Profile picture for Frustratedindc

Am I being negotiated with in bad faith?

We have been interested in a brand new condominium building in one of the developing areas of DC. The deal they are providing for any purchase is 11k in concessions toward closing costs. The unit itself is an oversized one bedroom.

The seller price for the unit is 400k. We have been negotiating back and forth on the unit for a few weeks. I based many of my offers on the sale of units in the summer. The floor right below, for example, sold for 358k. The seller however, has told us that they recently sold a unit 4 floors lower for 360k and the floor above for 378k. Essentially indicating that he believes the market has changed since the summer. As a result, the seller made a final counter offer of 370k on my offer of 363k. Which, is his prerogative.

I told him it was a financial issue for me, paying the monthly mortgage would be difficult for me at 370k. As a result I counter-offered and told him I would offer 370k, but that he purchase 1 point on my mortgage (3k for quarter percentage off) to make it more financially feasible.

I received a response today from the agent that has me absolutely baffled. The agent tells me that the 370k offer is no longer on the table since I had declined it (I had kept the channel open over the holidays) and that the seller was reconsidering from the beginning 400k price. He further says he would be willing to submit an offer for consideration to the seller for 370k on a clean deal only with absolutely no other concessions (with the 11k). I understand if he wants to sell at 370k and that is his final offer, but I feel as if the whole bit about the offer not being on the table etc, is in bad faith. I see it as an attempt to give me a raw deal and as insulting to me in general.

Talk me down. I would like to know beyond the idea about whether 370k is worth is or not, is the seller acting a little ridiculous considering the market? The building has not even sold 40% of its inventory yet either.
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January 05 2010 - Navy Yard
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Replies (13)

Profile picture for SoCal Engr
When you countered, you effectively rejected his offer of $370K. Therefore, the seller is entitled to either reject your counter, or respond with a new counter. The seller chose to play hardball and see how firm you are.

Your choices are: (a) Stick with your last offer and take a chance that the seller is actually willing to pull the deal off the table, or (b) decide that you can live with the deal at $370K without buy-down on the mortgage.

It's just business, nothing personal. You seem to have pushed the seller as far as he wants to go, and now have to decide how important that last x% is to you.
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January 05 2010
Profile picture for Frustratedindc
Hi Socal_Engr,

Thanks for your response. This is what I initially believed as well. However, why bother with the expiration bit? It feels like showmanship and a bit insulting considering how close (3k) we are on a deal. Instead of offering suggestions, ideas or simply stating 370k is really as far as he is willing to go, it looks he is like gaming.

His original final offer was 370k and it seems he is pretending to even pull that off the table with his agents comment on him willing to "reconsider" a clean 370k offer if I make it.

I think the agent and developer are playing the good cop/bad cop routine. I've never had direct contact with the developer either and have gotten sugar talk from the actual agent.

In the end, the seller still has over 60% unsold in his building in a buyers market. What I find intriguing is that in his e-mail, the agent never states my offer was accepted or rejected. Just that the seller's original 370k offer has expired, that the seller is reconsidering from 400k again, that he is willing to submit a clean 370k offer for the buyer to reconsider and to let me know so he can process my request accordingly.

This is why I'm so confused and looking for advice.
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January 05 2010
You didn't mentioned that it was a Developer sale before.  Big difference in a Developer being Seller and an individual.  In this case, of course they are playing a game. 

You shouldn't let emotion get in the way of you decision.  With 60% of the units unsold.  You should play the game back.  Obviously it sounds like you feel that this inventory isn't going to go away anytime soon.  If you do not "have to buy" this unit, then tell them... "after reevaluating my person finances I am willing to offer you $350,000".  Obviously they will reject that offer and at that point walk away.  Make sure to keep in contact with the agent and tell them that if they will consider you $350,000 offer at a later date to call you.  Odds are that the Agent is commission based and if he/she only works on this project then the Agent will definitely keep you in the loop when they think they can make a deal at your price.  Now of course you could be wrong and this project does have the sales to support the higher price point, but that is part of the game.
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January 05 2010
Profile picture for Frustratedindc
My apologies for not stating it was a developer sale. I didn't recognize it would be a massive difference.

As far as if I believe the 60% will be moved quickly, I'm unsure. DC's new construction condominium inventory is getting dried up and this building is one of the few games left in town that it completely built and allowing people to move in. The building has sold about 37% in under a year. The unit itself is the last available of its kind/layout (other than the model) in the building and is oversized compared to condo sizes in the city. It also is the only layout that appeals to me in the entire building. Considering they had sales on two similar units on the higher and lower floors in just the last month, I wouldn't be shocked if the developer feels he will eventually get what he wants in his price range. The area itself is developing, however and does pose moderate risk.

I understand the idea of the 350k final offer, but considering he has sold lower floor units for 360k+ it is highly unlikely they will ever contact me.

What it comes down to is the fact that despite being so close to his stated price point, he is still playing games. It seems by your comment Caleb that it is not abnormal for these kinds of games/comments to come from developers. If I'm very interested in purchasing, I suppose I should either sit tight with my offer or consider the +/- of going to 370k?
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January 05 2010
I think you have come to the right conclusion.  If this is the last of the floorplan that you want and you feel that inventory has a chance to move quickly... then its not going to be easy to play hardball.

