GET THE MOST OUT OF SELLING YOUR HOME WITH THESE TIPS
Negotiations are conversations that help two or more parties reach an agreement on a specific topic. In the context of real estate, negotiations are usually conducted between two parties: the buyer and the seller, and sometimes, with representing real estate agents. They all come to the table to settle on the pricing and terms of the home purchase.
Why are real estate negotiations important? As the seller, your primary goal is to maximize the sale. On the side of the home buyer, they want to find a good deal on a property. Despite two different motivations, these parties strive to reach a common ground where both will benefit from the sale through negotiations.
How do real estate negotiations work and what are some tips and strategies that sellers like you may benefit from? This guide will answer these questions and more.
Table of Contents
HOW TO NEGOTIATE LIKE A PRO WHEN SELLING YOUR PHOENIXVILLE, PA HOME
The key to good negotiations is to be in the right frame of mind beforehand. Negotiations are dialogues between you and the buyer so it’s crucial not to view the other party as your enemy. Instead, view negotiations as opportunities to reach the settlement table with a win-win situation.
As a seller, you need to balance maximizing the sale of your home and attracting potential buyers with good offers. To strike this balance, there are some things to consider before diving into the negotiation process. Here are some tips on real estate negotiations for home sellers like you.
Know your bottom line
In real estate negotiations, the bottom line symbolizes the worst possible outcome that the negotiator might accept. This draws the line between proceeding with negotiations and dropping potential offers.
As the home seller, it’s important to know your bottom line before starting negotiations. Of course, the ideal situation is where you get the highest proceeds from the sale. However, not all buyers will put in an offer that reaches the same level as your asking price. What’s the lowest offer you’re willing to accept?
Knowing the bottom line also applies to the settlement date. Are you in a rush to sell? If so, are you willing to settle for below your asking price? Or maybe you’re waiting for your kids’ school year to finish before the move. Is the buyer willing to wait? What’s your contingency in case they say no?
Communicate well
The first rule of real estate negotiations is to communicate well with your real estate agent, as well as the buyer and their real estate agent. Be quick and clear when communicating with other parties and set expectations early on to avoid wasting time.
Communicating well is especially important when you’re discussing the terms of the sale contract. Is the buyer a seasoned investor or a first-time home buyer? Do they know about the local real estate market? Take note of what the potential buyer finds important about the home or the process. Are they looking to close the deal soon? Which appliances and furnishings would help sweeten the deal for them?
Understand the market
Home sellers aren’t required to have professional-level knowledge about their local real estate market. However, knowing market trends is an advantage at the negotiation table. Is your local market currently a buyer’s or seller’s market? If it’s the former, the number of homes on the market outweighs the demand. In that case, buyers may have more negotiating power. But if it’s a seller’s market, the demand for homes is higher than the housing stock, which means you have an advantage as a seller.
You may also use market trends to price your home competitively and use that data to make informed decisions during negotiations. Known as comparative market research, this process involves looking for homes with similar square footage and features, comparing prices, and using that information to gauge your home’s value.
Highlight your home’s strengths
Whether in writing real estate listings or during negotiations, it’s vital to highlight your home’s strengths. To do that successfully, you’ll also need to know what the average home buyer is looking for in homes in your area.
One of the first things home buyers consider in their home search is the location and the home’s proximity to their place of work, their kid’s schools, major highways, shops, and amenities. You can also emphasize the type of property you have and the advantages that come with it. Single-family homes are great for privacy and perfect for young families but cost more to maintain. Condominiums and townhomes are good for couples and retirees and have lower maintenance costs but require homeowners association or condo fees.
Another real estate negotiation tip for sellers is to showcase its unique features and recent upgrades. Before putting a house on the market, making small repairs and a few cosmetic upgrades are common. Sometimes, homeowners will also make significant upgrades, like a finished basement, a home gym, and state-of-the-art appliances, among others. Some buyers may be willing to pay more for these features and upgrades.
Stay calm and professional
Regardless of your home’s sentimental value, selling real estate is a business transaction. As such, it’s important to approach the process and the negotiations as level-headed and professional as possible. Setting an unrealistic asking price is bound to drive buyers away. Holding on to that position may even hurt your chances of making a sale because some buyers may take that as a red flag if your home sits on the market for too long.
