When you decide to sell your home, you must go into it knowing that it is not going to happen overnight. In an ideal world, you would get a buyer the day you list your home for sale who offers exactly what you’re asking without any contingencies. But, in the real world, you can expect to list your home for sale and patiently wait for offers to come in. And, the offers you do get will likely be well below your asking price. Therefore, you will have to start the negotiation process. A few tips to keep in mind to help you successfully negotiate are discussed below.
Research Your Market
First and foremost, you need to thoroughly research your market. You probably did this when you listed your home for sale, but you must stay on top of market trends, especially if the housing market in your area is constantly changing. Trends tend to fluctuate over time and being knowledgeable of those trends will help you in negotiating. You are going to want to know what similar homes in your area are listed for. Also, research recent sales in your area to get an idea of exactly what homebuyers are willing to pay to live in your neighborhood. If you simply leave the negotiations to chance without knowing what’s going on in your market area, you are setting yourself up to lose thousands of dollars by accepting an offer that is too low. Another useful tool in making sure you get a fair price for your home is to have an appraisal of your property performed. Being able to present a recent appraisal of your home to prospective buyers will go a long way to ensure you don’t waste time with buyers making offers that are too low. You can simply tell them that the appraisal is your bottom line if you wish.
Prepare Your Home
You can bet that when a buyer looks at your home and does the walk-through, they are taking mental notes and making a list of items that they want repaired or upgraded. Of course, a home inspection is going to reveal any repairs that must be made before you can close. But, there might be some minor items that won’t necessarily prevent the closing from taking place. However, such small repairs will give the buyer the leverage they are looking for to negotiate in their favor. Your real estate agent can make suggestions and tell you if you need to make repairs. They know what prospective buyers are going to look for and can offer you valuable advice in this area. The bottom line on this is that you want your home to be in tip top shape when buyers are looking at the house.
Avoid Revealing Your Motivations
Buyers are always looking for room to negotiate. If they suspect that you’re motivated to sell, they will have more leverage during negotiations. Therefore, you want to be careful so as not to reveal any personal details. Buyers know that you’re selling your home and that is all they need to know. Do not reveal your reasons for selling. Perhaps, you are looking to sell as quickly as possible because you’re getting a divorce, working on a deadline, you can no longer keep up with the mortgage or for a variety of other reasons. The buyer should never know any of these details.
Understand Buyer’s Negotiating Tactics
Buyers, either knowingly or unknowingly, will use tactics to try and drive the price of your home down. Some of the tactics are nitpicky and downright annoying to the seller. If you are aware of some of these tactics, however, you can be prepared to deal with them head on. Below are just a few ways buyers commonly try to talk you down on the price or other conditions of the sale:
- The buyer will claim they need a third party, such as an attorney to review the contract or family members who are helping with the down payment to look at the property. You can counter this tactic before setting the negotiations appointment by asking the buyer if they would like to include anyone else to be present when the details of the deal are finalized.
- Sometimes, you’ll get a non-stop negotiator. Just when you think everyone agrees, the buyer will come back with some minor adjustment to the deal. The best way to combat this tactic is to make a final list of conditions that everyone agrees to. You can inform the buyer that this is the deal. If, after everyone has agreed, the buyer wants to change something, this results in a counter offer. You are under no obligation to accept the buyer’s counter offer. And, if the buyer really wanted your home, but was trying to make you agree to petty demands, then they are the ones that lose. Since you don’t have to accept the counter offer, you are free to move on to another offer which means the buyer has lost the deal. This is frustrating for everyone because it wastes valuable time that could’ve been spent on a serious buyer who accepts the philosophy that a deal is a deal.
- Don’t be surprised if the buyer suddenly makes a statement asking if you would take “X” amount. This tactic is used to catch you off guard in hopes that you’ll agree to their on the spot offer. You should respond by telling the buyer that you will consider any offer that is presented to you in writing. Such a response diffuses the situation and gives you time to think about the offer. Don’t ever let a buyer put you on the spot because it can cost you.
