No one teaches you how to negotiate the price of a home in high school, so if you're a first-time home seller, it can be an overwhelming process. Or maybe you've had to negotiate real estate prices before and walked away with seller's remorse.
In this blog, we’ll give you 10 real estate negotiation tips for sellers to help you get the most during a sale.
1. Work With a Real Estate Agent
Negotiating a sale is easier with an expert – that's why one of the best negotiating tips for home sellers begins way before you get an offer.
It starts with the selection of your listing agent.
When you work with a real estate agent, you pay them commission – typically 5-6% of the final selling price. It can be tempting to try to keep that percentage by selling the property by yourself.
The problem is that selling your home is a complicated process with many legalities attached. It's also an emotional process for the home seller. Combine those two, and you'll quickly realize why it's important to hire a professional who understands the process and will be able to see the whole board with an objective and practiced eye.
Real estate agents have education in areas that can be critical to the best deal like:
- Determining market value
- Showing your property in the best light
- Attracting qualified buyers
- Negotiating terms
And since their commission is determined by the negotiated price, they have a vested interest in getting the highest possible selling price for your home.
2. Choose Your Real Estate Agent Wisely
Licensed real estate agents will have an education in the same topics, but not everyone has the same amount of experience or skill.
You'll want to pay attention to how long candidates have been in the business, what past home sellers say about their experience, and their professional reputation.
Any listing agent will require an exclusive contract, and it's during this process that you'll negotiate rates for their commission. You've got to balance the commission with the value of the agent's experience and skill – you'll likely have to give up one for the other.
3. Set a Realistic Asking Price
The asking price for your home will determine not only where negotiations will begin, but also how many people will be interested in your property.
Start too high and no one will bite. Start too low and you'll have less leverage in negotiations.
So, how do you set the right price? Check recent sales in your neighborhood for similar homes – websites like Zillow have made this process easier.
A listing agent can be invaluable for setting the right asking price, though. They'll know what affects the market value of your home, whether it's a buyer's or seller's market, and other factors that are more difficult to judge as a layperson.
4. Get a Home Inspection
The question of sellers getting a home inspection is somewhat controversial.
The downside is that it's an extra expense, and if you find a problem, you'll either need to fix it or disclose it to potential buyers.
The upside is that you won't get any surprises later. If something needs repair, it will almost certainly come up later. The difference is that later, the information can ruin your leverage in negotiations, or even tank the deal.
Pre-sale repairs can even lead to marketing opportunities. If you have to replace the roof, you'll be able to advertise that the house includes a brand new one – that's very attractive to home buyers who are looking to avoid major repairs as a new homeowner.
5. Counter at the Asking Price
You put a lot of effort into setting your asking price, and when the first offer comes in, it can be tempting to meet them below the asking as a compromise.
It's not necessary, though. Consider countering their offer with the asking price or just a few thousand below. You can come down in future rounds, if necessary, but you may not have to.
This isn't a realistic proposition for every property or in every housing market, but you might be surprised.
6. Put a Deadline on the Counteroffer
Putting an expiration date on your counteroffer forces buyers to make a decision in a timely manner and It also creates a sense of urgency that can put negotiations in your favor.
There is another, more practical, reason for putting a deadline on a counteroffer. Once you enter negotiations (offers and counteroffers) with a potential buyer, it's considered unethical (though not illegal) to entertain other offers. If you do entertain multiple offers, you're required to disclose it to all parties, and this often scares off buyers who don't want to get into a bidding war.
Therefore, while you wait for an answer to your counteroffer, your house is effectively off the market. A deadline prevents this limbo from lingering too long.
States often put a default time frame in the standard contract. Consider making your deadline shorter than the default for your state but be aware that if the expiration is too fast, you could lose potential buyers.
7. Don't Be Afraid to Reject an Offer
If an offer doesn't meet your expectations, you don't have to make a counteroffer at all. If it's unacceptable enough, you can and should reject the offer.
If you're interested in keeping the buyer interested, ask them to submit another offer.
As with the deadline, a rejection helps you avoid juggling multiple offers. If you reject an offer instead of providing a counteroffer, you're not legally in negotiations with the other party, so you can proceed with other, more attractive, buyers.
8. Offer to Pay Closing Costs
Most home buyers are cash-strapped – they're out of pocket for the down payment and moving expenses, at the very least.
Closing expenses are traditionally the buyer's responsibility and amount to roughly 3% of the purchase price up front. And that's a healthy chunk of change for an eventuality that many buyers don't really plan for. In comparison, borrowing a little more may seem totally doable.
Therefore, offering to pay closing costs can be a great tool to make the deal at a higher purchase price.
The trick is to make sure that the purchase price you set with closing costs considered align with your home's appraisal. The buyer's lender won't approve an overpriced sale, so you'll have to lower the price later and lose money you didn't intend to.
9. Concede Other Things to Get the Best Price
Negotiating a real estate contract involves a lot of moving pieces, and they're all potential leverage to make your asking price more palatable to the buyer.
Potential points of negotiation include:
- Being more flexible on move in / move out dates
- Allowing a contingency for the sale of a prior home
- Paying points toward the buyer's mortgage
- Offering a home warranty plan
- Prepaying property taxes
- Agreeing to cover repairs or replacements
- Allowing other concessions
10. Know When to Walk Away
When negotiations really aren't working, don't be afraid to move on. If you've exhausted all options and are still failing to make the deal you can live with, then it's better to find a new buyer than live with seller's remorse.
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Written and Published by: VanEd