When $1 costs you $1400 dollars

I spent last week Friday morning tying lose ends on a contract that I was negotiating for a buyer client. After going back and forth all week, I thought we had come to some kind of agreement when I got a call from the listing agent. Turns out, the seller would not move on the price on his last counter-offer. He was stuck at $400,000. The last offer that we had sent was for $399,999- and we were 1 dollar away from an agreed upon price. The seller (and agent) was insisting on this price OUT OF PRINCIPLE (His words, not mine), and was willing to walk away if we did not pay the extra dollar.

Needless to say, I was a little blown away. Actually, I was A LOT blown away. I just could not imagine that in a week where the Dow Jones had dropped by 700 points in one day, a 'motivated' seller (he was being relocated), would 'walk away' over ONE DOLLAR!

Eventually, I had to spend some time explaining to the listing agent (and eventually the seller) why we had insisted on $399,999 price tag. Because in reality it would cost both the seller and the buyer more money if we agreed on a $400,000 price tag. The property is located in DC, and so at closing, the purchaser would be paying the recordation tax, and the seller would pay transfer taxes. (This can always be negotiated differently, and there are certain exemptions- but that is an altogether different blog entry). DC government has set that number to 1.1% for each, if the sales price is less than $400,000. That number changes to 1.45% if the sales price is at $400,000 or more. Therefore, that $1 difference could actually cost the seller and the buyer an additional $1,400 each!

$1,400 buys plenty of shoes!