If you are fortunate enough to be selling your home in a seller's market, you may not feel that you need advice on negotiating the deal. But careful negotiation can be critical, especially if you are considering multiple offers. Conversely, in a buyer's market, you may be glad just to get an offer, let alone have the option to negotiate. But even in this situation, it's important to avoid making unnecessary concessions.
It pays to understand the dynamics of negotiation and recognize that the best real estate transactions are those in which the seller and buyer both believe they got the best deal.
Why Deals Fall Through
Negotiations gone awry are a major cause of failed real estate transactions. Try to avoid these negotiating traps:
Moving too fast.
It can be tempting to push negotiations through quickly, especially if you need to sell for financial or relocation reasons, or if the market is fast (if there are many buyers but few listings). Take the time to read offers carefully. If a buyer makes a low offer because the house needs repairs, make sure the buyer's estimate of the cost of those repairs is accurate. It may be better to make the repairs yourself before selling, rather than accept a big price cut.
Letting emotions rule.
Remember that the house you are selling is a commodity. Don't take offense at comments about the landscaping or decor, especially when the buyer makes a lower offer based on those factors. If the market is not in your favor, you may have to offer a decorating allowance or accept a lower price. If you're in a seller's market, counter with a full-price offer. In any case, don't avoid dealing with a buyer who has insulted you.
Reluctance to counter.
Countering an offer is a time-honored tradition in real estate. Countering means that you come back at the buyer with a different price or different terms. Remember that negotiating to sell a house is a give-and-take process. If you fail to counter offers, you may end up accepting a lower price for your home. Make all counteroffers in writing to avoid misunderstandings.
Bad-faith bargaining.
This means that one or both parties is not bargaining seriously or with the intention of actually completing the transaction. Bad-faith bargaining not only can result in a failed sale but also possible legal action. If you aren't serious about selling your property—that is, you won't accept anything but an overpriced offer—you probably shouldn't be in the market. If you're a serious seller, watch out for the bad-faith buyer who will waste your time by making unacceptably low offers or engaging in endless negotiations. Even worse are bad-faith buyers who misrepresent their ability to purchase your home and take you off the market for several weeks before their failure to secure financing nullifies the contract. If you have any qualms about a buyer's means, ask for a pre-approval letter from a lender.
Failure to meet deadlines.
Time can be an ally and an enemy in negotiations. It is vital that both sides meet deadlines—but this doesn't mean that you can't be flexible. A long line at the lender may hold up a buyer's financing. Make sure that your closing date allows for contingencies that may take a longer time than usual to satisfy. Also, make sure that the buyer or the agent asks to extend contract deadlines promptly so that you can make any adjustments.