Professionalism also means carefully reading and reviewing an offer before countering, accepting, or rejecting it. Don’t rush into a decision just because you think that offer is the best you’ll get.
At the negotiation table, be communicative, patient, and flexible. Listen to what the potential buyers say, establish trust, and encourage mutual respect. If the conversation gets too heated, take time to cool down and resume talks later.
Cooperate and compromise
Cooperation and compromise are vital during negotiations. Cooperative negotiations where you and the seller work together are better than adversarial negotiations where you view them as the enemy. The seller and buyer may have different goals but the negotiation process is there to give both parties what they want.
For example, you’re looking to move out in four weeks but you need to stay for an extra two weeks more due to a family emergency. In this case, you may accept the best offer that comes along but at the same time, try negotiating for a shorter inspection period and a settlement date that works best for you.
In some cases, you’ll have to compromise as the seller. For example, a potential buyer wants to add a couple of appliances to the deal and won’t proceed otherwise. It may be in your best interest to be flexible and give the potential buyer what they want. The same goes for some contract terms but in these cases, it’s best to first consult with your real estate professional before making your next move.
Know when to take the offer
The goal of negotiations is to reach the finish line and close on your home in the shortest possible time. When negotiations drag on, some buyers start to lose interest. That’s why it’s important to know when to bring negotiations to a close. You need to review all offers carefully. Offers usually come with a handful of standard contingencies, such as inspections. However, offers full of contingencies are a major red flag.
Your real estate agent is your best adviser on when to conclude negotiations. An agent with years of experience has gone through dozens of negotiations in the course of their work and will know when you’ve finally secured an offer worth accepting. Note that bringing negotiations to a close doesn’t automatically mean accepting the offer, as there are other strategies you could employ.
REAL ESTATE NEGOTIATION STRATEGIES
One of the most important real estate negotiation tips for sellers involves using specific strategies that may help you gain an upper hand and hasten the closing of the deal. The more astute sellers employ a combination of these strategies and their effectiveness depends on the situation. Here’s a quick rundown of these strategies.
Accepting the first offer
In an ideal situation where you’ve put your home on the market for the first time, the first offer is usually the best. The first buyer will want to edge out the competition from the get-go and make an offer that’s above your asking price. Negotiations at this early part of the home-selling process, even before you’ve conducted home viewings, give you that extra advantage.
What if it’s not an ideal situation? According to Investopedia, if the first offer is below your asking price, it’s best not to accept it outright. Buyers expect a bit of back-and-forth before a final price is settled so their offers are below asking. Make a counteroffer that’s more than the initial offer, but lower than the asking price. This strategy is especially effective for those looking to sell property immediately. However, it doesn’t guarantee maximum returns.
Countering offers below asking price
If a potential buyer insists on an offer below asking, you have a couple of counteroffer options. The first one involves countering the offer using your listing price. This might sound counterintuitive because you risk buyers walking away, but this helps separate serious buyers from those looking to lowball you. Buyers who are serious about purchasing your property will stay engaged with this strategy.
The second option involves countering the offer at slightly below your asking price. With this strategy, you’ll be flexible enough not to drive away potential buyers but not so flexible that you settle for significantly lower than your initial asking price.
Rejecting an offer
Another technique you can employ is to “reject” an offer. If a potential buyer submits an unsatisfactory offer, you may ask them to submit another offer instead of giving a counteroffer. This shows that you believe your property is worth your asking price, prompting the buyer to submit a more compelling offer. By not submitting a counteroffer, you’re not engaging the buyer in a negotiation situation and will only accept a stronger offer. When in doubt, consult your real estate agent.
This technique is especially advantageous if your property has only been on the market for a short time or if you have an upcoming open house.
Multiple bids and bidding wars
In a bidding war, multiple buyers compete to purchase the same property by submitting higher offers than the others. This is common in seller’s markets when the demand for homes is higher than available homes on the market. These bidding wars often result in a sale price that’s higher than the listing price.
