One of the first facts you must realize when selling your home is that it is probably not going to sell for the asking price. You will want to price your home high enough to realize its market value when it is sold, but low enough to be attractive to buyers. If you price your home too high it is likely you will receive few offers, if any at all. You will, however, have more leverage in pricing your home if there are few homes for sale in your market.
Price Home Competitively
Buyers wanting to buy a home in your neighborhood will pay a premium if there are few homes available for purchase. Keep in mind that pricing your home too low might mean a fast sale, but you’ll lose a lot of money. Even if you need to sell your home quickly, you want to ensure you are pricing the home competitively, so you receive a fair price. You want to avoid both situations caused by pricing your home too high or too low, so you will need to find some middle ground when pricing your home for sale. If the price is right once your home is listed, you can expect to receive several offers.
Choosing the Best Offer
Once the offers start to come in, you are going to choose the best offer. Of course, if none of the offers you’ve received thus far meet your expectations, you can continue to search for a buyer until you do receive an offer that you’re comfortable with. Once that offer comes in, there will be some negotiating between you and the buyer. Unfortunately, mistakes are often made during the negotiating process. This is the part of the process that creates a tense situation because making the wrong move could cost you thousands of dollars or the loss of a prospective buyer. The process of selling is long and frustrating at times. The last thing you want to have happen is to get all the way to the negotiating stage and start making mistakes that will cost you money or buyers.
Keep in mind that the buyer will try to negotiate the deal in their favor. If they see that you are motivated to sell quickly, they will use this to try and talk you down on the purchase price. However, you, as the seller, can do the same. For instance, if you know the buyer needs a home in your neighborhood, you can use this information to negotiate the deal in your favor. Generally, the party who’s most prepared will be the one that wins in the negotiations.
When you enter negotiations with the buyer, keep in mind that this process requires balance. If you want to be a good negotiator, you can’t be too rigid. You also cannot be a pushover. You need to know when to take a firm stance while at the same time keeping things fair. Negotiating takes skill and patience. Not everyone has what it takes to be a good negotiator. However, if you want to become a successful negotiator when selling your home, then follow the tips below.
Become a Research Expert
You must know your market and know what your home is worth when negotiating a sale. Once you set an asking price, you need to decide what the bottom amount is that you’ll be willing to accept. Go into the negotiating process with the knowledge that buyers will do anything they can to bring the asking price of your home down as far as they can get it. You can also research recent sales in your area of homes that are comparable to yours. If you start negotiating with a buyer and have no idea what homes have sold for in your area, you are setting yourself up to make serious mistakes and accept an offer that is too low. If you know what you must receive for your home, you can negotiate until the buyer agrees to a price that is acceptable. If one buyer doesn’t meet your pricing expectations, you can move on to the next buyer.
Prospective buyers know that you’re selling your home. That is all they need to know about you. If you make the mistake of divulging any personal information about yourself, then you are going to give the buyer leverage that will work in their favor. You will want to keep quiet about your situation, especially if one of the following situations requires a quick sale of your home:
- Being late on the mortgage
- Going through a divorce
- Working on a deadline
- Moving across the country
Once you reveal details of your personal situation, the buyer likely has you where they want you. Any of the above situations could mean that you are motivated to sell your home quickly. This tells them that you are less likely to negotiate and will accept their lowest offer. Don’t sell yourself short by telling too much.
Another great reason to stay quiet when you’re negotiating is that you want to avoid any discussions if the offers you’re getting do not meet your standards. Simply refusing to acknowledge a buyer’s offer when it is clearly a ridiculously low offer will make the buyer rethink the offer and save you time. Your hope is that you will then receive an offer from the buyer that is worth negotiating. When you practice silence, you have greater control over the negotiations.
Let the Buyer’s Emotions Work in Your Favor
You want your home to be able to speak for itself. Therefore, you must make small repairs and renovations that will appeal to the emotions of prospective buyers. If you prefer to show your home to a buyer, it is best to do the walk-through without saying anything, unless the buyer asks you questions. Buyers are motivated to buy a home based on emotion. This means you want the buyer to be able to connect emotionally with your home. It is even better if you allow your real estate agent to show the home. This allows the buyer to form their own opinions regarding your home without you there trying to shape their opinions and convince them why your home is amazing. If a buyer can get excited about the prospect of owning your home, the negotiating will be in your favor because that buyer has already made up their mind that they want your home.
