Negotiating techniques for homebuyers and sellers
Whether you’re buying or selling, there can be a lot of emotions tied in with the process. While a seller who has lived in their home for years might have a hard time letting go—feeling nostalgic recalling all the memories they’ve made—a buyer may be envisioning their future life unfolding in that very same home, already having fallen in love with the property.
So, whether you’re filled with nostalgia or excitement, you’ll want to go into the process prepared and ready to negotiate. Here, we’ll talk about negotiating tips for both buying and selling.
General tips for buyers
Don’t be afraid to negotiate, but do make sure you know whether you’re in a buyer’s or a seller’s market. While sellers often price their homes slightly higher, expecting a buyer to negotiate the price down, they’ll probably be less accommodating if they have multiple offers coming in.
So, if you’re in a seller’s market where homes are quickly being swept up, negotiating may be a little trickier. If there are multiple offers coming in and you are offering a lower price, the seller will most likely go with the higher offer, whereas if homes are sitting on the market for a while, you’ll have more wiggle room to negotiate, whether that’s for a lower price, repairs or something else.
General tips for sellers
As one of the largest deals you’ll probably ever make, you’ll want to make sure you’re getting a good price for your home. It’s important to know your market. In a buyer’s market, you’ll most likely have to be a little more flexible in negotiating with a buyer, but in a seller’s market you can take your time with accepting an offer, and you don’t have to be afraid of rejecting an offer that’s too low.
Once you’ve got your market down, you can begin to use these strategies to make sure you’re getting the most out of your purchase or sale. Below, you’ll find tips tailored to both buyers and sellers.
Work with an agent
From helping you build your offer letter—pointing to where you should place contingencies and how much to initially offer—to assisting with potential negotiations, a real estate agent can be of huge assistance.
Choose an agent that understands the local market and who can help you build a strategic, compelling offer, and trust their expertise in advising you when to walk away from an offer. They’ll have an easier time doing so, as they’re not as emotionally attached to the property.
Working with an agent can make all the difference for a seller too. Choose an agent that knows your neighborhood well and can help you price your home accordingly. An agent can show you how your home measures up to others on the market, as well as highlight the details that will help to boost your home’s overall value.
Don’t underestimate the importance of the home inspection
Buyers—order a home inspection
If a home inspection uncovers issues with a property that you find problematic, you’ll want to ask for concessions—either requesting for the seller to make repairs or to lower the price. This step is critical in ensuring you don’t have surprises pop up that you haven’t budgeted for. That being said, it’s always important to have an emergency fund, regardless of what’s reported on an inspection.
Depending on how extensive the repairs are, know that requesting the seller to make them will add additional time to the sale. Another option would be lowering the price and taking care of the repairs later which ensures you can move in faster, but then you’ll have to deal with the repairs yourself. This will depend on the sellers as well, and whether they need the sale to go through by a certain date.
Sellers—get your home inspected yourself
You’ll of course have your home appraised before putting it on the market, but you should also consider getting your own inspection. While it may sound like pointing out what’s wrong with your home will only bring the price down, it’s definitely better to know what you’re dealing with.
If a savvy buyer starts pointing out everything that’s wrong in an attempt to lower your asking price, and some of these things take you by surprise, you won’t be in the best place to negotiate. You can specifically ask to look out for things that will cause buyers to walk away. This is a good time to work with your agent too. They can help you decide what’s worth fixing before selling.
Get in the game
Buyers—search under your budget
If you find yourself home shopping in a seller’s market, you’ll want to prepare yourself for a bidding war. Starting your search below your budget gives you some room to add on to your offer, should you end up in a bidding war. If the home’s list price is already at the limit of your budget, you have no wiggle room to engage in any bidding. Just make sure you don’t get too caught up in the process and end up significantly overpaying for a home.
Buyers—get a pre-approval
Speaking of overpaying—you’ll want to make sure you’re not going over your own budget, and that your budget is a true reflection of what you can afford and not just an estimate. If you’re working off a loose estimated budget, you don’t really know how far you can go in a bidding war.
A pre-approval ensures you know your limits in terms of your budget. It can also put you in a position to make an offer on the spot. In a competitive market with multiple offers coming in, a seller may be hesitant to even look at a buyer who hasn’t been pre-approved.
Sellers—spark a little competition
If you find yourself in a seller’s market and you’re expecting to receive multiple offers on your home, you can take your time on accepting one. Some suggest waiting to look at any offers until after you have an open house. In this scenario, buyers might expect higher competition—potentially placing higher offers from the get-go.
Another option is to price your home slightly lower than its value to attract the most buyers. This can lead to a bidding war that has the potential to take offers above listing. Though heavily reliant on the type of market you’re in, you’ll want to speak with your agent before making this decision.
Sellers—include a timeframe with your counteroffer
If a buyer puts in an offer that you feel is too low, but you’re willing to cut your original asking price a little bit, you’ll begin a negotiation with the buyer by submitting a counteroffer. Attaching a deadline to this offer can help keep the process moving. This can be extremely important because your “Days on the Market” (DOM) numbers are ticking away. The more days on the market, the more likely you’ll get below your asking price.
Buyers—personalize your offer
Keep in mind that it’s not just buying a home that can be stressful. Oftentimes the sellers are feeling that stress as well—whether they’re concerned with timing the sale of their home with moving into their new property, or they need the sale to move quickly because they are relying on those funds.
You can tweak your letter to offer flexibility to the seller depending on their desired timeframe. If you can find out (or have your agent find out) when they’d ideally like to move out of their home and when they’re hoping to close by, you can add this into your offer.
Whether you’re willing to move fast with the closing or move slow on the timing of when you need to move into the home, let the seller know. In some instances, buyers even add what’s called a leaseback or rent back option, allowing the sellers to stay in the home for a couple extra months if need be.
If you can find out a little information about the sellers, you may uncover that something as simple as offering to purchase some of their furniture could help your offer stand out. Here’s where knowing your audience comes into play. If the sellers are downsizing, this could be helpful, as they probably don’t need everything and won’t have to worry about transporting or selling the pieces they no longer need.
There have even been instances where the sellers were struggling financially—having trouble getting everything out of the property before the buyers were supposed to move in—and the buyers ended up covering the seller’s moving expenses. You never know what might end up making the difference for someone.
Sellers—add in something extra
If you find yourself in a buyer’s market, and you’re eager to get your home sold, never underestimate the power of throwing in a few add-ons.
Offer to cover closing costs
While it seems like this would be similar to lowering your asking price, covering a buyer’s closing costs can mean even more to them—especially to a first-time buyer who isn’t using equity to make their purchase. Oftentimes buyers have been saving for years to cover a down payment, and the addition of upfront closing costs on top of the cost of moving and can be a deal breaker. Covering closing costs can help to ensure that their loan will close.
Throw in a deep cleaning or some décor
Your home is probably in tip-top shape already, as you’ve staged it and tried to keep it nice and clean for open houses, etc., but once you move all your furniture and belongings out, there are always some areas that could use a little TLC. Offering to pay for a deep clean after you’ve moved out can be a big help.
You can offer to include some furniture as well. If there are some hard-to-move items that fit perfectly with your home—say an entertainment system or something of that nature—you can always offer to leave it for the future owners.
Whichever side of the fence you land on—buying or selling—it’s so important to know your market and to know what your tactics are in terms of negotiating. Working with a qualified agent is the best way to make sure you’re on the right track.