Getting An Offer
Saving the agent’s commission is one of the major benefits of selling your home without the help of an agent; however, those savings can be lost in part or even completely if you fail to negotiate the sale of your home effectively. Since selling a home is one of the largest transactions in ones life, it’s important to understand the negotiation and closing processes well and work out your strategy for dealing with both early on.
- Take you Time, Reply in Writing When a prospective buyer presents an offer to you, either directly or through an agent, the first thing to remember is that you should not reply to it verbally. In fact, take some time to consider the offer. There is usually a two- or three-day period, as indicated in the offer, during which you may review and consider the offer before responding in the form of a written acceptance or counteroffer.
- Qualify Financing Before entering too far into negotiations, you’ll need to know what the buyer’s financial situation is. Specifically, find out whether or not the buyer is pre-approved by a financial institution and for what amount. You’ll also want to know how much of a loan they are seeking and what percentage of the price they intend to put down. This is important to know, since many financial institutions will decline a buyer applying for a loan with too small a down payment. That being the case, the buyer may not even be qualified to get the financing required to buy your home and so negotiating with them will be a moot point.
In most cases, the first offer you receive will be at least slightly less than your asking price. This is to be expected and does not necessarily mean that you need to take the offer as is or halt all further discussions. A common trap sellers fall into is the desire to stop all negotiations with a potential buyer simply because they are insulted by a low offer. Keep in mind that a buyer’s initial offer rarely represents the highest price they are willing to pay. Rather than throw away a possible sale, you should take the opportunity to draw up a counteroffer.
Though a counteroffer is basically a rejection of the buyer’s offer, it gives you a chance to divide the difference between the offer and your asking price in some way (not necessarily 50/50). What you choose to include in the counteroffer is largely up to you, though it should differ enough from your original price and conditions to warrant review by the potential buyer. Sending back a counteroffer with no concessions on your part will very possibly put negotiations in jeopardy.
If you’re negotiating multiple offers
Include in your counteroffers that you are in a multiple-offer situation and so the signing of your counteroffer by a potential buyer does not mean that the offer is accepted by you, the seller, as final. Many newer real estate documents have a section to deal with this scenario, allowing you to simply check a box that effectively releases you from being bound to the first signed counteroffer you receive and allows you to review all counteroffers before making a decision.
Price isn’t the only consideration when making an offer or a counteroffer. Additional terms and conditions, often referred to as contingencies, are sometimes included in the offer, typically by buyers. The most common of these – and often the most dangerous to you as the seller – is a contingency that links your escrow closing date to the sale of the buyer’s current home. This contingency protects buyers from having to pay for a new home without having sold their previous one. While it provides excellent protection to the buyer, it can result in a delayed or canceled sale for you. Should you be presented with such a contingency, it’s a good idea to include a “kick-out” clause in your counteroffer that states that you, the seller, have the right to entertain other offers if the buyer’s current home is not sold in a specified time period.