After all the effort you’ve put into preparing your house for sale and marketing it to potential buyers, you deserve a sigh of relief when an offer comes through. However, for most sellers, the hard part of selling a home has only just begun: negotiations. Negotiating the best deal when selling your home depends on several factors and is much easier when you have a trusted agent by your side. Most offers aren’t great and aren’t terrible, but rather lie somewhere in between, and the price is only one piece of the puzzle. That’s why it’s important to understand the underlying conditions in your sale, so you can see what the trade-offs really are.
A winning negotiator plays hardball with price.
Once you’ve received an offer, take charge and direct the proceedings. Price is typically the number one concern for both buyers and sellers. As a seller, you won’t want to accept a potential buyer’s initial bid on your home. Buyers expect some back-and-forth, so their initial offer will probably be lower than your list price, but also lower than they’re actually willing to pay for your home. Most sellers counter the first offer with a price below their list price because they’re afraid of losing the potential sale. While you want to remain flexible and open to striking a deal, this strategy will only sell your home quickly– but not at top dollar. Instead of dropping down to something close to the buyer’s offer, counter at your list price. Assuming that you’ve priced your property fairly, to begin with, countering at your list price tells the buyer that you know what your property is worth. Buyers will likely be surprised by this strategy, but it will weed out any lowballers and those interested in a deal rather than the property. If playing this hard with price seems intimidating, try countering slightly below your list price (think $1,000). You can also soften your counteroffer in other places, so you don’t scare off the buyer too quickly and show that you’re willing to work with them.
A top negotiator knows the hand they are playing.
It is imperative that you listen carefully to what the other side is offering so that your decisions are informed. If you’ve already done your research and priced your home correctly, the odds are likely in your favor. However, many negotiations fall apart simply because one side or the other doesn’t understand exactly what is being put on the table. Remaining well informed and detail oriented during negotiations will put you in a better position in the end. You want (and should get) your price, but buyers feel the same way. If buyers aren’t willing to budge on price, take a look at the whole picture and decide if the offer is worth negotiating in the first place. Review the deposit, price, down payment, terms, occupancy, and contingencies of the deal. Is it a serious offer backed by evidence of a sufficient deposit? Is there anything that works against your timeline or could weaken the deal? Your real estate agent or lawyer can help you understand each of these factors.
A strong negotiator remains flexible and open.
Whenever you are in a negotiating situation, you must maintain realistic expectations. After all, it is rare that you will get everything you want while negotiating. Before sitting down to the table, think about what you are willing to give up and what is an absolute deal breaker. That way you are prepared to make a decision when the time comes. Terms may offer the greatest flexibility in your negotiation. Most often, buyers are seeking a new loan and plan to make a cash down payment. But many times they will ask you to carry part of the financing. Just remember everything is negotiable. If you’re willing to carry back some of the financing, you may agree to their proposed terms, but change the length of the loan or the interest rate. If you carry “back paper,” try to see that it includes a monthly payment that is at least equal to the interest owed and that it also includes a late penalty for failure to make the payment on time. Another area that can provide flexibility in your sale is closing costs. It’s become standard for sellers to cover the cost of closing, which can amount to about 3% of the purchase price and covers fees. Buyers often don’t realize that when they ask the seller to pay their closing costs, they’re essentially lowering the home’s sale price– something sellers will see very easily. Instead of pushing off the additional costs, say “Yes” to this ask and up your price (even if it means going over your initial listing). You can point to the specific numbers associated with closing costs to back your increased price.
A smart negotiator knows when it’s time to call it.
Try to understand the buyer’s motivation, especially if you have limited offers. While you want to get the best price for your home, there are some instances where it’s beneficial to just split the difference. Remember, the longer it takes to sell your home, the longer you have to drag out the process—and pay the mortgage. The key to executing any negotiating strategy successfully is offering an exceptional product worth fighting over. If buyers aren’t excited about the property you’re offering, your tactics won’t cause them to up their game, they’ll just make them walk away. For more information on negotiation tactics or pricing your house for market conditions, contact me today. Happy negotiating!