Let’s Make a Deal!
As you enter the negotiation process of your home sale, the number one thing you can do for yourself is to be prepared. Having a clear plan in mind before any offers come in will help keep you from making a rash decision on an offer, rejecting out of hand an offer that could have been altered, or accepting something that was less than it could have been.
Know Your Limits
Working with your real estate agent, you should not only find an appropriate price to advertise your home at, but understand the lowest possible price you feel comfortable selling your home for. Knowing this limit will help you set boundaries at the negotiating table. Besides the upper and lower limits, it is also a good idea to think of one or two price points in between, ones that you will be ready to counter with when the buyer offers less than your original asking price.
Countering With Your Asking Price vs. Asking for a Resubmission
Many home sellers are surprised at how low their initial offers are. This is usually because the buyer’s agent is advising them (correctly!) to do so. One hardball tactic used against low-ball offers is to simply counter with the asking price. This does a couple of things, it reinforces to the buyer that your initial home sale price was serious, and you believe in it, and it also separates those buyers who are serious about your home from those just looking for a deal. This tactic does turn off many buyers, however, and is better employed during a seller’s market, or when you are feeling particularly confident about the sale of your home.
Another way to deal with low offers is to not counter with an offer at all but to ask for a different offer. This signals to the buyer that you know they gave you their lowest offer, and can probably do better. It’s less aggressive than countering with the asking price and won’t scare off timid buyers.
When choosing between these tactics, it’s smart to rely on the impressions of the buyers from your real estate agent, who can help you determine what type of buyers are giving you offers.
Cover the Closing Costs, Keep the Asking Price
Getting to know your buyer can be important in the negotiating process. One reason a buyer might be giving you a low offer is that they are trying to save money for some of the other upfront costs. Some home-buyers, particularly first-time buyers, can be fine on their credit but poor on cash. In this case, it can be worth it to both parties for the seller to cover the closing costs in exchange for a higher sale price. During the negotiation, understanding the buyer’s priorities can go a long to make both buyer and seller happy.
With real estate transactions, technically, everything is negotiable, and anything can be put in a contract. So even if closing costs don’t solve the problem, it might be furniture, appliances, or a security system. Thinking outside of the box has helped to close many real estate deals.
Put a Time Limit on the Offer
Once you begin negotiating with a buyer, you won’t be able to accept another offer if it comes along. One way to put a little pressure on a buyer is to put an expiration date on your counter offer. This causes them to take the offer more seriously, and if they are going to counter, to do it fast. It also speeds up the entire process so that if this buyer isn’t the right one, you can move on and find another.
Negotiating Under Different Market Conditions
In a seller’s market, you might not have to do much negotiation but instead will have to juggle multiple offers, looking for the “highest and best” offer from among many. In these cases, you and your agent will have to go over each offer carefully, looking past just the price, into option period, earnest money, and closing date.
In a buyer’s market, you will have to be more careful with negotiation, staying clear with your goals without frightening quality buyers off. In this type of market, the buyer will come in with more confidence and attempt to get as low of a price as possible. This is why it’s important to understand the buyer, to know their priorities, and to get creative with the contract. In this case, other homes in the same market with the same price point (those Comparables you used to price your home) are also your competition. While negotiating, keep in mind what your competition is offering, and do your best to keep your buyer from looking elsewhere.
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