Consider the following hypothetical. You’ve entered into a contract to purchase

Question

Consider the following hypothetical. You’ve entered into a contract to purchase a new house, and the closing is scheduled for next week. It’s typical for some last-minute bargaining to occur at the closing table, where sellers often try to sweeten the deal. You have three options for the closing: (1) attend yourself; (2) send an attorney authorized to close only per the previously negotiated terms; or (3) pre-sign all the closing documents per the current terms, and do not attend the closing. Evaluate the strength of your bargaining position for each option. Which of these would be the most advantageous? Explain your reasoning. Post your answer to the discussion board.

Explanation / Answer

The best option is to attend the closing sesion myself.

The reason is, if I do not attend (option 3), there is no opportunity of a bargain at all and it is a win-lose situation in favor of the seller.

If I send my attorney, I save on my time and energy by not attending in person, but the attorney will be an agent while I'll be the principal, and the principal-agent problem may arise if the attorney doesn't act in my best interests, instead works on his own best interests. Secondly, the attorney will be pre-directed to close it at already-negotiated terms, leaving no room for bargaining. Unless explicit authorization is provided to do bargaining in my favor, he will not be legally compelled to do so. Even if he does, the outcome may not be to my best interests (principal-agent problem).

Therefore, my personal attendance will be the best advantage from perspective of a beneficial bargaining deal.

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