Home Buyer's Dirty Tricks
Home buyer's dirty tricks? You have heard the expression, "buyer beware," implying that the seller is the only one who might do something unfair, but if you are that seller, beware of the buyer too.
The good news for sellers is that most home buyers don't know the following tricks. Even if they did, many would hesitate to use them. Some of them are unfair, but some are just good tough negotiating tactics - I'll let you decide which are which. In any case, these are "tricks" and techniques that you need to be aware of if you are selling your house or other property.
Home Buyer Scare Tactics
Scare tactics are sometimes used to get you to drop the price on a home. A buyer who has some knowledge in the building trades can be especially good at this. He looks up at the floor joists when in the basement, for example, and frowns. Maybe he even measures the distance between them and shakes his head. If you ask what's wrong, he casually mentions something like, "Well, the standards have changed, and these are spaced according to the old standards, but they might be okay."
He might also find the one rotten piece of wood and poke a pen into it to make it crumble. "It probably isn't carpenter ants," he announces, leaving you wondering just what it is, and whether it is serious. The whole point is to make you think you better get rid of this house before it falls down. Get ready for a low offer, or get a second opinion.
The low offer itself is often nothing more than a technique to get you to drop the price. The buyer doesn't have any real hope that you will accept his offer of $230,000 on your $270,000 home. The point is simply that when he later offers $250,000, it doesn't look so bad to you. You might accept this new offer, even if previously the lowest you would go was $258,000. The buyer has altered your expectations.
That may just be good negotiating, but there is another way this has been done. A different buyer makes that really low offer first. Now the idea that the property is worth less than you thought is more credible in your mind. When a second buyer comes along and offers that $249,000, you are convinced that you were aiming too high, and so you accept. What you may never learn is that the two were working together.
A "weasel clause" is simply a name used by some investors for a contingency in the offer that lets the buyer weasel his way out. This might be as simple as a line stating, "This offer is subject to approval by buyers wife within three days." Then the buyer has three days to change his mind, simply by parading his wife through the home and having her say no.
In reality, there will always be contingencies that let a buyer back out of a deal. For example, since most banks won't actually approve a loan until there is a specific offer, buyers need a financing contingency for safety. It might say, "This offer subject to buyer obtaining a mortgage loan at 8% interest or better within ten days." Since buyers aren't experts on houses, they also will commonly have an inspection contingency, and they can back out if the inspection shows anything they don't like.
There will be justifiable reasons for a home buyer to get out of the deal then, and clauses in the contract that provide for that. But these are also used in tricky ways, so what should you watch for? Start by saying no to any log deadlines. If an offer comes in and the buyer requests 30 days for getting inspections done (10 is more common), he is probably not concerned about the inspection. More likely, he doesn't know how he will get the money he needs, and he is trying to buy time.
Also, sometimes these contingencies are nothing more than a pretext for new negotiations. For example, a man sees that the windows all have peeling paint, and make the offer anyhow. Then, when the inspection comes in ten days later, and mentions the peeling paint and other minor problems, he asks for a reduction in the price. You have now invested perhaps two weeks into this buyer, and he can walk away thanks to the inspection clause (he gets the right to "approve" of the results or not).
Do you lower the price? That's up to you. But if you want to avoid this situation, clearly state every problem a home has in a disclosure document that the buyer sees and signs before he makes the offer. Whether this buyer's tactic is good negotiating or an unfair trick, you just want to avoid it.
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ABOUT THE AUTHOR
Copyright Steve Gillman. To learn more Home Buyer Tricks, and to get a free real estate investing course, visit: http://www.HousesUnderFiftyThousand.com/home-seller.html