In a buyers market, it’s hard for you, as a seller, to get what you want out of the buyer. Getting the best price with the best time frame for closing takes some negotiation skills! During a contract negotiation, it’s important to understand both parties want to win. If you can make the buyer feel like they’ve “won,” while keeping the price within your bottomline, that’s when a contract becomes a deal.
How do you make the buyer feel like they’ve won?
Getting a buyer to feel like they win is a delicate process. On one hand, you don’t want to give your home away. On the other hand, you know home buyers aren’t coming and going like they used to. Making a buyer feel like they win the contract negotiation process is going to require some flexibility on your part.
Let’s say you get an extremely low ball offer 30k below asking price. You know this buyer is testing you. They want to know if you’re willing to negotiate on your selling price. Two things to consider. How well qualified are they to buy your home? And when do they plan on closing?
If the buyer is paying cash closing in two weeks, you may want to negotiate a little more openly. If the buyer only has a pre-qualification letter, you might want to tell them to go swim in a lake!
Negotiating A Low Ball Offer With A Home Buyer
First of all, the buyer should have submitted some sort of proof of funds with their offer or a mortgage pre-approval letter. If they didn’t, before you dive into counter offers, ask them to supply some sort of proof they have access to the money. Once you know they are capable of buying your home, you should start the counter offer process. You should always consider any offer you receive, no matter how low it is.
They came in really low so you know that they’re looking for a steal. Remember, the key to a great negotiation is to let the buyer think they won, and keep your bottom line in tact.
Your first counteroffer should be close to asking price. Let them know you aren’t going to give your home away. Also, the buyer may not know what comparable properties to your home are selling for. You might want to submit comparable properties that can give your offer more weight in the negotiating process.
If it’s a cash buyer, most of the time they will submit an offer assuming since they have cash, you will be more willing to reduce your price. To counter this mindset, let them know that money is money. Whether a buyer has a bag of cash or they need to get a loan, you aren’t giving your home away. Your selling it.
The Counter Offer
Once you submit your first counteroffer, you can get a feel for what this buyer’s going to do. If they counter back without any movement on their low offer, you know they’re unreasonable, and you can reject the offer. You can also counter at full price just to see if that’s really their final offer. If it is move on.
If they counter with an offer that shows their willing to negotiate, it’s time to play ball. You need to give a little in order to receive. If you don’t have much room to wiggle, you can try offering things other then cash.
Offer other things such as furniture, art, paying for closing costs, paying for appraisals, home inspections, settlement dates, or a reduced earnest money deposit. Sometimes these added benefits will be enough to persuade the buyer to accept your counter.
Do You Have Negotiating Leverage?
Negotiating your selling price depends a lot on the amount of leverage you have. How long has your home been on the market? Are you in a buyers market or sellers market? Do you have other interested parties?
If the buyer is an investor, you usually don’t have much leverage as they are looking at the bottomline. If the investor can’t get the home for the money they expect, they will move on quickly. The investor has a certain price point they’re willing to pay.
On the other hand, a buyer that falls in love with your property may be more willing to pay extra just to get the house of their dreams. If you know the buyer is in love with your home, you may have more leverage in the deal. If you can find out what motivates your buyer, you can use that as leverage to increase your selling price.
Negotiating a contract on the sell of your home is not a fun process, in fact it’s extremely stressful if you feel you aren’t getting what you thought you could. Don’t negotiate on your own, get someone in your corner to help you. Whether it be a real estate agent or a real estate attorney, the money you pay for their professional services can easily be recouped with the experience and knowledge they provide.