negotiating Your offer
Negotiating offers is one of the hardest parts of selling your home. Every situation is different and so a negotiation tactic that works in one situation might not work in the next. Here are some negotiation tips that can help you get the most out of your property.
Set a date for reviewing offers.
In a Seller’s Market it may behoove you not to respond quickly to the first offer that comes in, but instead wait sometime to allow other buyers to see the property and make offers as well. It may mean letting the first offer expire, but if those buyers are really interested in the house they will extend the expiration time. Usually 4-5 days is enough time for all serious buyers to see the house.
Consider the buyer’s perspective.
Has your property been on the market for a long time, or is it a hot new property with a great price? These factors can make a big difference in how the negotiations will go. We are happy to play hardball, but you need to be ready to lose an offer if you don’t want to make any concessions or price reductions, especially if the house has already been on the market for a while. Unfortunately there is no magic negotiation technique that works in every situation, but here are couple things to make the process easier and more effective:
Don’t be offended by any offer.
Buyers will always try to buy a property for the least amount of money with the greatest number of concessions. It’s in their best interest to do so. It’s easy to take things personally when you’re selling the home that you have lived in, improved, and loved, and a low ball offer can feel like a kick in the gut. But this is a business transaction and needs to be treated as such. Review offers objectively and try to keep your emotions at bay.
Consider what you know about the buyer.
We do the best we can to find out as much about potential buyers as possible, but sometime no information is available or forthcoming from the buyer’s agent. It may be difficult to know their level of motivation and their ability to compromise, but anything we find out will help us judge how hard we can push back.
Don’t discuss the property or the sale with the buyer.
Usually you won’t be home during a showing, but if you happen to bump into a potential buyer, don’t discuss the property or the sale with them. The more the buyer or their agent knows about you and your selling situation, the better advantage they will have in the negotiation. We will have already displayed a list of your property’s features in the home. Let the buyers discover the home’s value for themselves. Trying to prove it to them will come off as needy.
The offer price is not the only piece of the puzzle. Here are some things to consider when Choosing the best offer from a pack of offers, or when deciding whether to accept, counter, or reject an offer :
- Closing & Possession dates – Do the dates and timelines suit your needs? If not, this would be a good place to counter as most buyers can be flexible.
- Rent Back – Will the buyers allow you to stay in the property after closing? If so, how much will they charge you for the privilege? In a competitive situation you may be able to get a long rent back for free.
- Home Warranty from Seller – Are they asking for a Home Warranty? Who is paying for it?
- Home Inspection Length – The shorter the home inspection period, the shorter the timeframe when they can walk away from the sale with their earnest money.
- Property included in sale – Are they asking for more than what was offered in the listing?
- Information about the buyers – Did the buyers write a letter about themselves? The more we know about the buyers the more we can guess about their motivation to see the sale through to the end.
- Escalation Clause – Are the buyers will to pay more in order to compete with other buyers? If so, how much can you escalate their offer?
- Buyer Closing Costs Paid by Seller – Are the buyers asking for a contribution to their closing costs? Does the amount indicate that the buyers might not have much money to work with?
- Pre-approval – Are the buyers pre-approved? Is it a lender we know? Sales are most likely to close with a local lender than an internet or out of state bank.
- Earnest Money – This is the money that you will get if the buyers breach the contract in anyway. The higher the better!
- Down Payment – The higher the down payment the more financially stable the buyers probably are. The more financially stable the buyers are, the more likely that they will not be scared off by a minor list of repairs from the inspection.
- Type of loan – Conventional loans are the most solid with the least amount of red tape. FHA and VA loans are a little more complicated. Renovation loans are VERY complicated and may result in significant delays. Of course, CASH is always king since that removes the loan and appraisal contingency, as well as shortens the timelines.