Glenn Kelman, the CEO of online brokerage firm Redfin, passed along this helpful list of "tells" that may indicate a home seller is willing to cut the price on a property. Buyers should take notice and negotiate accordingly if they spot any of these:
The likelihood that a seller will lop 5 percent or 10 percent off his asking price isn't just determined by the house's "intrinsic value" or its "fundamentals." It's also a matter of the seller's state of mind, which can drive him to stick to a high price or to drop an already fair price. So as brokers, we don't just look at the cards on the table but also at the people playing them, searching for "tells" that the seller is ready to cut a deal.
The Six Major Tells
1. The seller must move: The seller's agent occasionally posts a message in the MLS that the seller is motivated. Bingo!
2. The home's previous sale price was much lower: The seller may accept a discount if he can still come out ahead. On the other hand, few sellers will accept less than what they owe on the mortgage, unless they're already in default.
3. The home has been on the market 90 days without a price change: Redfin displays days on market for each listing.
4. The neighborhood has many homes languishing on the market: Use the listing statistics below Redfin's map to see if the neighborhood's listings average 90+ days on market.
5. The property is vacant: The seller's probably paying two mortgages.
6. The owners are getting a divorce: Look in the property tax records for recent title transfers.
The Eleven Minor Tells
1. The home is staged: staging can cost hundreds every week. It increases the listing's appeal but also increases the seller's motivation to sell.
2. The property has been relisted: when a property is relisted, Redfin.com resets days on market. But your agent can query the MLS directly for the listing's entire history.
3. The seller is offering special incentives to buyer's agents: tell a seller to keep the incentives in lieu of a lower price.
4. The listing is a short sale: to avert foreclosure, the seller will take almost any price, but the trick is getting bank approval prior to foreclosure.
5. A bank is selling a foreclosed property: banks don't like owning homes and are often eager to sell.
6. The property is an estate sale: relatives may not want to hold out for top dollar.
7. There are many foreclosures in the area: even if the listing isn't a foreclosure, it competes for buyers with nearby foreclosures.
8. The property is the most expensive in the neighborhood: an expensive home built on inexpensive land can easily be overpriced. Sellers value the wine cellar more than you will.
9. The property is unique: sellers become emotionally attached to unique properties, which are difficult to price and difficult to sell. But if the home is one of many in the same development, the seller's agent is usually more confident about the asking price. And if the home is part of a new development, the builder will hesitate to set a low precedent for future sales.
10. The property is the first or last home in a development: new-home prices are difficult to negotiate, but extras and closing costs aren't. Builders are anxious to sell the first home for marketing buzz and the last so they can move on.
11. A contingent sale fails or stalls for more than 45 days: after a competing buyer has rejected or delayed a deal because of financing or inspection contingencies, the seller may eagerly accept cash on the barrel, even at a lower price. Use listing alerts to track contingent property sales.