Here are some negotiating tips for anyone selling a home…
It’s exciting to get an offer on your house. But there are lots of details that go into seeing the negotiation through to the end. Negotiation is about a lot more than giving and taking!
Selling your home is one of the largest financial transactions you are going to make. The choices you will be making when negotiating have an affect on how much you will walk away with. Negotiation is the art of creating a deal that makes everyone happy.
In a perfect world, every home buyer and seller would get precisely what they would like. The perfect deals would be the ones where both parties believes they got most of what they wanted and didn’t give up too much.
Your partner in the home selling process is your real estate agent. One of the various tasks they deal with is the face-to-face negotiations.
It’s a good idea if you let your Realtor handle the negotiating instead of you. Even if you’re an experienced negotiator!
This doesn’t mean you won’t be having behind-the-scenes conversations with your Realtor. This is a warning to protect yourself from speaking directly with the buyer or their agent.
Your Realtor writes real estate contracts and negotiates everyday. They have significant expertise when it comes to local home prices. They understand and deal with other real estate agents and speak the same language. Your Realtor has the knowledge, expertise and experience to assist you negotiate the sale of your home.
These negotiating techniques can help you get the best price for your house in almost any market. Here’s what you must know about negotiating when selling a home:
Remain Calm When Negotiating
Avoid emotional decision making. When you are selling your home it’s not easy to separate yourself emotionally. You need to look at selling your house as a business deal and not take anything personally.
Selling your home is a team sport. It means you must rely on your Realtor. Home buyers typically have a buyer’s agent representing their interests.
This is why you must have a listing agent who is representing your interests.
You should feel comfortable letting your real estate agent handle the negotiations. Your Realtor will negotiate with your best interests as their number one objective.
Correct Pricing Is a Negotiation Tool
There’s a difference between what you want or what you think the house is worth and what it will sell for. The list price is not based on how much a seller needs or wants. Sellers may need a specific price but that has nothing to do with the reality of your local market.
Look at your local market to give yourself a more realistic idea. Your real estate agent will also be able to provide a comprehensive report about your area.
This report will include recently sold and active listings of comparable homes. It should also describe the general health of the local market. It may include similar homes that have expired or were withdrawn (homes that did NOT sell).
Using these facts will reduce the need to negotiate the price. Plus you can include these cold hard facts when you make a counter offer. This will show potential buyers that your home is worth the asking price.
Always Counter When Negotiating
As a seller, you probably shouldn’t accept a potential buyer’s initial offer for your house. A prospective buyer will usually make an offer that is lower than what they’re willing to pay.
Buyers typically expect a back-and-forth negotiation. This simply means their initial offer is going to be less than what they’re prepared to pay. It’s important to remain calm so you negotiate effectively.
It is possible that you will receive a really low offer. These are often called low ball offers. Your first reaction may be to say no…
You should always counter every initial offer!
Your best option is to counter the offer and begin the negotiating process. If these buyers want to buy your house, they will try to reach a mutually satisfactory agreement.
If you cannot reach a mutual agreement or the potential buyer is unrealistic, do not hesitate to walk away!
I suggest you read You Will Not Be Punished By Your Anger
Settling to Get to Settlement
Being stubborn isn’t the best strategy in any negotiation. If your objective is to sell your home, taking less than your desired price is better than not selling at all.
I know this is a bitter pill to swallow. But sometimes, you have to do what you have to do…
You need to consider how much it costs if you do not sell. Think about your monthly mortgage payment, taxes, insurance, maintenance, etc.
It adds up! When you know the overall cost of keeping your home on the market each month, it makes some offers more appealing.
I have seen sellers wind up with less money because they wanted to hold out against my advice. Sometimes you have to bite the bullet and move on.
Show Me the Money
You may receive an offer that doesn’t have a proof of funds or pre-approval letter. Your only response should be to say you will counter after seeing these important documents.
Serious home buyers make serious offers. A serious offer always includes these documents!
Time to Think Too Much
It’s important to give buyers time to think about your counter offer and not feel pressured. However, you don’t want to miss other potential buyers because you are negotiating!
I suggest you give the interested buyer a short specific amount of time to make a decision. This forces the buyer to make a decision quickly so you can either get your home under contract or move on.
Don’t make it too short but don’t give the buyer too much time. I suggest 24 to 48 hours. Think of it as a way to gently nudge the buyer towards making a decision.
Negotiating Means Communicating
If you don’t express any interest in a buyer’s offer, there’s a good chance they’ll walk. This is why you should tell them you are thinking and will respond by a specific time.
Saying nothing speaks volumes. By not immediately countering, you cause the buyers to feel uncertain about their offer.
Not countering immediately is a highly effective negotiating tactic. If you’ve got an offer, it is better to make a rational unemotional decision.
Forgetting About Home Repairs When Negotiating
Properly preparing your home before it hits the market doesn’t seem like a negotiation tactic. But it will stop a buyer from bringing up any significant objections.
This is why you should get an inspection before putting your home on the market. You can either make repairs or adjust the price and include repairs estimates for buyers to see.
Plus it helps you to cover your butt by being 100% upfront and disclosing any issues. Many agents suggest offering a free home warranty with an acceptable offer.
Today’s educated home buyers almost always get a home inspection. Any issues can reduce the offer price or cause a buyer to run away. Getting a home inspection before your home hits the market helps to prevent these problems.
This will also reduce the chances of the buyer’s inspection uncovering any major problems. Be prepared to negotiate by either changing the price, making the repairs yourself or having the money put in a repair escrow.
Negotiating Closing Costs
It seems like it’s become normal for buyers to ask the seller to help with their closing costs. After saving a down payment, requesting the seller to help with closing costs becomes attractive. Some buyers can’t even close the deal at all without help with the closing costs.
If the buyers don’t have closing costs, they may be able to borrow more. If you help the buyer with their closing costs, they will be able to buy your home. However, you must be remember that the home must appraise for the contract price!
If a buyer makes an offer that requests assistance with the closing costs, counter with your willingness to pay but at a higher price. It’s also possible to exceed your list price so you still get what you need.
Some buyers don’t understand that when they ask for closing costs, they’re lowering the seller’s net price. But as the seller, you’ll see the bottom line and you must remember your acceptable net price.
The First Offer Is Often Best
The first offer is often the best one and could be the only one. It can be tempting to wait and see if other offers come in. I have seen sellers make this mistake this time and time again.
Yet, greed is often the downfall of many people selling a home. If the offer is close to what you had hoped for, make a counteroffer so the negotiations will continue.
It Isn’t Just the Price You Must Negotiate
It is easy to focus on the selling price but negotiating isn’t just about price. You must evaluate the price, terms, contingencies and dates.
Sellers and buyers must agree about many things besides the price. If you are having trouble agreeing on one issue, it’s possible that a concession on another topic will help.
Your agent will be able to explain the specifics of the offer and what it means for you and your bottom line!
The Take Away
There are a lot of details to work out when it comes to selling a home. Effective negotiating is the key to maintaining a buyer’s interest and selling your home!