Leveraging time on the market in negotiations

3 Replies

I'm currently looking around at various properties for a personal residence. I am wanting to use time on the market as leverage for lowering the price, but I'm trying to find out at what point this would technique this will work.

Can anyone give me a break down of time on the market to likelihood of selling? In other words, at what point do sellers start getting nervous and become willing to go with your low offer as opposed to let it sit on the market a little longer. 6 weeks, 6 months, etc? And would that apply to short sales and foreclosures, or is the bank willing to let it sit until they get what they want?

Interesting question.  Time on the market tells you how long it has been for sale, but not how motivated the seller is.  I just got a quad under contract that had been on the market for quite a while, the seller had kept raising the price as improvements had been made & rents increased.

The house that I purchased as my primary residence had been on the market for 2 years when we purchased it and the seller was pretty motivated to give us more favorable terms.

I wouldn't look at time on the market exclusively, but time on market vs average time on market.

As far as when sellers get nervous/desperate, each one is different. Some sellers have to sell due to a job re-location and want to sell fast. Others just want to downsize & will move once their house sells and are in no hurry. I would generally say that the longer something is on the market the more your average seller is going to be willing to negotiate, but with SFR's there is a lot of emotion involved.

@Jesse Waters Thanks for the tips. I didn't even think about a buyer increasing price as time went on due to continually fixing it up.

Time on the market is definitely not something I am looking at exclusively. With my personal home, I'm really looking for something within my price range and location. The actual condition of the home is of little concern. But I am leaning more towards short sales, foreclosures, or anything that could use a little bit of work.

The number one reason is those are the properties I could afford in my market, and the second being that I can repair it little by little and increase it's value over time. Plus, then it's also possible to leverage the need for repairs in the negotiations as well. However, I don't know how well, if even possible, you could negotiate with a bank on a short sale/foreclosure.

But if, while I'm looking at different properties, I can make note of how long it's been on the market and bring it up in the discussions, I want to be a least minimally educated about the average time on the market so I don't get laughed off the negotiating table.

Originally posted by @Traver Freeman :

@Jesse Waters Thanks for the tips. I didn't even think about a buyer increasing price as time went on due to continually fixing it up.

Time on the market is definitely not something I am looking at exclusively. With my personal home, I'm really looking for something within my price range and location. The actual condition of the home is of little concern. But I am leaning more towards short sales, foreclosures, or anything that could use a little bit of work.

The number one reason is those are the properties I could afford in my market, and the second being that I can repair it little by little and increase it's value over time. Plus, then it's also possible to leverage the need for repairs in the negotiations as well. However, I don't know how well, if even possible, you could negotiate with a bank on a short sale/foreclosure.

But if, while I'm looking at different properties, I can make note of how long it's been on the market and bring it up in the discussions, I want to be a least minimally educated about the average time on the market so I don't get laughed off the negotiating table.

 As has been mentioned, time on the market can have an impact on a sellers motivation, but I might add also be a telling take as to how unmotivated a seller is to sell their property.

I would agree that SFR owner occupied sellers have many more reasons, including emotions, that guide their motivation.

When it comes to short sales and foreclosure it really all depends on the bank. Some banks will allow a home to sit on the market until they get their number. While other banks, including the big banks, will sell properties at substantial discounts to current market prices particularly if the property needs work.

The only way to find out is to submit an offer to the bank. Discounts ranging from 20-40% are not unheard of in REO sales. When making and offer be prepared to show your ability to close the transaction at the offering price by either submitting a proof of funds or a preapproval letter from a lender that has already pre approved you for financing up to the purchase price.

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