S01E08 - Emotions and Economics: Mastering the Home Buying Negotiation Game

Transcript

Welcome to Moose Tales. I'm Jon with Two Moose Home Inspections, and I have some short home inspection topics I got on my mind and I want to talk it out. So, let's dive right in.

From time to time, we have people that are buying homes, asking us what our opinions are on negotiations. Sometimes they view the home inspection report as their golden ticket to get a better price on a home, and that these are the negotiations that the seller has to fix. And before we get into that, let's just pump our brakes for a minute and ask ourselves first this question is it a buyer's market or is it a seller's market?

And depending on your answer, your ability to negotiate may already just be right out the window and you have no ability to negotiate because what the seller will do is say, we'll just take the next person, please, that doesn't want us to spend all this money or make these repairs or do whatever it is that you're asking them to do.

They're going to go with something that has a lot less friction. So, is it a buyer's market or is it a seller's market? Let's just say hypothetically that it is a buyer's market, and you want to negotiate. Well, first off, that's what your realtors are for, not your home inspector. And it's really important to understand that the inspection report is not an itemized list that you're going to hand to the person selling the house, and you're going to say fix every single one of these things.

That is not what a home inspection report is used for, because if you do, the seller is going to look at you and say you're a difficult person to work with and I no longer want to work with you. So, what it actually is, is a list, an itemized list of things that should be or could be repaired in the House that you in the future are going to be repairing or choosing not to repair.

It is something that you are using to determine. Is this something that I want to take on? Is this something that I want to tackle? It is not something that you're saying. Seller You're going to repair this before I take possession of the home. If you're uncomfortable with making these fixes, do these repairs on your own, you know, on your own dime, on your own time, or with your own skills, well, then that house might be a challenge for you to manage.

And then, yes, of course, negotiation will help to have the seller take care of things you're unwilling to do on your own. But you have to understand that every home has issues and so therefore you, as the person buying the home, are becoming a homeowner and a homeowner has to repair roofs. A homeowner has to fix foundation issues.

A homeowner has to do all these things. And whenever I say has to, I don't mean has to. I mean should. But you'll see that there are homes that have been neglected and people are putting off making these maintenance items, you know, fix or fixing these maintenance items. And therefore, we have homes that are just completely neglected and damaged and have issues and that's fine.

But if we're talking about negotiations,

let's talk about how do you plan to negotiate. Are you going to negotiate via text, via email over the phone? Are you going to do it in person? Because that kind of makes a big difference.

If you're in person, they can decide, Ooh, I like you as a person, and therefore I'm willing to move a little bit more for you or do more for you. You're a real person. You're somebody that you know, I can see myself in you and therefore I'm going to help you out. However, are you just asking and taking, taking, taking or are you giving something in return?

And I don't exactly know all the ins and outs of the things that you could be giving as the person buying. But it's really important to work with your realtor because if all you're doing is taking, taking, taking, eventually they're going to say, you know what, I don't want to make this next repair. I don't want to do this next thing that you want me to do.

And so, you have to figure out what is it that is incentivizing the seller. A lot of times we have issues where somebody will want to discredit the home inspector. And why is that? Because the home inspector is going to find something now that it has been found, especially for certain material defects, they are going to now have to disclose that to the next buyer.

And so sometimes they feel like home inspector, you just made it harder for me to sell my house and therefore I'm going to discredit you. I'm going to come after you. I'm going to do whatever it may be because you found this foundation issue that I either did or did not know about. But now they have to repair it.

And whenever we think about a person selling their house, there's always this like this idealized version of, you know, they're in their golden years and they're downsizing and financially they're perfectly set and they're moving to Florida and they're going to do all these amazing things and they're happy and their family comes and visits them on Christmas and yada, yada, yada.

That is not the way that things are. Sometimes there's been a death in the family. Sometimes somebody has been taken advantage of through fraud or theft or some kind of scam or coercion or whatever it may be. And these people are so dependent upon the money that they get from the sale that the loss of any money just is unfathomable because they may not be able to put food on their plate.

They are selling the house not because they want to. They're selling the house because they have to. And so sometimes whenever you come to them and you say, here's a list of everything the home inspector wants you to take care of, these people are not in position for that. And that is what your realtor is for. So please, again, have these talks with your realtor.

one thing is you have to be flexible with them. For them to be flexible with you, you have to build trust with them, for them to build trust with you. And that's something that your realtor is going to know the most about.

and your realtor knows these are the deals that have been accepted. This is the price; these are the terms. This is the trust that they had to develop in order to do those things. And therefore, I think that there's a good likelihood that in this market that is ever changing, that we could be able to do these certain things.

And that's why you have a conversation with a realtor. But at the end of the day, if you're not willing to walk away from a house, are you actually negotiating or are you begging? And I don't mean that in a negative way. I'm not being like, well, you're just a bunch of beggars. No, no, no. That's not what I'm saying.

What I'm saying is, is that if you know that you are going to continue with this house come hell or high water, where you say, I love the location, I love the property, I don't care about the house. Heck, bulldoze the house. We'll build the one that we actually want to have. But I need this location. I need this property.

I need this land. Well, are you actually negotiating? Because you know that you're not going to walk away from the deal. They don't know that. So, you're kind of bluffing, you know, and hopefully, like, they don't call you on it. But if you're going to negotiate, if you're truly negotiating, then you have to be willing to walk away from that deal.

And a lot of people get emotionally invested in the house. They're purchasing and therefore are unable to do that. Now, again, as a home inspector, this is nowhere near my lane or my expertise or anything like that. I am specifically stating get with your realtor because again, is it a buyer or seller market? I don't know. They know.

Is it trending one way or another? I don't know. What are the cops in your area? I don't know. What does the seller want? I don't know. There's so many things that I, as a home inspector, don't know. The only thing I can tell you is here's my report. Are you, as an individual, comfortable taking care of these issues yourself if, let's say, all the negotiations fall through and if you are, you should proceed forward with your realtor to negotiate and do whatever.

And if you aren't? Well, the nice thing is, is that you have subject to a lot of times in your agreements. And that could say based off of the findings of the home inspection report, we want to back out of this contract.

and you and your realtor can put in language that protects you as the buyer that you know, what if after I see what could be potentially wrong with this house, I don't feel comfortable with it and I'm ready to move to the next, That's a possibility.

But the reality is, a lot of times people fall in love with a home and their ability to negotiate is hampered.

Now, if you were an individual that was buying properties as an investment for an investment portfolio or whatever it may be, and you want all these like multifamily dwellings and yada yada yada, then yeah, it's not going to be emotional at all.

It's going to be, what does my spreadsheet say? Am I making money at the purchase? And if I'm not that I'm walking away, Yeah, those people, those people negotiate, and they negotiate hard. They might get one out of every hundred that they end up, you know, putting an offer on.

but that's a different game than what most people are doing whenever they buy a residential home.

So, at the end of the day, use your realtor. They have amazing resources, and they have amazing experience to be able to tell you, I think we can push in this way and let's make it happen because I want to get you the best deal that I can. And that's a Pod.