Negotiating should be easy if you know the market
Since you have been monitoring the market weekly and adjusting your asking price as needed (see Step 14), you should have a ton of information to use while negotiating. Unless your home simply has no equal in your market, there is a high likelihood that the buyer will offer less than you are asking, or will request additional items or contingencies. If you are working with a REALTOR®, they can negotiate on your behalf and help you understand the various components of each buyer offer.Click here for your free guide!
Real estate agent consulting services
Negotiating the real estate contract may be a good time for a home seller to enlist the services of a real estate professional. Many REALTORS® offer their services on an hourly basis as a real estate consultant (call us at 1-800-416-7949 to learn more about how real estate consulting works or for help finding a real estate consultant in your area). You can negotiate on your own, but you'll likely be up against someone who does this every day, and you'll need to know how to 'play your cards' just right to get the deal done. A real estate consultant can provide professional help to you in this stage of the game for a very reasonable fee.If you are not working with a real estate agent or consultant, you need to have a thorough understanding of home values in your area, real estate contracts and be ready to negotiate with the buyer or their agent. One wrong move can either terminate the deal for you, or lock you into a price or terms that are not favorable to you.
Make sure you know what you are doing before entering into negotiations with a buyer. Also remember that if the buyer is represented by a real estate agent, you cannot negotiate with the buyer directly - you must go through their agent.
HomePoint.com may be able to answer some of your questions. However, your best bet is to work with a local real estate expert given their in-depth knowledge of your particular market and because they can physically visit your house and those competing against yours. Feel free to call us at 1-800-416-7949 with questions - we'll try to help or put you in touch with someone who can.
What does an offer for buying your house contain?
An offer is simply a written contract of what the buyer is willing to pay you for your house, and when and how they will pay you. Certainly, the price is important, but the when and how are equally significant. Waiting six months for the buyer to sell their own house (while your house is off the market because you accepted a contract including that specific contingency) is probably not in your best interest. See a sample real estate contract document from the Texas Real Estate Commission (TREC).Notice Regarding Texas Contract Forms
As public records, the contract forms adopted by the Texas Real Estate Commission are available to any person. However, TREC contract forms are intended for use only by licensed real estate brokers or salespersons trained in their correct use. Mistakes in the use of a form may result in financial loss or a contract which is unenforceable.
If you are obtaining the forms for possible use in a real estate transaction, you should contact a real estate licensee or an attorney for assistance. TREC cannot provide legal advice to the public on private contractual matters.
Read every aspect of the offer carefully
The terms in an offer can impact you significantly. Make sure that you understand everything about the offer. If you don't understand something, hire an expert to help - either a real estate agent or a real estate attorney. Don't ask the buyer's agent to explain everything to you! It's not their job (they work for the buyer) and they won't tell you everything you need to know (because they work for the buyer and have the buyer's best interests in mind). It's not fair to ask the buyer's agent to help you. They would be doing their client a disservice by offering you any help or information.Your tendency when reviewing the contract will be to look first to the price and the closing date, but also make sure you read through the contingencies. These could have a more profound impact on the offer than any other items, including the price offered.
What is a contingency?
Example: I want to buy your house, but I have to sell my current home first. I write an offer (contract) on your house, subject to me selling my house first. If I don't sell my house, I don't have to buy yours. This is a contingency. The more contingencies there are in a purchase offer, the more 'outs' that buyer has so that they can walk away from the deal.What's important for you to understand is that, in the above scenario, if you accept this offer, your house will effectively be off the market (it's under contract to the buyer, who won't close until they sell their own house) until such time as the contract expires or the buyer sells their own house and purchases yours. Depending on the contract language and dates, this could be months! You could "miss out" on other buyers while waiting for this buyer to sell their house – which they may not do – meaning you're left with your house still for sale, and those other potential buyers will have found something else.
Again, a real estate consultant could really help you at this point to negotiate the best deal for your specific situation. You may want to accept the hypothetical offer described above, but a consultant can help you negotiate better and ask the 'right' questions of the buyer to ensure that they're likely to sell their house. Where is their house located? What is the asking price of that home? Is the home in good condition? (don't take their word for it – ask that you be able to see it yourself to find out!) Is it on the market now, and, if so, how long has it been for sale? Have they had any offers? If they do not have a solid offer in 30 days, what steps will they take to move the house more quickly? Will they lower the price? Will they agree to that in writing?
All of these questions (and answers) could cause you to decide whether or not to accept the offer, and whether to change or insert additional language into the contract.
Contingencies are part of every contract. A "no contingency" contract is really what you want to receive, but is not likely to occur. As such, you need to understand what contingencies are and what they mean for you in the offer you received. A real estate agent or consultant can tell you more about contingencies. HomePoint's advisors are also available to answer your questions at 1-800-416-7949.
Everything is negotiable
Remember, everything in a purchase offer (contract) is negotiable. The price, the specific action dates (such as the closing or possession date), contingencies, earnest money, and even what's included in the sale (i.e. who gets the window coverings) is negotiable. The buyer will typically want everything for the lowest possible price. It's up to you (or your real estate agent) to negotiate with the buyer (or their agent) to get the best deal for you. Remember, if the buyer is represented by a real estate agent, you must conduct all negotiations with that agent, not with the buyer directly. Hiring a professional to help you here can be well worth the cost, because that professional could help you get thousands of dollars more for your home, or better terms, or both.
