When you receive an offer from a homebuyer, chances are it will be less than you expected. The housing turmoil of the last eight years has taught buyers to go in low, except in the most heated markets.
It’s natural to get angry and indignant, but you won’t get a higher offer that way. You’ve got a fish on the hook, and jerking the rod won’t land it — you’ve got to reel it in. Like a good fisherman, you want to get the fish to the boat alive before you decide whether to throw it back.
Before you fire back a reply, try to understand why the offer is so low. Sometimes the buyer will tell their agent and their agent will tell your agent. First look at the comparables they’re using — are they relevant? Is the condition of your home better or worse than other similar homes?
The first offer is your reality check. If your agent told you to declutter, paint, repair and deep clean and you didn’t do it, then the offer is showing you the error of your ways. Unless you do some drastic corrections, the only thing you can do is negotiate the buyer’s low offer upward.
Negotiation typically works best when both parties get what they want. For example, you may be willing to take less money in exchange for a cash offer or a quicker closing. Your buyer may be willing to pay closer to your asking price in exchange for paying their closing costs, which could be several thousand dollars.
Your willingness to negotiate depends on several factors:
Can you get something you want in exchange for conceding something the buyer wants?
What are your market’s conditions? Do buyers have the upper hand or do sellers?
How badly do you want to sell? Are you willing to let a few thousand dollars stand between you and the next stage of your life?
Start from a position of strength — an offer shows you have something the buyer wants. Unless the buyer can get the same thing for less elsewhere, you can safely counter the buyer’s offer.
Keep in mind that a buyer will only pay what he or she believes your home is worth. Buyers respond to price, location, and condition. What you paid for the home, or what equity you need out of it, aren’t relevant to the buyer.
Homes in top condition sell for the most money. You can’t negotiate your home’s location, but a poor location can definitely be improved by putting your home in the best condition possible.
If your home isn’t spotless and move-in ready, then condition is likely affecting the price buyers want to pay for your home. You can either make the repairs and updates your buyer wants, or you can counter with a carpet allowance, pay HOA fees, or some other concession that will please the buyer.
Before you negotiate any offer, you need to know whether or not you have a solid, serious buyer. This is where your real estate agent is indispensible. Your agent can act as a go-between to make sure your buyer is qualified by a reputable lender.
She can give you feedback on your home’s price, location or condition, and make suggestions on where you can improve your negotiating position.
Once the buyer makes an offer, your agent can advise you how to negotiate the offer, based on the contract terms, and what she can find out from the buyer’s agent about your buyer’s motivations.
Your agent can’t tell you what to ask for your home or what you should accept, but he or she can tell you what you can do to improve your contract negotiations.
If you don’t agree to the buyer’s terms, and counter the buyer’s offer price, or change the day of closing, or some other term, the home is not yet under contract. Your buyer can initial his or her acceptance, and you have a binding contract.
Or your buyer can do nothing, and you may have lost an opportunity to sell your home.
Written by Blanche Evans