Negotiating The Sale Of Your Home

Negotiating a successful sale of your home requires an
environment that sustains the buyer’s interest and trust during
the process Many of our clients have been very experienced
negotiators, and from them we have learned that the goal is to
reach a “good agreement” – one in which the underlying interests
of both seller and buyer are met The results of a poor
agreement may come back to haunt the parties after the closing
Here are some thoughts to consider as you prepare to negotiate
the sale of your home
What do you want to achieve in the negotiation?
Letting the buyer know what you need, in a clear and reasoned
way, is the first step toward getting it For most people, price
is the highest priority, and is given the most attention The
buyer’s offer must be evaluated in light of a market analysis,
marketing time and buyer responses This will give you an
indication of what a reasonable offer should be In addition to
price, there are other needs to think through Distinguish
between “must haves” and “would likes” Your interests might
include:
Selling at the highest price possible Coordinating your move to
your new home Setting the closing to meet your travel, school
or work time frame
Resolving any repair issues fairly
Protecting yourself by having complete property disclosures
Locking in a mortgage loan rate for your new home
Having no title or survey issues, or solving any that do arise
Completing your relocation process
Getting settled into a new home and neighborhood
Forging a good relationship with a buyer who appreciates your
home
Having no future problems or unexpected issues after closing
How much leverage do you have?
A big factor in your leverage is the underlying market
condition If you are in a seller’s market you should receive
offers at the top of the range This is especially true if your
home is in a hot area and has great appeal If you have multiple
offers, you have very strong leverage! Buyers will make their
best offer up front If you are in a buyer’s market, and your
home has been for sale for many months, you have a lot less
leverage to work with Knowing the buyers’ underlying interests
will help you improve your leverage If you see that they love
your house you have some leverage If their time frame is
immediate, and you can meet it, you have some leverage If you
can meet some of their secondary needs, you have some leverage
for a better price If the buyer is a dispassionate investor you
have very little leverage
Be careful that you do not accept an offer that contains a high
risk contingency to sell the buyer’s home, a too long option
period or a buyer without approved financing These offers have
a down side that may be difficult to live with Buyers should
submit a letter from a lender giving their qualification status
Understand the Option Period
In Texas, our contracts contain a short “option period” during
which the buyer can terminate We all breath a sigh of relief
when the option period is over In the long run the option
period protects you, the seller It allows time for the buyer to
do inspections and answer any open questions Keep in mind that,
for many buyers, taking the first step in a big decision is
hard Once the ball is rolling it is easier for them to stay on
track Action creates commitment There are subtle pressures to
keep the buyer in the deal, such as face saving, and time and
money investment Is an adversarial or cooperative approach more
effective?
There is nothing more destructive to the negotiation process
than the adversarial style Professional negotiators try to
preserve the relationship between the parties The goal is not
to reach an impasse in which neither the seller’s nor buyer’s
needs are met Sometimes buyers include a note with their offer
explaining why the house is not worth what they are asking,
pointing out deficiencies, etc No one can read a note
criticizing their house without a defensive reaction
In the same vein, your attitude toward the buyer can be
effective in solidifying their interest in your home The
negotiation process usually begins with some degree of distrust
between buyer and seller The goal is to move in the direction
of trust as quickly as possible
How do you work with a combative strategy?
Sometimes you have no choice but to work with an adversarial
buyer or agent Their strategy includes: emotional statements,
snide remarks, defensive arguments, threats to terminate, ego
involvement, and stated positioning Creative solutions are not
likely to be found in this environment Working with a combative
style negotiator requires control of your own emotions Here are
some pointers: Do not respond emotionally An angry or defensive
response will escalate the negotiation into a no-win battle
Do not argue Arguing usually positions them more strongly and
drags the negotiation process off course
Do not ignore their arguments Listen carefully, but do not
accept or reject
Acknowledge the fact that certain emotions are present, without
responding in kind
Strong emotions arouse emotions in others, including fear and
anger The anger may have a source outside of your contract, or
it may be a negotiation tactic The agent may try an “us against
them” strategy If this happens, write “cover memos” with your
responses to the buyer in order to break down the barrier
Firmly anchor pricing and other points to outside data Show
that your proposals have not been chosen unreasonably Do not
allow hazy proposals to stand Put everything in writing An
emotional negotiator will usually produce an unclear agreement
Offer some wins on some of the terms Face saving is important
Make your counteroffer as attractive to them as possible Look
for ways to meet their underlying interests
Remember that they may be qualified buyers who can satisfy your
goals
Is every point in the contact negotiable?
Yes However, one of the most effective means of coming to an
agreement is to rely on consistent standards For example, it is
common in our area for the seller to buy the title policy and
buyer to pay survey cost Using accepted standards prevents
buyer and seller from haggling over every point On the other
hand, all points in an offer can be used to help structure the
deal
How do you move in the direction of “trust”?
Most people are fair minded and reasonable They respond well to
respectful treatment and to having their concerns heard If the
seller feels that the buyer and agent are acting with integrity,
they will be much more cooperative Contract negotiation is a
sensitive area, and anxiety can be high Both buyer and seller
are under pressure, with future plans at stake Acting with
integrity does not mean that all cards have to be put on the
table It is not proper to discuss your cost basis in the house
or urgency to move It is valuable to develop trust because
trust raises the level of cooperation and forwards the
negotiation Here are ways:
Listen and understand what the buyer has to say
Take their questions seriously and get back to them quickly
Express appreciation for the buyer’s interest in your home
Respond within a reasonable time to offers or proposals
Disclose the property condition thoroughly This usually has the
effect of improving the buyer’s interest Reveal some personal
information about your use and enjoyment of the home
Leave out bottles of water for your prospective buyer
Offer a small gift such as a neighborhood directory, list of
service people, babysitters, etc
Give the buyer first choice on any items your are planning to
sell or give away
Give an orientation to your home to show how to operate your
pool, sprinkler, security, etc
Accommodate the buyer’s requests to drop by and measure the
house or show it to relatives (We know this can be annoying)
Finding common ground with the buyer can be a very powerful
reinforcement of the buyers choice of your home If you meet the
buyer during a visit to your home, make the buyer feel welcome
and look for some common interests, children’s needs, etc
Responding to a “Low Ball” Offer
There is a point at which an offer is so low and poorly
considered that it should not be given a response However, most
of the time it is best to respond to offers: The buyer may be
unfamiliar with your market In his market, greater price
reductions may be commonplace
The buyer may be unfamiliar with the comparable sales for your
home By providing sales data, we can build his confidence in
the property
The buyer may be starting low, but be willing move up
It may be in the buyer’s background or culture to negotiate
aggressively Once terms are settled, he may be very
relationship oriented
By refusing to counter you are adding a little slap to the
buyer’s ego He may not submit another offer, and you will not
see how high he will go
Responding to a Reasonable Offer
Buyers expect sellers to take an evening to discuss the offer
If an offer is accepted within 5 minutes, the buyer may feel
uneasy
Multiple offers must be presented fairly You should either
disclose to all parties, or disclose to none, that multiple
offers have been received We prefer disclosure to all parties
in most cases This will maximize your ability to obtain the
best price By disclosing that there are multiple offers, you
are not “shopping” your contract Shopping occurs when you
disclose the terms of an offer to induce a buyer to submit a
better offer This results in distrust of the process, and
possible loss of the buyers There may be lot of emotion on the
table Future problems will be avoided by a formal procedure for
handling offers

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