Create a Bidding War
You may be able to create a bidding war if you receive several offers for your home and the market isn’t saturated with homes for sale. The bidding war will start when there are several buyers who want your home. Once the offers start to come in, buyers will keep adjusting their offering price higher. Sellers have received more than their asking price when creating a bidding war. It should be noted that a bidding war is only a good idea if the conditions are right. If you’ve been struggling to get offers and the housing market in your area is particularly bad, then a bidding war probably won’t lead to the successful sale of your home. In this situation, the best way to sell your home is to acknowledge offers as they come in and choose an offer and negotiate with that buyer.
Keep Your Ego in Check
You already know that you’re going to be receiving a large amount of money from the proceeds on the sale of your home. The anticipated amount of money will make you feel confident and wealthy. Unfortunately, this thinking can go to your head which leads to you thinking you’re a better negotiator than you are. When you become over-confident in your negotiating skills, you’ll likely lose out on a good deal. Instead of showing arrogance, let your confidence shine through. Such confidence will gain you respect from buyers who will take you seriously. You should convince yourself and the homebuyer that you know what you’re doing while at the same time remembering that everyone makes mistakes. By doing this, you will have better negotiations that will lead to a successful conclusion.
How to Deal with Counter Offers
To successfully sell your home, you should expect to receive counter offers. You will probably go back and forth with the buyer before terms are agreed upon. You, as the seller, can do one of three things when you receive an offer:
- Accept the buyer’s offer without any conditions or a counter offer
- Make a counter offer to adjust conditions of the sale
- Ignore the offer because it has completely missed the mark
It is unlikely that you’ll receive an initial offer that you will be willing to accept without making a counter offer. This might happen, however, if there are few homes in your market for sale and there are many buyers. In a market where there are many buyers, it is even possible to receive an offer that is higher than the asking price. This is rare, but it does happen.
The most likely scenario is that you’ll receive an offer that you want to make a counter offer on. You might want to counter on the purchase price if the initial offer was much lower than what you are willing to work with. The buyer may have made an offer with contingencies, such as if they buyer must sell their home before they can move forward with the purchase of your home. This is quite common, and you are likely to encounter this. You may receive an offer on your home, but the buyer cannot get financing until a home inspection is complete or the buyer must get financing approval before the sale of the home can go forward. These are just a few examples of contingencies you might encounter when you receive an offer. If the offer is reasonable, but you feel it is in your best interest to continue negotiations, you will make a counter offer. You can counter on the price and other conditions.
There are times sellers encounter a low-ball offer that is just too low to even consider. If you receive such an offer, it can be frustrating because such offers only waste valuable time that could’ve been spent on a serious buyer with a better offer. If you ignore the offer completely, you can either hope the buyer realizes their mistake and makes a better offer or you can simply move on to another buyer.
If you receive an offer that you feel is worth negotiating, but you’re not quite ready to accept, you can make a counter offer to adjust a few of the conditions. The conditions that are often dealt with during the counter offer include:
- Sale Price
- Closing Date
- Contingencies from the Buyer
- Closing Costs Contributions
It should go without saying that one of the most negotiated items is the sale price. Each side wants to be comfortable with the price and feel that they are getting a fair deal. Achieving this can take quite a bit of negotiating.
Selling a home takes time, patience and a willingness to negotiate. You must be willing to give a little, but you don’t want to take the first offer that comes along, especially if it is well below your asking price or contains unreasonable requirements. Once you find the right buyer for your home, then the negotiations will begin. The goal is to find a middle ground that you and the buyer can agree upon. You shouldn’t be discouraged if it takes several counter-offers before you agree. This is common.
The home selling process isn’t always easy, and it can be very frustrating at times. But, in the end it is a rewarding experience, especially when you can realize the proceeds from the sale. You will have a large amount of money to spend however you wish, whether it’s on a new home or some other purpose that you have planned.