HOW TO NEGOTIATE
YOUR HOME’S SALE
Your home is for sale and a buyer is making an offer
to purchase. How do you negotiate a good price and a
good deal?
Know your negotiating position
Try to be objective about how buyer’s will see
your home’s value; (ask your real estate agent for
his or her honest opinion). Is your home a rare find
that is in move-in condition and is located in a
desirable neighborhood? Or, is it a handyman
special? More likely, it falls somewhere in the
middle. By knowing your home’s perceived value to
buyers, you can make better decisions about how to
negotiate its price and terms of sale.
Also, are you in a buyer’s or a seller’s market?
Are you anxious to sell at any price or can you turn
away a bad offer and wait for another? If another
buyer doesn’t appear, can you take your house off
the market and wait for a better time to sell? Or,
do you have a deadline (for example: you’ve already
bought another house or you have a job relocation).
Know your limits and goals
Set your limits and goals based upon your
negotiating position. You should decide:
- your bottom price
- your range of closing dates
- what additional items and fixtures you can
include with the house
- can the buyer assume your mortgage (is it
transferable and is it at a lower than current
interest rate)
- can you offer vendor financing to the buyer
Be confident
If you fear that a buyer will walk away from
negotiations, you might settle for less. That’s why
you should know your negotiating position, plus your
limits and goals. It will help you to maintain your
confidence when the buyer’s agent tells you that
this is the final offer.
Relax
Most real estate negotiations are conducted in a
calm, professional manner. Few agents or buyers will
say or do anything to upset you. However, it is
natural to feel personal about low offers or
criticisms toward your home. Just remember that it’s
all part of the process.
Know your home’s positive qualities
Make a mental list of all of your home’s positive
qualities: an updated bathroom, new furnace, close
to good schools, and so on. They will be useful
counter-offensives to the buyer’s (or buyer’s
agent’s) arguments for a lower price.
Avoid distractions
Let yourself concentrate on the offer and the
negotiations. You and your agent will receive the
offer from the buyer’s agent; (the buyer will not be
present). You want to concentrate on the offer, the
negotiations, and counteroffer. Therefore, keep
children, pets, and other distractions out of the
room.
The buyer’s agent will take your counteroffer
back to the buyer. This process can go back and
forth several times. Clear your schedule for at
least the next day or two. Of course, you’ll still
go to work and do your normal routine - just don’t
leave town.
Always respond to a first offer
Ideally, the first offer will be reasonable and
you will easily negotiate a final price. But what if
the offer is a bad one? Should you respond?
Even if it is insultingly low, always respond to
a first offer. Some buyers think they must begin
with a very low offer in order to set the pace of
negotiations. Don’t take it personally. Simply
respond with an appropriate counteroffer. Typically,
it is best to respond with a price that is close to
your asking price. You can reduce it in later
counteroffers.
Carefully review the offer
When you receive an offer to purchase, you will
probably first look at the amount of money being
offered. This is just one of the many things you
must consider. There are countless terms and
conditions that the buyer might attach. There are
far too many to list, so here are just a few:
- include appliances and fixtures that you did
not list with the home
- request indefinite warranties on everything
from appliances to pools to furnaces
- ask for unfavorable (to you) closing
schedules
- require that you pay for an updated survey
(even if the existing one is fine)
- make the sale conditional upon financing,
home inspection, etc.
Most offers come with a 24-hour deadline for
reply (unless special conditions, such as long
distance, call for more time). Arrange with your
lawyer to review it within this time. He or she will
alert you to unfavorable terms such as unlimited
warranties and other things that can put you at risk
of additional cost or liability. However, you must
decide on other, more subjective matters, such as
closing dates and appliances or fixtures.
At this early stage, it is wise to withhold the
extra goodies that the buyer might request. You can
use them later when the negotiations get to the
finer points. Otherwise, it is okay to agree to
things like closing dates and other small matters
that will not compromise you.
Submit your counteroffer with your price, plus
terms and conditions. Give the buyer 24-hours (or
appropriate time period) in which to respond.
Leverage other things to keep the price up
When the buyer is asking for a lower price and it
seems this is their final offer, look for other
things they might want in return for accepting your
higher price.
Throw in more things
This is where you start to bring out the other
goodies like appliances, window coverings, fixtures,
and so on.
Let the buyer assume your mortgage
This can be attractive to the buyer if the
mortgage has a better interest rate than what is
available at present. Of course, it must also be
transferable to a new owner. By letting the buyer
assume your mortgage, you will save them the cost of
higher interest rates (many thousands of dollars
over the term of the mortgage) plus lending fees to
appraise the property and approve a new mortgage
(from $300.00 to $400.00).
Give the buyer their closing date
If you can be flexible, give the buyer their
preferred closing date. Buyers often prefer to close
on or near the date of closing on their old house.
This saves them the cost of bridge financing
(average of $1,000.00 in fees and interest for one
month), storage, and hotel or apartment
accommodations.
Offer seller financing
Only offer seller financing for special
situations when it means the difference between a
sale or not. If you can afford to wait for payment
over a period of months and years, and if selling
conditions require you to consider this option, it
can make the deal. You can offer the buyer a
slightly better interest rate and still make more
money than you would with most savings deposits.
Also, you can save the buyer many of the fees to
process a mortgage. Your real estate lawyer can
prepare the seller mortgage.
These basic strategies have worked well for many
sellers. As each real estate negotiation is unique, you
will probably find more ways to successfully negotiate
the sale of your home |
