiations, you need to be willing to walk away.  In most cases, buyers can simply make another offer on the neighbor's house down the street.  But in this case, that's not an option, so this buyer should consider a more friendly negotiating strategy.

Sellers, unfortunately, don't usually know whether the buyer is bluffing or not.  And in this market they'll usually give in to more demands than they otherwise would.  However, that rare seller who has the best home on the best lot with the best amenities at the best price is going to be much more confident when he says "go ahead & buy the less desireable house down the street."

 -Chris