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How to Negotiate with Buyers
Sellers today have to do more to attract buyers and offers than ever before. When offers come in, sometimes they are low or have conditions that have to be negotiated. As a seller, you can be proactive before the offers come in to make sure negotiations are kept to a minimum and in your favor.
Negotiate by Planning Ahead
In negotiations, you have to know what your bottom line is, because the offer will usually be less than your asking price. You may have more than one offer to compare. The highest priced offer may not be the best offer if you are asked to make costly repairs or contribute to the buyer’s closing costs.
To avoid surprises, work out several potential scenarios wit your listing agent, so that you will be prepared with a response when an offer comes in. Your real estate agent should be able to provide an estimate of your closing costs, as well as the buyer’s closing costs, so you can do the math together.
Make the repairs you’ve put off, so that the buyer isn’t turned off or penalizes your price because of them. The buyer is bound to ask you to make the repair anyway.
Find hidden repairs and code violations by having your home professionally inspected. Keep receipts of all repairs performed, along with any warranties to show the buyer. Fill out a seller’s disclosure with honest informed answers that give the buyer the data he or she will need to know about the house.
Generate the best offers by getting the house showroom ready and keep it ready to show at all times. De-clutter the house, deep clean it, and paint it. Buyers respond well to a “model home” appearance.
When the Offer Comes In
When an offer comes in, have your real estate agent contact the buyer’s agent to find out as much as possible about the buyer and the buyer’s needs. You want the agents involved to have a rapport. Your agent will need to get as much information that will enable you to respond positively to the offer and still keep your bottom line intact.
Buyers often want to test the seller, and make offers below asking price. However, if the offer is close enough to accept, don’t sign right away. Delay the acceptance for a few hours. This strategy lets the buyer know that the offer wasn’t jumped on, and may cause the buyer to think twice about being too demanding during the inspection phase.
In the case where you get a full price offer, study the offer carefully to add up possible expenses such as whether the buyer wants you to pay his closing costs. A full price offer could signal that the buyer intends to negotiate a lot of repairs or refurbishing costs during the inspection period. If you’ve had your own inspection, you’ll know what to expect and how much you will negotiate off the price or in repairs.
If the offer is uncomfortably below asking price, try to find out the buyer’s mindset. Could the buyer be trying to buy more house than he or she can afford? Could a change of financing help get closer to your price? Can you help with the buyer’s closing costs if he or she will raise the offer price?
An offer with very little down payment may signal that the buyer has financing issues. Find out if the buyer has been pre-approved, which means that the buyer has actually been approved for a loan through sharing his/her financials with the lender.
Raise your home’s value in the marketplace
Buyers pay less for homes with negative associations such as a busy street, poor condition, unappealing drive-up, or prison-like bars on the windows. They pay more for attractive locations, good schools, curb appeal, cleanliness, storage space, and well-done updates, among other attributes.
Ideally, you want to have time to sell and not be pressured by job transfers, divorce, foreclosure, or other vulnerable situations. If the buyer knows there is pressure behind your sale, he or she may use that as an advantage in negotiations, regardless of how well you’ve prepared the house. Keep your reasons for selling private between you and your agent.
The highest prices are obtained by sellers who have taken the time to prepare their homes for marketing. This includes all needed repairs, staging the home to appeal to the most buyers, and making the house available to show to buyers.
Don’t let the house seem too small by having any rooms do too much duty. Buyers are confused when a bedroom is an office, too. Get rid of any excess furniture that make rooms look smaller, or impede traffic patterns. In other words, think of objections buyers may have and overcome them before they make a low offer.
Keep negotiations pleasant
Some buyers may assume they have the advantage because of the number of houses available, and they may behave overconfidently. Stay cool, because you’ll be able to get a great deal when you buy your next home, too. The shoe will be on the other foot because you’ll likely recoup any losses you may have incurred on the sale of your home, by being able to buy at reduced prices, too.
Be patient. While stressful, expect negotiations to go back and forth until the contract is amended to both the buyer’s and your satisfaction. Trying to “just get it over with” can cost you money. Don’t make a final decision until you have all the information you need, such as the buyer’s pre-approval letter and most recent comparable sales and active competition.
As long as you keep the relationship pleasant, respond to the buyer’s questions with receipts, documentation, and information in a timely manner, it will be easier to negotiate the sale of your home.
Buyers want to feel that they got a good deal, and the best way to make them feel good about their purchase is to show them that you have taken good care of the home, and that you are turning over a fine asset to their care.