The seller was unprepared for the deal and thus, did not yet have the documents our attorney needed to complete his due diligence. Over the course of our two week wait, the seller's agent scheduled three open houses per week, and just as we were finally ready to sign contracts, we got the dreaded call. "We received an offer that is $30,000 higher than yours. Before accepting this offer, the seller would like to give you the opportunity to match or beat the offer." The new buyer was putting more cash down and gave the sellers the option for a post-closing possession. There was no way we were going to ultimately compete with him. We opted to keep our original bid as back-up.
So there we were, quite disappointed but ready to get back to our search. These things happen, I know, from being in the industry for ten years. We attended open houses over the next two weekends, and a couple apartments caught our eye. We started to ponder about another unit. Then my phone rang Monday morning. It was the seller's broker. "Our offer actually looks like it is going to fall through. Here's what the sellers would like to do. We are going to have an open house on Wednesday, and if you're still interested and the seller doesn't get any higher offers, they will accept yours on Friday."
Now, here's where my questions start --- and consequently, where my broker/seller lessons come in. Being no stranger to real estate transactions, I have learned that one can finesse a deal through to completion or one can really botch a negotiation and end up with nothing.
Lesson #1 - Don't put your apartment on the market until you are prepared with all of the necessary paperwork and information. Let's say you have a buyer who is willing to give you the asking price for an apartment. He or she places their offer, and the seller happily accepts. However, the offering plan has yet to be ordered, the financials have not been requested, and the seller has to vet various attorneys before moving forward. By the time the two weeks pass to receive these materials plus another week for an attorney to complete their due diligence, you run the risk that your buyer either finds something else or becomes frustrated and revokes their offer. A seller (and their broker) should be fully prepared before putting an apartment on the market.
Lesson #2 - Be extremely careful in how you handle rejecting an already accepted offer. Deals fall through all the time. Usually, it is the result of a buyer backing out. When a buyer makes an offer and is ready to move forward, a seller must thoughtfully weigh the pros and cons in releasing that buyer for a higher offer - (especially in the case where the buyer has nearly completed their due diligence and is prepared to sign contracts.) A delicate approach is essential. I, for one, appreciate that the seller's broker gave my partner and I the opportunity to come up the $30,000. Was the timing right for the seller to cut our deal? Considering their higher offer will now fall through, I'm not so sure. Regardless of the outcome, be gracious and keep the door open in the event that your new deal does not work out.
Lesson #3 - Develop a thoughtful, strategic approach when returning to an interested buyer.
Negotiation is an art. It isn't as easy as saying, "We want 'X', and we'll let you know how, when and where we want it." There are always multiple parties involved in a negotiation, and everyone involved must feel like they have either come out on top or, at the very least, there is a fair balance of interests. The moment one side feels short-changed or slighted, you have a problem. In our case, by proposing to accept our offer (again) after seeking out yet another round of buyers, the seller has perpetuated a feeling of inequity. The selling broker's tactic has not instilled confidence nor has it served to bring two parties together successfully. It is important that one does not create hurdles during a negotiation but creatively figures out ways to surpass them.
With our current situation, I can't help but think of the saying: A bird in the hand is worth two in the bush. I wonder if the seller's risk is worth the potential reward? Maybe, maybe not. The real lesson to be learned here, however, is that even if it is, just be sure you aren't cutting off your nose to spite your face if it doesn't work out.