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Selling your house is probably one of the biggest financial transactions you will undertake in your lifetime, and the decisions you make when negotiating a price with a buyer can have a significant impact on how much money you walk away with. These negotiating strategies will put you in the driver's seat and help you get top dollar for your home in any market.
Counter at your list price
As a seller, you probably won't want to accept a potential buyer's initial bid on your home. Buyers usually expect a negotiation, so their initial offer probably will be lower than what they are willing to pay and lower than your list price.
At this point, most sellers will counteroffer with a price below their list price because they're afraid of losing the potential sale. They want to seem flexible and willing to negotiate in order to close the deal. This strategy does indeed work in terms of getting the property sold, as thousands of sellers can attest, but it's not necessarily the best way to get top dollar. (Bing: What's the median sale price in your ZIP code?)
Instead of dropping your price to get closer to the buyer's offer, counter at your list price. Someone who really wants to buy will remain engaged and come back to you with a higher offer. Assuming that you've priced your property fairly to begin with, countering at your list price says that you know what your property is worth and that you intend to get the money you deserve.
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Buyers may be surprised by this strategy, and some will be turned off by your unwillingness to negotiate and will walk away. But you'll also avoid wasting time on buyers who only make lowball offers and who aren't so much interested in buying your property as in getting a bargain.
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A variation on the strategy of countering at your list price is to counter just slightly below it, conceding by perhaps $1,000. Use this strategy when you want to be tough, but you're afraid that appearing inflexible will drive away buyers.
Reject the offer, don't counter and invite the buyer to resubmit
If you're gutsy enough, you can try a negotiation tactic that's more extreme than countering at your list price. Simply reject the buyer's offer and don't counter at all. To keep them in the game, you then ask them to submit a new offer. If they're really interested and you haven't turned them off, they will.
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This strategy sends a stronger signal that you know your property is worth what you're asking for. If the buyer resubmits, he'll have to make a higher offer.
Also, when you don't counter, you're not locked into a negotiation with a particular buyer and you can accept a higher offer if it comes along. For buyers, knowing that someone can come along and make a better offer at any moment creates pressure to submit a competitive offer quickly if they really want the property. This strategy can be particularly effective if the property has been on the market only a short time or if you have an open house coming up.
Hold off on all offers until a certain date to try to create a bidding war
List the home on the market and make it available to be shown. Schedule an open house for a few days later. Refuse to entertain any offers until after the open house. Potential buyers will expect to be in competition and may place higher offers as a result. You might get only one offer, but the buyer won't know that. On the other hand, if you get multiple offers, you can go back to the top bidders and ask for their highest and best offers.
Put an expiration date and time on your counteroffer
When a buyer submits an offer that you don't want to accept, you counter the offer. You're then involved in a legally binding negotiation with that party, and you can't accept a better offer if it comes along.
In the interest of selling your home quickly, consider putting a short expiration time on your counteroffer. This strategy compels the buyer to make a decision so you can either get your home under contract or move on.
Don't make the deadline so short that the buyers are turned off, but consider making it shorter than the default time frame in your state's standard real-estate contract. If the default expiration is three days, you might shorten it to one or two days.
In addition to closing the deal quickly, there's another reason to push sellers to make a fast decision. While the counteroffer is outstanding, your home is effectively off the market. Many buyers won't submit an offer when another negotiation is under way. If the deal falls through, however, you've added time to the official number of days your home has been on the market. The more days your home is on the market, the less desirable it appears, and the more likely you will be to have to lower your asking price to get a buyer.
Agree to pay the buyer's closing costs, but increase the purchase price
It seems like it's become standard practice for buyers to ask the seller to pay closing costs. These costs generally amount to about 3% of the purchase price and cover what seems to be a lot of frivolous fees. Buyers are often feeling cash-strapped from having to come up with a down payment, moving expenses, redecorating costs and furniture and appliances, so paying for closing costs becomes unappealing. Some buyers can't even afford to close the deal at all without assistance with closing costs.
While many buyers don't have or don't want to spend extra cash upfront to get into the home, they can often afford to borrow a little bit more. If you give them the cash they want for closing costs, the transaction may be more likely to proceed.
When a buyer submits an offer and asks you to pay closing costs, counter with your willingness to pay but at an increased purchase price, even if it means going above your list price. Buyers often don't realize that when they ask the seller to pay their closing costs, they're effectively lowering the home's sale price. But as the seller, you'll see the bottom line very clearly.
You can increase your asking price by enough to still get as high as your list price after paying the buyer's closing costs. If your list price is $200,000 and the buyer offers $190,000 with $6,000 toward closing, you would counter with something between $196,000 with $6,000 for closing costs and $206,000 with $6,000 for closing costs. The only catch is that the price plus closing costs must be supported when the home is appraised; otherwise, you'll have to lower it later to close the deal because the buyer's lender won't approve an overpriced sale.
