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Negotiating Sales Contracts for Vacation Homes
There can be so much more to negotiating a sales contract than simply the price. Read this before buying a vacation rental property.
When you're buying a second home, one thing you should remember is that the property is not a primary residence—there's not the same sense of urgency to sell. Sellers don't have the typical time lines, like relocation, children starting school, or fear of being homeless. With second homes, there can be so much more to negotiating a sales contract than simply the price.
Price: At times, certain vacation properties are in such high demand that there's little room for negotiation. This is when your hard work in sourcing a good real estate agent who can really make a difference.
Time: Timing can be an important factor. Are you going into your peak rental season or not? Closing toward the end of peak rental season could back fire and leave your property vacant, leaving you to pay the mortgage payments during the slow season . But on the other hand, the seller might be willing to sell at a discounted price for exactly the same reason..
Settlement charges: You can always negotiate the sellers to pay some of the closing costs.
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Furnishings: If the property is sold unfurnished, you can always negotiate that they leave some/all of the furnishings. A good realtor could help you find out why the sellers are taking the furnishings and perhaps assist you in negotiating them as past of the deal.
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Repairs: Though you should always note repairs that you noticed in your sales contract if you intend on them being caught by the home inspection, there are also some more things that fall under the "repairs" category that do not come under inspections. This would be things like paint, carpeting and other aesthetics. I personally never recommend you negotiate that the seller fix/replace/repair aesthetics, if you want those things fixed and want it to be part of the seller's responsibility, you can always ask for an allowance. This would be cash back (on your closing docs.) to you to fix/replace/repair after you purchase. For example, if you ask the sellers to replace the carpeting, what kind of carpet are they likely going to replace it with? Likely the cheapest one out there? As for items that would be noted on your home inspection, you would have to look at the sales contract and see what the dollar amount limit is on the contract for items on the home inspection.
Realtor commissions: I don't ever think you should depend on those as being a negotiation tool. Often realtors will help the sale go through with their commissions but that should be their choice not yours. For example, buying and selling realtors might be up against their clients not coming to terms on a very small amount, say $1000. They might say, is it worth losing the deal over $1000? They might say we'll reduce our commission each by $500 or better yet, propose all parties involved come to terms and the realtors, buyers and sellers each agree to $250. But all in all, I so not think their salary should be a negotiating tool for buyers or sellers.
© Christine Karpinski 2006
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