Home & Garden Columns

About the House: Realistic Negotiations: What You Really Really Want

By Matt Cantor
Thursday October 30, 2008 - 10:54:00 AM

A client called me this evening to talk about a house he was in contract to buy and we became engaged in a rather long, intricate and complex conversation involving all the things that he and his wife were now facing that had formerly been a foggy and insubstantial tissue of details beyond their attention. The house was exciting and new a week ago and no thought of the finer issues had intruded into their reverie of the Dream Home. The inspection was fun and exiting and we chatted happily for hours about all the things that might be done and some harsh realities about what should be done. A water heater from the 1930’s (yes, no joke) was long overdue for replacement and genuinely unsafe. Some foundation issues were demanding attention and the need for seismic work also loomed harshly.  

Then came the hard part: the money. An engineer had been retained and he further confused things with a range of fresh issues that seemed to orbit around our concerns without actually lighting upon any of them. One thing was horrifically clear, however: a price tag of twenty grand. Last but not least, a sewer camera video (the colon-oscopy of home inspection) showed a need for a $7,500 repair. To be sure, my client was feeling the bottoms of his pockets being unsewn and he hadn’t even reached the end of escrow. 

And this is where our story begins. The client says, “Well, the seller should be paying for the sewer, shouldn’t he?” 

The truth is that the connection between the things a buyer cares about and the financial incentive these items will have for the seller is a tenuous at best. Even the saintliest of sellers will rarely care much about the condition of a sewer on the home that they’re leaving. This is not to say that the seller is necessarily dishonest or conniving. That’s the less-frequent case, but the relationship between these disparate concerns (those of the seller vs the buyer) and a direct financial link to obligation is hard to discern (if not altogether impossible). 

In my career I’ve met a few sellers that I would describe as obsessive-compulsive who felt that they had to fix anything that was wrong with their house prior to transfer of ownership. But such as these are very few and far between and I pity the poor souls. If I sell a broken palm pilot on e-bay and I tell you it’s broken in the advert, I don’t feel a bit of remorse when I ship it off. It’s the buyer’s informed choice. I only hope that they offer me a lot of money for it. 

This is precisely the situation that the sellers of our house are in. They are selling a broken house. Everyone is selling a broken house. There are always things that could be fixed, upgraded, or modernized. There is always a more efficient heater or better bolting that can be done, but to do it just isn’t in the interest of the sellers. It is very much in their interest to honestly and fully disclose all that they know, plainly and simply so that they don’t get sued six months after the sale of the house. It’s also very much in their interest make sure that the house gets well inspected by all the relevant parties, whether that gets done by them or by the buyer they have chosen. Same reason: it will keep everyone happy in the end because they will buy with relatively accurate expectations. But this does not mean that the sellers have any reason to provide any particular improvement which has been pointed out as desirable or even vital to the buyer.  

The buyer says, “I’ve offered you $740,000 for your house and now I discover it needs a new water heater. Don’t you think that you should buy me one? You’re taking every penny I’ll ever earn in this deal!”  

To this, the seller retorts “Well, I’m really sorry that you need a water heater. This one has worked fine for me for years. I certainly wasn’t attempting to deceive you. I assure you that I have at least one other buyer waiting in the wings who will take the house for the same thing who will not want anything back or anything fixed. I really like you, your wife, your dog, your child and your realtor but this is my final offer.” 

The seller’s position is completely reasonable. I have no idea whether there actually is a back-up offer but it’s at least plausible. 

Now the buyer wants out. “That blasted sellers don’t care that the water heater might blow up or leak or stop heating my bathwater the day after I move in!” 

But why should they? It is reasonable to expect them to provide accurate information on the sale but not for them to bear the burden of any particular choices, no matter how objectively necessary, as a part of the sale. 

The buyers might do better to take the following approach. Figure out what the repairs which they deem essential will cost; look at their budget (including the cost of the home and projected expense), then determine if the house is affordable. Compare this with other “realistic” options, remembering that the grass always seems greener at the next open house-- especially before you’ve inspected it. Consider the likelihood that the seller will accept a lower offer and how you will feel when you’ve been back in the market shopping three months hence. Will you regret not having taken the offer on the table?  

This is not to say that one should not negotiate, but ideas of what is righteous and fair and the notion that the seller should adopt a caretaking position in your future may create false imperatives. These can override otherwise objective decisions and cool negotiations. It’s not about the seller: it’s about getting the house you want at a price you can live with. The subsequent choices of what to fix, how and when should rightly be the buyer’s alone.