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Journal of negotiation for house purchase

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Writing a journal of negotiation experience, for 3 negotiations.

Gayle(BUYER): Hello Scot I have been looking over the inspection list and have done some other research on the property and I am ready to put in an offer on the house.
Do you have some time to go over a couple of things?

Scot
Yes, I do.

Gayle: Scot I would like to put in an offer of $210K, with appliances included as well as any repairs or issues found during the inspection.

Scot
Unfortunately, I cannot accept the offer of $210K. I do not have a copy of the inspection report you ordered. Can you tell me what items you are referring to that need repair? Yes, the appliances are included with the property.

Gayle:
1. Painting of the exterior/interior of the property
2. Balancing of doors that do not hang properly
3. There has been a leak found near the fireplace which indicates some roofing issues.
4. Repairing of the accents lights located outside
5. Carpet is worn and dated

Scot
The carpet and paint show normal wear and will last at least 3 or 4 more years. The closet doors do need to be adjusted as does the roof requires repairs. I am willing to give a credit to allow you to hire a handyman to make these two repairs. As for the accent lights, they work fine.

Gayle: Scot during the inspection it was found that the outside accent lights we inoperable. The house has had two owners and it it has been noted that it standard to replace carpet every 5 years. The exterior definitely needs painting.

Scot
I do not know why they would list the lights as inoperable, as I have them on as we speak. If you would like to have the inspection company come back out to verify, I would not mind at all.

Gayle: Scot $215K, carpet and painting allowance of $7K and $1,500 for the repair of the leak in ceiling.

Scot
I can understand your concerns in regards to the carpet and paint, but you must take into consideration the fact that I had the HVAC system replaced last year and I upgraded the front and rear storm doors with premium quality doors. I would consider an offer around $245K.

Gayle: Scot $220K with carpet and painting allowance of $7K and $1,500 for the repair of the leak in ceiling.

Scot
Before I consider your offer are there any other concerns or questions you have about the house?

Gayle: Scot, this seems to be jist of my concerns.

Scot
Well the house is located in a very nice area and it is anticipated that the housing value will rise 4% to 5% each year. The ceiling repairs would only cost around $800 and the house did appraise for $241. With that said, I can appreciate wanting new carpet and paint, but these two appear to be more of a want than a need. Yes, the carpet and paint show wear, but they are functionally acceptable and the appraiser did take these items into account when determining the value of the house. So, I will take an offer of $238 and the house is yours. Did I mention that I also added a built in microwave too?

Gayle: Scot I am going to continue looking. If you decide to reconsider my offer, please reach out.
Again, thank you for your time.

Scot
No problem and I understand. At this time, I am going to stick with my final price and I wish you well in your hunt for your new home. If I do decide to reconsider, I will definitely give you a call. Take care and good luck.

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Solution Summary

Journal of negotiation for purchase of house are examined.

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JOURNAL OF NEGOTIATION
Role in negotiation
The simulation was for negotiation between buyer and seller of a house. Parties involved are Gayle who is the buyer and Scot who is the seller of the house.
Expectations from the situation
It seems that the house was inspected by an inspection company. The company has provided a report wherein they have provided a list of items which need repair. The report is with Gayle and Scot is relying on the report for getting the items that require repair. It is critical to know that as it affects the final price of settlement and entails buyer for credits for getting the repairs done.
Preparing for negotiation
Before even getting into negotiation buyer should have an understanding of the local area and try to find out reasons for sale. It is possible that the seller wants to move to a different location or to a bigger house post arrival of baby and so on. It determines seriousness of seller and how desperate they are to sell the property. Comparable properties which have been sold in nearby locality should also be known with price at which property was sold and price per square foot. If it is a new property the developer may fix the price per square foot; the developer also knows that there would be demand for the property. However if they are keen on offloading then they may strike a deal off books, which means that there are chances for negotiation. The buyer may be in a better position to bargain if the property has been on blocks for a longer duration or there are issues with the property.
Before starting off negotiation, Gayle did research work on the condition of the house. He got it assessed by inspection company and used the report to kick off negotiation. Gayle knew that there were repairs works required which included ...

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