Counteroffers
You will typically have the ability to counter the buyer's offer for your house. This means you are saying "I'm willing to work with you, but I want some things that were not in your original contract." You can counter anything that was in the buyer's original offer.Remember, this is all about give and take. To get a deal done, you will likely need to give on some points to get some other things you want.
Writing counteroffers requires a special skill. There are a lot of emotions involved in a real estate transaction. The words you choose in a counteroffer (and how you negotiate) can make or break a deal. You may be able to do this on your own, but consider enlisting the services of a professional to help you here. HomePoint.com can connect you to a professional who can help you review an offer and prepare a counteroffer for a low fixed fee. Or, your full-service agent can provide this service as a part of their package for a commission (typically 5-6% of the sale price of your house).
Here's another example to help you better understand the offer/counteroffer process. Here is a hypothetical buyer's offer to you:
Buyer: Susanna Gonzales
Offer Price: $285,000 (you wanted $299,900)
Close Date: 60 days from now
Conditions: Seller agrees to leave all window coverings, all appliances, including washer and dryer and all children's play equipment at the property (you don't care about the window coverings, but wanted the washer and dryer and the kids play equipment)
Contingencies: Buyer must obtain a new loan, house must appraise for $285,000 and buyer must sell their own property prior to closing.
There are some things in this offer you don't like. The price is lower than you wanted and the buyer is asking for some extras. In addition, they must sell their house before they can purchase yours. You might respond with a counteroffer that includes the following (Note: This language is for illustration purposes only! Do not use this language in an actual real estate transaction! Consult legal counsel or a real estate professional to create language to be used in an actual real estate transaction.)
Your hypothetical response (counteroffer) to buyer:
Buyer: Susanna Gonzales
Purchase Price: $295,000
Close Date: 30 days from now
Conditions: Seller agrees to leave all window coverings and children's play equipment; washer and dryer are available for an additional $800.
Contingencies: Buyer will have a first option to purchase the property, but Seller will continue to market the property while Buyer is marketing their own house. Seller will notify Buyer if any other offer is presented; Buyer will have 48 hours to remove the contingency to sell their house, or terminate their offer.
OK, what did that do?
Price: Most buyers like to come back with a counter to your counteroffer. Their original price was $285,000 – yours was $299,900. If you meet them halfway now, your price will be $292,450 – you may be leaving money on the table. The buyer may accept this amount, but may also counter back at a lower price, like $288,725, the difference between your $292,450 (your counter price) and their original offer of $285,000.
On the other hand, if you counter at $295,000, you are left with more negotiating room if the buyer counters your counteroffer. It's likely that they will come back at $290,000 (halfway between your $295,000 and their $285,000). In this case, you are probably getting what you want, with nearly 97% of your asking price. If they take your $295,000, that's even better. You ‘win' either way.
Keep in mind that the condition and desirability of your property will dictate how you negotiate price. A home in good condition in a desirable location will typically sell faster and for more money. You may be able to get your original asking price if your home is in a good location and is in good condition, especially if there are few substitutes (other homes like yours) in the area.
What to do if the buyer rejects your counteroffer?
The examples above work well in the hypothetical world. What if your buyer does not accept your counteroffer and appears ready to walk from the deal? This situation is where having the help of a professional can be extremely valuable. The answer to this question really depends upon your situation, your need to sell the house and the amount of money at risk.If you haven't already hired a real estate consultant, get one at this point. Their knowledge and ability may help you to save the deal, and the cost to you will be nominal.
Continuing negotiations
Even if the buyer rejects your counteroffer, you can still continue negotiations. However, they have "called your bluff" at this point, and will know that they are in the position of strength. If you feel that you can still resolve your differences and complete the transaction, you should absolutely contact the buyer (or their agent, if they are represented by an agent) to continue negotiations.Remember, you'll have to give in to some or all of their requests; make sure you lead with this in the conversation. Example: "I have considered your offer further, and decided to agree to your terms regarding the price and the washer and dryer. However, I cannot wait 60 days to close – can you do 30 days?"
Re-listing your property
If the negotiations ultimately fail, you can re-list your property (if you took it off the market), or change the current listing status back to 'active', and continue marketing to find another buyer. Repeat steps 11 through 15 (and 10, as needed) until you get a solid offer and get your home 'under contract'.If your property is listed in a Multiple Listing Service (MLS), that listing can expire. Many homeowners do not understand how listings really work. The listing is a right to sell your house for a specific period of time. Once that listing expires, the right to sell your home disappears. A listing is much like a stock option – once you've passed expiration date, the option has no value.
When your listing expires, the listing agent is bound to either renew the listing for some term, or remove the listing from the MLS and stop marketing the property. You will have to decide if you want to renew the listing for some term with your current agent, or select a new agent to market your property (or do it yourself). If you decide to select a new agent, repeat steps 6-9, outlined elsewhere in this document.
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