The key to executing these negotiating strategies successfully is that you have to be offering a superior product. The home must show well, be in excellent condition and offer something that competing properties do not if you want to have the upper hand in negotiations. If buyers aren't excited about the property you're offering, they will be turned off by hardball tactics and walk away.
No counter offer? What fantasy world does that author live in?? Umm...it's a BUYER's market -- regardless of where you live, and unless you could care less if your house ever sells, no counter offer is the same as telling a prospective buyer you could care less about ever, selling your place. Like another poster said, treat every offer as if it will be your only offer. That doesn't mean you have to accept the first offer as the final offer, and lose your shirt, but in these times, never look a gift horse in the face....our house has been on the market for 3 weeks, and I guarantee you we'll take every offer seriously.
Thank you Grady. Most people don't bother to look at the real numbers. They'd rather just keep spouting off their neighbor's bad advice.
In my city, it's been a buyer's market for a few years but we have less than 2 months inventory on the market now. Prices are still abysmal but anyone that would call that a buyer's market doesn't know what a buyer's market is.
I sold my house a week ago for full asking price. The house was clean, staged, the yard looked nice and the closing went very smoothly. I had a good, experienced agent who I've used for 3 previous transcations.
The house was on the market for 10 days. I turned down a low ball offer, 10K below asking, the first day the house was on the market.
I did have an appraisal and knew I was going to have to price 200K less than I paid for it. Oh well, I'd made that much selling fmy first fixer house 12 years ago. I had to sell for a job transfer and will make it up on the next house I buy in the Central coast of CA.
It wasnt necessary to me to do anything as far as closing costs, it was pretty much a traditional sale.
Here's another important tip. Get the appraisal done as early in the process as possible or you are going to be sorry if the appraiser deeply undercuts the price you've already negotiated on. Half way through selling you've probably already put down money on another property or rental, and mentally if not physically are moving out. Then your agent calls with the news that the appraisal is 18K less and you're caught in a bind. Don't expect too much help from your agent at this point. Remember, they want their commision regardless of what the house sells for. At least if you insist on getting the appraisal early and it comes back lousy, you'll have more leverage. If the buyers won't meet you with at least 9K more (out of pocket), you can then decide to let the house go or wait for another buyer that may not mind renegotiating the price closer to what you want. Of course, that is if you have had more interest than just the one buyer. The stress of selling a house is bad enough without having an appraiser come in at the last moment and screw up the whole deal. Know what your house is worth to you and in the market.
These are good negotiating tools! But it all depends on how motivated buyers, or sellers are.
What I dont understand is why Zillow has to indiacte the amount of days X propety has been
listed on the market.
It serves only one purpose. Lowering the value of tthe home!!!
Buying a house is much like getting drunk. The buzz happens immediately and gives you a lift. The hangover comes a day after your first mortgage payment. Folks, the majority of realtors are greedy morons who are only looking at their commissions and rarely if ever have anything of value to say or do. Their contribution to the entire procedure is totally worthless as far as I am concerned and I have been buying and selling properties for over 40 years.
A new tactic over the last few years by realtors is to "buy" a listing which means they place an unrealistic price on the property based on what they think the area will bring or will make the seller want to list with them and not based on actual stats or facts in the area. If you plan to use the suggestions in this article to bargain (which can work and does saves time), I would suggest that you have no less than 3 appraisals done by financial concerns where people would secure a mortgage as a way to justify the listing price so that buyers know going in that you have a firm but rational reasoning for the asking price and not a "wish" price. Seller and buyer both will save time and you will probably be closer to the actual asking price for that day and year. Personally, I see no reason to use real estate agents today with the internet and other resources that are available to most consumers. If sellers and buyers split the 6 percent commission that is spent for someone to stand around while you make your decisions, both of you would come out better in the end and happier and with a few more dollars for both of you. Remember, no one likes to think that they were taken advantage of and this way the deal works for everyone minus a real estate commission.
Last, but not least, banks are getting smarter about their losses or potential for loss. If you are not willing to buy back your house for the listing price I do not suggest thinking that placing an unrealistic price on your house is wise even if you spent a boat load of money on upgrades. When it comes to upgrades or improvements, in many cases you just made your house more likely to sell first but not at a higher price!
I might wager to mention that many of the people who do not like this article are the same ones who got talked in to over paying for their house and are now upside down and praying for a miracle. None of this would have happened in the housing market if realtors had not driven up prices in the first place knowing full well that things were over priced in many areas of the country.