Negotiate

We get the frustration most homeowners have with paying others to complete a seemingly simple process. However, there are so many moving parts in the real estate sales equation. Although we’ve provided ample examples of the complexity of a real estate transaction, negotiating the close is yet another pertinent issue.

Sometimes you’ll run into a buyer who slowly tries to chip away at the seller by making additional requests (they aren’t always outright contingencies but, they can be). First, it may be a pest inspection and also the seller paying for pest control to spray around the property. Next, the buyer might want to add a contingency where you’ll seed the lawn (“It’s such a small thing to do! After all, I’m buying this $500,000 home from you!”).

You can clearly see where this is headed. How you manage this is to not a given. Each time you give in to a demand, you empower the buyer to push further. Indeed, there is a time to make a concession and a time to say no.

The key to managing any negotiation is preparation. Make sure you are completely familiar with all aspects of the real estate buying and selling process. This way the other party within the transaction cannot catch you off guard. Also, ascertain the funding pathway. If there are loan contingencies without a pre-approval letter, then you could be setting yourself up for failure during escrow if the loan isn’t granted. Trust then verify all the information given by the owner in regards to financing a transaction before accepting an offer. This may involve calling the loan officer directly to make sure they can close the deal.

Remember that people will ask for the moon and back. It isn’t personal. But, you need to stay realistic and don’t allow emotion to cloud the negotiations. Leave some room for flexibility (but don’t give away all of your bargaining tools) by having something you can give up, or give away during the process.

For example, if having the rooms repainted white is something you’re willing to offer as a contingency, then when the back and forth begins as to who is responsible for what, this can be your olive branch, so to speak. It demonstrates your understanding that there is another party to consider on the other side of the deal. Win-win should always be in the forefront of your mind.

Another negotiating tactic is to consistently insist on counter-offers if your offer is rejected. Why? Because if you don’t then you’ll be trapped in the cycle of chasing the other parties “wants.” You’re not a mind reader, nor should you be.

Tip: Create a “sense of urgency” to increase the motivation and speed of action of the buyer.

Dealing with facts is the only successful way to close the sale. Otherwise it’s easy for the other party to begin chipping away to wear you down. Stand your ground and get everything in writing, even the counter-offer, so everyone is clear what each side is expecting.

Overall, keep the end goal in mind. And, we don’t mean just yours, the other party also has an endgame, and a great negotiator keeps both in mind while keeping everything realistic and in writing.

When offers start to flow in, it’s time to review and consider each one. The challenge is to not take offers personally. If someone offers a price severely below the list price it’s for logical reasons. Many buyers will submit low offers in hopes of grabbing a deal or negotiating on an agreeable price.

Use your CMA and continuing research as factual evidence as to why their offer isn’t feasible. Work with facts instead of emotion. You can also counter an offer with contingencies attached:

• Request a larger earnest money deposit
• Exclude or include personal property (they want the washer and dryer and you’re willing to throw that in, with or without a warranty)
• Negotiation of who pays certain fees
• Adjusting contingency due dates

Check your contract. A non-response to a buyer doesn’t necessarily mean any agreed upon fees are null and void. You may also communicate to the buyer’s agent and tell them you won’t be responding (purchase contracts often have an area where you can specifically initial that the offer is rejected; and it’s a good idea to officially reject offers). Should you provide a counter offer to the buyer, be aware of the counter offer expiration date. In the meantime, you can consider other offers, counter the additional offers and also make different counter offers to each potential buyer.

If you’re unsure or not completely comfortable with this process, by all means, contact me and we can assist you.