Create a Bidding War
If the housing market in your area is good, you may be able to create a bidding war. This tactic can be used successfully if there are few homes in your market for sale, but there are many buyers. You can increase the offers you get simply by refusing to accept any offers until a certain date. Then when the offers start to come in you will see buyers adjusting their offers because you’ve received a higher offer. You keep accepting offers until you receive an offer that meets or exceeds your asking price. And, yes, you can get a bid for more than what you’re asking. If there are many buyers who want your home, some may be willing to go above your listing price to be the winning bidder. It all depends on how badly the buyers want your home. When you have determined that the bidding is over, and the highest bid has been placed, then you can proceed with that buyer. Keep in mind that the conditions must be right for a bidding war to bring you success. If you’ve received very few offers or the market is saturated with homes for sale, then a bidding war probably will not be the successful solution to selling your home.
Don’t Try to Influence the Buyer
In an eager attempt to sell your home, it can be easy to point out all the great features your home has to offer a buyer. Your goal is to get the buyer excited at the prospect of living in your home. However, if you are showing the home yourself, it is a good idea to stay quiet during the walk through. You should only speak if the buyer asks you questions. An even better idea is to allow your real estate agent to show the home to buyers without you being present. This will afford buyers the opportunity to form their own opinions of your home without you being there trying to convince them to fall in love with your home. The idea is that you want buyers to be excited about your home without being convinced. You want them to picture themselves living in your home and feel comfortable. This is where the buyer’s emotions come into play. If they make an offer based on their emotions, you might just be pleasantly surprised. If the buyer really wants your home, you can except to receive an offer that is fair and reasonable because they don’t want another buyer coming in and stealing the deal.
Know How to Deal with Counter Offers
Either the buyer or seller can make a counter offer. The initial offer you get from a buyer might not meet your expectations. As the seller, you can make a counter offer to adjust some or all the following: Increasing the purchase price
- Increase in the earnest money deposit
- Refusal to pay for certain fees
- Adjusting contingency time frames
- Including amendments
- Changing the closing date
- Including or excluding personal property
- Fixing mistakes made by the buyer’s agent
These are just a few of the items that may be included in your counter offer. Basically, any conditions that you require should be included in your counter offer. The most contested issue that creates the need for counter offers is the selling price. Buyers will do anything they can to talk you down on the selling price of your home. As mentioned earlier, you are not obligated to accept a buyer’s counter offer. You will likely go back and forth with the buyer a few times before everyone agrees. But, if the negotiations seem to keep going with no end in sight, it may be time to cut the buyer loose and seek other offers.
Avoid Making Emotional Decisions
Selling your home can be emotional, especially if you’ve enjoyed living in that home for many years. You’ve no doubt added many personal touches to the property and maybe even raised your family there. This makes it difficult for you to detach yourself from the process. You have an emotional attachment to your home. But, when it comes time to sell your home, you need to look at the process as a business deal. Some sellers will get upset if they receive a low offer on their home. They feel that it is an insult because their home is certainly worth more. Therefore, you need to keep in mind that it is all part of the process. Buyers are going to make low offers. It is not an insult to you or your home. It is simply the way people do business, trying to get themselves a great deal. If you’re present when buyers are doing a walk though of your home, they may make comments about the property that you don’t like. Do not take such comments to heart. It is nothing personal. Everyone has their own personal style and taste. What you like for your home may not be what a prospective buyer likes. From the time you list your home for sale, it becomes a business transaction. Keeping this thought in the front of your mind will keep the emotion out of your negotiations and help you choose the buyer the presents the best offer that is fair to both sides, no matter what they may have said during the walk through.
The negotiating process is often tense because the both sides are trying to obtain the best deal. When you enter negotiations, make sure you are prepared because the party who’s most prepared will usually be the winner when negotiating. You should also remember that you cannot be too demanding or rigid. There must be some give and take. If you take a hard stance just be prepared for the buyer to move on. However, you don’t want to be a pushover. If a buyer thinks they can get you to meet every one of their demands, they will do so. This could cost you thousands of dollars in the end. Therefore, you need to find a middle ground when negotiating. Everybody wants a fair deal which means you and they buyer will have to meet in the middle.
Call The Wright Choice Team today at 804-307-2589 to tour available homes for sale in the Chesterfield County area.