Real Estate Deal Killers: It’s Not the Repair, It’s the Commitment
Deals get done when a buyer wants to buy and a seller wants to sell. That sounds obvious — and it is, when both sides actually want the deal. Problems the size of the Grand Canyon shrink to a crack in the sidewalk. They get worked out, and deals get done.
It’s when one side is looking for a way out that a crack in the sidewalk becomes the Grand Canyon — and deals blow up.
Bottom line up front: who has the leverage in a real estate deal, and why the other side is really buying or selling, matters more than almost any single line-item problem that comes up during a transaction. Below: how to read leverage, how to read motivation, and what to do with both — plus, this week’s numbers on which local markets currently favor buyers and which still favor sellers.
This is this week’s Smart Beach Investor market report — subscribers get it first, every week
The Repair Isn’t Usually the Problem
I’ve seen inspections find mold in the ductwork throughout a property, requiring significant remediation — and the deal still closed, because the buyer and seller were committed to finding a workable solution. I’ve also seen deals collapse over minor repair issues, because one side had already started wanting to back out, and this was their get-out-of-jail card.
The repair wasn’t really the problem. Their commitment to the deal was.
How Leverage Impacts Negotiations
Usually, deals fall apart when the market dramatically favors one side over the other.
In a strong seller’s market, sellers often have little or no incentive to give the buyer much, because another buyer is likely waiting to step in and take their place. In a buyer’s market, the buyer often feels comfortable asking for the sun, moon, and stars from the seller — and walking away if there’s pushback, because there are plenty of other comparable properties available.
That’s why knowing the market you’re buying or selling into is vitally important. Who has leverage? How difficult would it be to replace this buyer, or to find another property? The answers shape the strategy you use to negotiate.
Why Are They Buying or Selling? Motivation Matters
Knowing why the other party is buying or selling puts you in an incredibly strong negotiating position.
Is the seller relocating, struggling to carry the property, settling an estate, or simply testing the market? Is the buyer purchasing a primary residence, looking for an investment, or casually shopping for a second home?
Motivation reveals how likely someone is to work through a difficult inspection, appraisal, financing problem, or closing delay. I once saw a buyer walk away from a $20,000 earnest-money deposit simply because he changed his mind about buying. The seller got the deposit — but still lost the sale. Even worse, another purchase depended on that closing.
Sellers can derail transactions too. A seller who no longer wants to move may refuse a reasonable repair or extension, because the change gives them a way out of the deal.
How to Keep Deals Together
When a bridge needs to be built, the primary tools available are:
- Price
- Terms
- Timing
- Credits
- Repairs
- Allowances
- Contingencies
The right tool depends on the problem and who has the leverage. Sometimes paying several thousand dollars to keep a deal alive is the smart play — even though it’s a bitter pill to swallow.
Be careful in these situations. I’ve seen buyers and sellers get so caught up in being right that deals fall apart out of spite. Sometimes the question you need to ask yourself is: do I want to be right, or do I want the right outcome?
How to Win as a Buyer or Seller
The best way I know to give yourself an edge is to simply have a good understanding of where you stand — and what a win looks like for you.
Buyers: know how replaceable the property you’re trying to buy is before making take-it-or-leave-it demands from the seller. Forcing repairs or concessions doesn’t help if you lose a property that will be tough to replace.
Not sure how replaceable a property you’re eyeing really is? We help investors figure that out before they make offers.
Sellers: know how replaceable the buyer is. Rejecting a reasonable concession can become even more expensive if the property sits another three months, or the next offer is even lower.
Wondering how replaceable you are as a seller right now? We can run the numbers on your specific property and tell you.
Already own an investment property here? Find out what it could be earning as a managed vacation rental.
The Bottom Line
If you can determine who has the leverage in a deal, you can build a better strategy — or use different tools — to make sure you get the right outcome from the sale or purchase you’re trying to make.
That brings us to this week’s numbers: which local markets currently give buyers leverage, and which ones still favor sellers?
See the Current Numbers by Market
This week’s report takes a closer look at Destin, where condos and houses are telling two very different stories:
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Final Thoughts
Whether you’re buying, selling, or holding, our job is to help you see your real position clearly — not guess at it.
- Buyers: Get notified when list price trends shift in your target market
- Sellers: Request a complimentary SaleAbility Analysis and pricing strategy
- Owners: Schedule a Rental Performance Review
Or reach our team directly at 850-654-3325 to talk through where you stand.
Committed to your success,
John Moran – CEO The Smart Beach Investor | Keller Williams Realty At The Beach Team
