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Saturday, December 18, 2010

Is the Buyer's Budget Negotiating Leverage?

Buyers Whose Eyes are Bigger Than Their Wallets

What is the Buyer counterpart to Sellers who "need" a certain price to consider selling?

Buyers whose final (first?) offer is 100% of their budget, and therefore can't go any higher.

So, the Buyer's agent will typically couch the offer in terms of, "I know this is a mediocre (or worse) offer for this house, but that's all my client can afford."

Assuming that that's true, do Sellers find that explanation compelling?

Budget Constraints

Put it this way: imagine going to a restaurant, and telling the waiter you'd like to order the $50 filet mignon, but you've only got $30.

While sympathetic, the waiter is likely to suggest ordering a cheaper cut -- or maybe trying another restaurant altogether.

Which is mostly how Sellers react.

There's nothing wrong with having a $300,000 -- or $150,000, or $800,000 -- housing budget.

After all, practically everyone is subject to budget constraints, whatever they may be.

But then, the appropriate course of action is to look for a home whose fair market value, ballpark, is . . . $300,000 or $150,000 or $800,000.

1 comment:

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