Often buyers and sellers come very close but something prevents them from signing the deal. They may make numerous offers and counter offers and still they may not able to agree on a price. The buyer may want the seller to reduce the price by a few thousand dollars. Sometimes there is another issue that neither party can solve. So what should an agent do if an impasse occurs? Well, now is the time to put on your creative cap.
There are some creative ways to close a stalled deal:
The seller should consider paying the buyer’s HOA dues
When a buyer purchases a home or a condo, they will have to pay monthly HOA dues. These additional costs may put off cash strapped buyers because they have to make monthly mortgage payments as well. If the buyer feels that they cannot afford to pay the HOA dues besides the monthly EMI on a mortgage, they will probably want to back out. In such cases, reducing the home’s price probably won’t help. Instead, the seller should consider paying the buyer’s HOA dues for a year. Of course, after 12 months the buyer will have to pay the dues on their own; however, by that time their financial situation may have improved.
The seller should consider paying the property taxes
The property taxes are due in April. Federal and state income taxes are also due in the same month. This puts an extra burden on the buyer. In this case, the seller should consider pre-paying the property tax. This eases the tax burden on the buyer.
The buyer can rent-back the house to the seller for a specified period
Both the buyer and seller may be eager to go forward with the purchase. But what if the seller wants to live in the home for a little longer? Well, in that case, instead of opting for a 3-month escrow, the buyer can allow the seller to reside in the house after closing escrow for a few weeks or months. The seller, in return, should pay the buyer a specified amount for “rent.”
If the seller only wants to stay for a couple of weeks, the buyer can perhaps offer a ‘free’ rent-back. You are unlikely to move immediately after you close. If you live in a rented home and the closing date is in the middle of the month, you may have already paid your rent for the whole month. In this case, you won’t incur any additional charges by allowing the seller to reside in the house until the end of the month. Since you have already paid the month’s rent, you can continue to live in your rented apartment until the seller vacates the house.
The seller can buy down the buyer’s interest rate
The lender may have given the buyer a ballpark figure for the house s/he wants to purchase, for example, a 3.5% rate for a thirty-year-fixed loan. If the buyer feels that s/he cannot afford to pay the EMI at that rate of interest, s/he will definitely want to reduce it somehow.
Sometimes, by paying the cost of 1% of the total loan, the buyer may get a lower fixed interest rate, say 3.2%. This is a good idea if interest rates are rising. However, if the buyer cannot make the upfront payment needed to bring the interest rate down, the seller should consider buying down the rate. By buying down the buyer’s interest rate, the seller can save money in negotiations. The buyer also gets a lower interest rate. So it is a win-win situation for both.
Agents should be aware of the fact that a deal can get derailed at the last minute even if both parties are eager to go forward. However, in such cases, a creative solution may help close the deal.
Before you make the final decision to buy or sell a home, you should be able to figure out the property’s value. Remember, you can always rely on a free home valuation report from Neighborhood IQ to help you in the buying process. Also, the Home Loan Advisor can analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, and match you with potential lenders.