A colleague recently asked if he should get a new approval letter for his buyer. The reason was that he was negotiating on a house, and was planning on offering less than the approval amount that the buyer could afford. I’ve also been in a situation where my buyer has cash in the bank for a cash purchase, and the bank balance is far more than the purchase price.
The question is: Are you giving away too much information by letting it be known that you CAN spend more than you want? Perhaps, but I don’t think this is a significant objection to overcome.
Let’s say a buyer has a mortgage approval for $400,000. A house is listed for $375,000 but is only worth $360,000. Will it make negotiations more difficult if a seller sees a letter that says the buyer can spend $400,000? Not if I’m good at what I do.
There is absolutely no justification for a negotiation to include a dialog of “but he has the money.” What in the world does that have to do with the price of Tea in China? Nothing.
This reminds me of sellers that “need to get” to a particular price in order to buy a new property. How is that my problem? It’s not. The house is worth what the house is worth. If it’s like all the other houses on the block, it’s probably worth close to the other houses. If it’s unique, it’s worth what a buyer is willing to pay. It’s certainly not worth what my bank balance says I have. That’s like my other favorite saying “How can I be overdrawn? I still have checks left!”
Next thing out of my mouth when someone says that to me is: prove it. Show me some justification for your price. I’ve proved my client can buy it. Now you prove your worth. If you can’t? We’ll be on our way.
