Tuesday, January 24, 2012

Landed Gentry, II

So in part I, I talked about the wonderful world of snooping around people's hosues that is called a house hunt.

We chose...the house with the mother of pearl toilet seat in the powder room, a mirrored wall in the den, and a wall-to-wall leopard print carpet in the master bedroom.  Scary? A bit. Nevertheless, it spoke to me.  It was otherwise in great condition and really, you can get new carpet and paint very easily.

Since this is our first home purchase, I don't know what one's usual experience is with price negotiation (except what I have learned by watching Sandra Rinomato on HGTV).  I'm sure a lot of readers will snicker at my naivete, but our situation was ridiculous:

The house was listed at $X, which we originally planned to offer. But our realtor convinced us to offer $X-5 because we were told that other offers had been $X-20 and $X-15.

We waited, tense, for the response.  Then we heard back...they wanted $X+20!

Have you ever heard of such a move? We thought it was crazy.  After a huddle, we went back with $X. 

Then while we waited, our agent found some more information - apparently, the property owners had been trying out "range pricing," which is probably familiar to Boston readers but maybe not those outside the area. (Here is some background: http://www.zillow.com/wikipages/Variable-or-Value-Range-Pricing-for-Homes/).  This was very popular a few years ago as the housing boom here wound down, as sellers tried all kinds of ways to get higher prices for their homes. 

Somewhere in the MLS listing, but not on the online listing, was noted that they were "accepting offers between $X and $X+30."  Mystery solved - they thought their house was listed at $X+30 and thought our offer was way too low. 

Apparently, the range pricing is done to generate buyer interest, but I didn't like it because I felt a little deceived by the property owners, who all had looked so nice in their family photos. 

On the other hand, this trickiness turned out to be better for us.  I only got a B in Bargaining and Negotiations in business school, but even so, I can tell that this process was stupid from the seller's point of view because:

a) By posting the lowest price, my husband and I "anchored low" (as my B&N professor would have put it).  Indeed, most experienced sales people show shoppers the most expensive thing first so that propsective buyers "anchor high" and are more willing to pay a higher price.

b) Had they anchored high with us, we would probably have made a different, possibly higher initial offer, so they probably left some money on the table.

and c) Probably some people walked away (the $X-20 and $X-15 people, certainly) because they were both surprised by and had no intention of paying the higher price, so they wasted a lot of people's time.

Anyway, all's well that ends well.  Their counteroffer was $X+10, which we accepted.  We had the home inspected, and that went well, and are now in the process of explaining the move to the Duchess, who is a little skeptical.
To be continued...


  1. Congrats on your purchase! When can we expect photos! :-)

  2. Not to mention, the practice seems a bit deceiving, at least in your sellers' case because they clearly weren't "accepting" bids starting at $X!