Once we’ve placed the right marketing in front of the right buyers and received a worthy offer for your home, it’s time to negotiate. I don’t want you to become too concerned about learning the process, or worrying about which moves to make (and not make), as that’s where my expertise comes in. As your exclusive representation, it’s my job to work on your behalf and to get you the most money possible with the best terms. Here’s a quick look at what you should know about the negotiating process.
Weighing the viability of an offer
Purchase offers can take a variety of forms: full asking price, asking price but with stipulations, less than asking price and so on. In addition, buyers may agree to your suggested closing date or include an extended date as a condition of the offer. The buyer’s agent is going to negotiate toward the highest benefit for their client. That’s what exclusive representation is all about. It’s my job to pull the negotiations back to your side of the equation—as much as possible—without killing the deal. Here are some factors we’ll need to consider in the process:
While we’ve gone to great lengths to determine an appropriate asking price for your home, how often do you offer full asking price for anything that’s negotiable? That’s right: Never.
If an offer comes in as much as tens of thousands of dollars below your asking price, don’t be alarmed. While that’s a bit extreme, it does happen. And it doesn’t mean that a deal can’t be made. Chances are, by the time you list your home for sale, we’ve already discussed what you will and won’t do with the price. If you’re serious about selling, then you’ll need to bend some (say $5,000 or so, depending on the circumstances). But that doesn’t mean that you have to roll over and lose money. After carefully weighing all of the terms, we’ll decide what’s acceptable, then make a counteroffer (which I’ll explain below). Conversely, you may find yourself with an offer that’s above asking price. This does happen. In such a case, we’ll need to closely review the other terms of the contract in order to determine where the buyer is possibly making up some of that ground—like asking for cash credits to use toward closing costs, or requesting items of personal property. If it’s in there, we’ll find and evaluate it.
Comparing multiple offers
Every so often, a home is so hot that numerous buyers jump on it at the same time, producing multiple offers. In those cases, we’ll want to look at more than just who’s offering the most money, but also delve into such things as:
– How strong is a potential buyer, financially speaking? Has the buyer produced sufficient evidence that they are capable of securing a mortgage that’s sufficient to follow through on the deal? (Or slightly higher, if you’re going to produce a counter offer)? A letter of pre-APPROVAL (not pre-qualification) should be provided with each offer to prove this.
– Do the offers include stipulations? Is one purchaser asking for no concessions (like cash credits toward closing costs, for instance) while another is asking for $4,000? Is one asking for the refrigerator you planned to take with you? These will need to be calculated into the offer.
– When is each party requesting to close on the deal? While one party may be offering you full price, are they also asking you to close before you’re ready—like within 15 days, when you won’t close on your next home for another 30 days? (Although, there are ways for dealing with that without affecting the deal, so read on.) Or are they asking you to hold off for 60 days, when you need to get moved for the new school year? Those details may be worth a few thousand dollars to you under some circumstances.
Those are just three examples of many variables that could make one offer more compelling than another. We’ll go over the finer points when the time comes.
Acceptance and/or counteroffers
If you get lucky and everything on an offer matches your desires, while there’s sufficient evidence that a buyer is financially solid, then all you need to do sign and initial in all the right places. Otherwise, we can just strike any items that you find disagreeable and write in what you feel is acceptable, then highlight and initial those changes for the buyer to review. We just submit that (changed) document back to the buyer and now you’re the one making what is referred to as a “counter-offer”. At that point, it’s up to buyers to weigh what we’ve changed and to decide whether or not they’ll agree to those (new) terms. And don’t worry, they won’t have weeks to leave you hanging. We can add an expiration date to your counter-offer, which typically ranges from 24 to 72 hours, but can be whatever you like.
While it typically only takes a single counter-offer to finalize a deal, it’s important to remember that this cycle can occur more than once amid the negotiating process and that’s perfectly fine. You may counter offer, only to have them adjust a few more items, so on and so forth, until everyone agrees to all of the terms. We won’t make this a tennis match, but we will “work” the deal until we’ve reached a point that everyone can agree on. Otherwise, if at any point we feel that an offer or counter offer is simply too far outside of the margins of what you’re willing to negotiate, you can stop the process by rejecting or withdrawing an offer.
Rent-back agreements: In the event that a purchase offer includes a closing date that precedes your ability to vacate your home (like, for instance, maybe you’ve scheduled the closing for your next home, but you won’t be able to close on it and move into that property until 10 days past the closing date a buyer is requesting on your current home), you may choose to add what’s called a “rent-back agreement” to a counter-offer. This agreement requests that you and the purchaser follow through with closing on the sale of your home, as planned, but defines a set period of time that you’ll be allowed to stay in your home past the time of closing. In that case, a daily amount will be formulated for rent (I can help you come up with an appropriate figure) and offered to the purchasers as compensation while you temporarily stay in the home they just purchased. In most cases, a buyer will be willing to extend you that right for the sake of making (and keeping) a deal.
Final acceptance: Get ready for closing
Whether there were numerous counter offers, or you were able to sign and accept the first one—once you’ve placed your final signatures and initials on an offer, your property is officially under contract. It’s important to remember that your home isn’t officially sold until additional steps have taken place (like inspections, title searches, mortgage approvals, etc.) and you’ve “closed” the deal with an attorney. But more or less, at this point, you can take a deep breath. Chances are, it’s as good as sold.
Once we have a finalized contract in hand, the dash to closing begins. There are countless things to do along the way, but I’ll help you to see things through in a systematic manner.