I can't speak to the Developer's mind or the local market as I know neither, but you are right that its not uncommon for Developer's to play games.  Here in Hawaii in the middle of one of the most severe downturn in the condo market, Developer's were and are still playing games. 
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January 05 2010
Profile picture for Frustratedindc
That is an interesting point Caleb. One would hope this close to sale, they'd drop the schtick. Anyone else have any suggestions/comments?
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January 05 2010
Don't get too caught up in the game.  If mortgage payments on 370K are going to push you financially, then check your budget carefully.  A home, even a condo, means spending money on maintenance that you do not spend when renting. 

Personally, I look at my budget (don't forget condo fees and the likelihood they will rise after the developer leaves) then I would submit an offer that reflects my bottom line closely and keeps me out of trouble.  I 'look 'em in the eye' and tell them this is the best I can do.  Then the seller either takes it or leaves it.  Don't worry about the games the developer is playing and don't get so caught up in the game you lose track of your own finances.
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January 06 2010
Profile picture for SoCal Engr

I once had a sale almost blow up over $2K. The buyer offered $2K below my asking, and I countered by splitting the difference - thought that was a slam dunk counter. The buyer was playing a power-trip and refused to budge (this was on a >$300K sale), and I said "If that's there attitude, I don't want to sell it to them."

Fortunately, the agent's stepped into the mix and adjusted their commissions so that the buyer got "their price" and I walked away with the same money as if they had accepted my counter.

Anyway, the bottom line is two-fold...

  1.  Don't take any of the negotiations personnally, it's "just business".
  2.  If it's "only $3K" to the seller, then isn't it only $3K to you too?

I don't know how much the $3K translates to in reduced monthly costs, but I can't see that it'd be a deal breaker. If it is, you may be attempting to buy too near your enveloper (i.e., even if you got the $3K buydown, how much cushion does this leave you for unexpected expenses?). 

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January 06 2010
Frustra,
You made a very attractive offer.
    1) The developer doesn't have to show the public a reduced price below $370 K
    2)  You receive a well deserved discount on your monthly payments

A couple of other issues to consider:
    1)  How long until you have to start paying HOA dues?  The building needs to be some larger % occupied before the developer can pass off the dues to the HOA.
   2)  Are the estimated dues realistic?  I've seen a number of projects that have marketed skinny dues and once the HOA gets into them for 6 months, they have to raise them another 10-20%.  If 10% of the units are still unsold at that time, it means that much less income to the HOA.

On the other hand, once you mentioned that the floorplan was the last of its kind, the wind left the sails (sales).

Best of luck
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January 06 2010
Profile picture for Frustratedindc
Thanks for all of your responses.

When I look at the "only 3k" I think about the fact that I have raised my offer 13k (plus requesting 1 point on mortgage) since he made his "final" offer of 370k. Now the seller is pretending to even take that off the table. I see almost no desire to negotiate on his end and an attempt to insult me by indicating that the offer he made just under two weeks ago has somehow expired. Hence my belief I am being "toyed with".

Further,  when I say 370k would be difficult, I am including costs of living comfortably etc, It comes down to about 50$ a month more than I want to pay, as the buying down of 1pt would decrease interest and therefore decrease my monthly payment by that amount.

Could I forgo going out 1 less night a week and buy the condo? Yes. That said, in terms of what I consider safe bounds 370k with the 1point would be the absolute maximum I could go before it affected my living style. At 370k, I am getting to a point where I'm even questioning value of purchasing in a developing area such as this versus going for a more developed area.

The HoA fees seem pretty standard looking at the other condominium developments in DC I have been in. In fact, I may consider them about 5%-10% too high. The fee for this particular unit is just below $400 with other developments having high 300s fees, but giving gas heat etc, as part of the paid amenity. As far as I know, we pay the HOA fees to the developer the moment we move in until the board takes over.

I have been truly baffled as to how I should respond to the developer's e-mail since I received it yesterday afternoon. Part of me doesn't even want to dignify it with a response because of the tone and comments made especially in light of how serious I have been (showing my pre-approval letter, never e-mailing too quickly, visiting too much etc,) and how close we are on the deal.
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January 06 2010
Profile picture for agentblu15
don't be afraid to include "other" negotiations in a counter-offer (if you make one) either-- ask for 6 months of HOA fees to be waived or paid by the developer, or ask for some additional upgrades to the unit that might save you personal expense later.  those items are often more negotiable, because they don't impact the seller's "bottom line" the way the sale price does.  If you have to pay the $3k point yourself, but get $3000 in free HOA dues, it basically works out the same for you.  bottom line-- be creative, and stick to your gut (and your guns).  if you get that "walk away" feeling, trust it.
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January 06 2010
With all due respect. You state you have been negoatiating for a few weeks and that the seller made you a final counter offer. This, not meeting your needs, was then again countered by you. The seller has acted in good faith as did you. Unfortunately you were at an impasse separated by a few thousand dollars that neither can or will accept. It happens all the time. Again, I do not see any evidence of bad faith, just a failed negotiation. Even so, you mention the seller is willing to start over again with a clean, no frills contract. If you are interested in the condo enough to buy it, make your final offer as clean as you can and be done with it. Very often one side or another simply tires of the back and forth and both end up with nothing. If you are at your limit, so be it, the seller most certainly can be at theirs too. Good luck.
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January 06 2010
It's a "financial issue" for both sides, you know.

Looking at it as if the other side thinks it's a game can lead you down the wrong path entirely.

Ultimately, all you can do is offer. Well, you can cajole, and sing, and dance - but the Seller does have the right to rescind their offer to you.

That's the way it is.
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January 06 2010
 
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