Open houses spur competition among buyers. After you list your home, schedule an open house a few days later and refuse offers until the open house. Potential buyers will then expect to go head-to-head and submit higher offers than the asking price. Ask your real estate agent to help you choose the highest and best offers.
That said, approach this strategy carefully as it might quickly develop into a hectic situation involving escalation clauses. Escalation clauses in contracts allow the buyer to increase their offer if the seller gets a higher offer, effectively outbidding other buyers. Escalations have maximum or ceiling prices that buyers are willing to pay.
There’s also the matter of ethics in dealing with multiple potential buyers at once. It’s considered unethical to accept an offer from a new buyer while you’re negotiating with another. You’ll also need to inform all parties involved about multiple counteroffers. You’ll do well to have a plan in case two or more buyers agree to your counteroffer.
Counteroffers with deadlines
This technique works if you feel like the negotiation process is dragging. Having a deadline on your counteroffer prompts the potential buyer to make a decision sooner, helping the sale move forward. The deadline should be shorter than the standard time frame in your state’s real estate contract. If the standard is five days, you might want to shorten it to three to four days.
While the counteroffer is pending, the property is effectively off the market. This reduces the time your property stays on the market. Some buyers find it unappealing when homes stay on the market for too long. When the demand for your home decreases, you’ll be forced to lower your asking price.
Paying closing costs
Home buyers may ask sellers to shoulder the closing costs, which is typically about 3% of the total purchase price. Some buyers may not have enough cash to settle the closing costs without assistance but they may want to take a higher mortgage. If the potential buyer asks you to shoulder the closing costs, you may be able to increase the purchase price.
WHY IT MAKES SENSE TO WORK WITH A REAL ESTATE EXPERT WHEN SELLING A HOME
Enlisting the help of a real estate agent is a huge advantage when selling your home in Phoenixville, PA. Here’s why.
-
Negotiation experts
-
Knowledge and experience
-
Expansive network
-
Find good buyers
-
Market your home
-
Help with paperwork and legal matters
Negotiations are an integral part of the education and training of real estate professionals. It’s part of their essential skillset. They’re there to advocate for your best interest and represent you at the negotiation table. They’re also well-equipped with negotiation strategies and techniques and know exactly when to employ them.
Selling your home is an emotionally charged experience. Feelings may cloud judgment and hinder progress. However, in working with a real estate agent, they ground you to avoid making emotion-fueled decisions in the selling process, such as overpricing your home or rushing to accept a weak offer. You may also leverage their knowledge and experience to help you make informed decisions and get the most out of selling your home.
Real estate agents have a massive network and resources to help you market and sell your home. While any other homeowner may use real estate websites such as Zillow and Craigslist, real estate agents have working relationships with fellow agents and their respective clients, essentially expanding the pool of potential buyers of your home.
Your real estate agent may also help you filter potential buyers and determine their qualifications and motivations. With their help, you get even more information from the buyer to facilitate negotiations and secure top dollar.
Real estate agents are trained to market properties. Traditionally, they would use offline and print methods to advertise homes for sale. Times have changed and real estate agents now use several online marketing techniques, such as online ads, professional photography and videography, and even social media marketing. You’ll rest easy knowing that your real estate agent has got you covered when it comes to marketing your home.
Paperwork and legal matters have always been part of the home-selling process. Thankfully, your agent will help you understand the legalities surrounding the sale. If you have any questions or concerns about the process, you may always approach your agent.
WORK WITH ONE OF THE TOP REAL ESTATE EXPERTS IN PHOENIXVILLE, PA
Real estate negotiations are challenging to navigate alone, as it’s an art and a science in its own right. Fortunately, your real estate agent is around to guide you throughout the entire process and get the most out of the sale.
If you’re looking to sell your home in Phoenixville, PA, get expert advice and tips on real estate negotiation for sellers from our team of seasoned local agents at the Marie DeZarate Real Estate Sales Group. Led by top-notch Realtor, Marie DeZarate, our team has the passion, market knowledge, and expertise in Chester, Delaware, and Montgomery Counties that ensure a hassle-free real estate transaction.
Let’s collaborate to achieve your real estate goals. Reach out to us by calling 484.881.2397 or by sending an email.