It all boils down to the negotiations. As discussed in Secrets of Power Negotiating, (read my review of the book) the best negotiations end with both sides believing that they got the best deal for themselves. When selling your home, your personal negotiation strategy should examine and carefully consider factors such as the condition of the real estate market and your own eagerness to sell when you start receiving offers to buy your home. An eager seller equals a lower price! If you’re eager to sell, NEVER communicate that … even to your own real estate agent.
While any parent knows that negotiation skills come naturally to children, those abilities seem to wane as children age. Many never remember how to haggle or negotiate to get the best deal for themselves again. I’d recommend reading Dawson’s book (see link above) and using these do’s and don’ts when faced with a real estate negotiation.
Real estate negotiation do’s and don’ts
Do stay with the facts
The facts of the deal — the condition of your home, the condition of the market, your need to sell, the buyer’s finances — should guide your negotiations … and your expectations.
Do use your agent
It’s usually best to avoid speaking with the buyer or his or her agent directly. Communicate your wishes very candidly to your agent so he or she can accurately represent your interests. Your agent should handle the direct negotiations, not you. By using your agent, you can more freely speak your mind and much more easily express your emotions and frustrations without the risk of damaging the negotiations.
Do give in … but not too soon
There’s nothing wrong with thinking an offer over for a day or so. Plus, by holding a hard line early, you can make it seem as if you care about certain terms that you really don’t. Then you can let the buyer have his or her way on those terms in exchange for other concessions that you really do care about.
Do go halfway … sort of
If there’s a number or date that you and the buyer can’t agree on, ask if the buyer is willing to go halfway. Then counter offer to go half of that. For example, if you’re asking $300,000 for your home and the buyer wants to pay $260,000, ask if the buyer would be willing to go halfway — $280,000. If his agent indicates to your agent that this is a possibility, announce that you’re willing to split his $280,000 and your $300,000 and concede down to $290,000.
Do focus on resolvable issues
Always ask a buyer to “set aside” the big issues that are plaguing the process and get him or her to agree with you on some common ground. If you focus on what you can solve rather than what you can’t, you can build up momentum and goodwill and make big issues seem smaller.
Do get everything in writing
Never consider any “oral agreement” as anything you can bank on, even if it comes from your agent. Insist on a written record, signed by both parties, of all counteroffers and revisions. Ask for signatures with dates, not just initials.
Don’t communicate your eagerness to sell
Nothing will get you a lower price more quickly than announcing that you’ve already taken another job in another state and have another mortgage to pay while trying to sell THIS house. Even if all those things are true, you don’t have to tell everything you know about your personal situation.
Don’t give in without getting a concession from the buyer
One of the biggest mistakes negotiators make is agreeing to a concession without getting anything in return. If the buyer simply WILL NOT come up another $1,500 in price, demand that the closing take place before you have to make another house payment. If he demands that you leave all appliances and window treatments, agree only if he comes up another $5,000 in price. If she demands that the carpet be replaced, demand that YOU get to pick them out unless the selling price is raised. If he demands that you paint the exterior, agree only if he pays all closing costs.
Don’t get stuck on minor issues
If you have an offer that really turns your head, don’t jeopardize it by focusing on terms such as whether you get to keep your Aunt Jenny’s handmade curtains that hang over your kitchen sink. People will get hung up on the silliest of things when there’s hundreds of thousands of dollars at stake. Real estate agents can tell you some really funny stories about how a $500,000 deal fell through because someone wouldn’t part with a $900 refrigerator.
Don’t be afraid of an offer with contingencies
Some sellers won’t accept an offer with contingencies attached that include getting “acceptable” mortgage financing or the sale of the buyer’s current home. Consider these conditions of the deal if they’re reasonable for the situation.
Don’t dismiss any offers out of hand
Read and consider all offers before rejecting them and carefully consider whether you should reject ANY offer outright. Sellers often cringe at their first offer, though studies have shown that the first offer is often the best — unless the home has been on the market for only a few days in a seller’s market.
Don’t be afraid to walk away
This is your MOST powerful weapon. Agree with a deal only if it feels fair to you. If your buyer or the terms of the deal feel in any way unsatisfactory to you, you can call it off. You’re in control … it’s your house until you sell it!
Negotiation isn’t JUST about price
Don’t fall into the trap that all negotiations are only about price. That’s the major factor to be sure but there are other factors you can throw in there such as:
- The timing of the closing
- Who pays which closing costs
- attorney’s fees
- title insurance
- real estate agent’s and broker’s fees
- Items you could accept with a lower cash offer – use of a vacation home, a boat, an RV, etc.
Everything is open for negotiation. The key is to know what you want out of the deal, but more importantly, know what your buyer wants. When you know what your buyer wants (his or her hot buttons), you’re in the driver’s seat.