5 Seller Considerations during Negotiations

You’ve spent a weekends and evenings getting ready to list your home. After a busy open house and multiple showings, you receive an offer. Now what? Consider these points when negotiating with the potential buyers.

Know the Market You’re Selling In

The national narrative about the real estate market does not always reflect the market you will sell in. Talk with your realtor to get an accurate picture of the market, keeping in mind that the market can shift in the matter of weeks or can vary from one price point to another within the same zip code. This information is powerful in that it can help you in setting the price and negotiating contract terms. In a sellers’ market, you may be able to remove home inspection contingencies as an example. In a buyers’ market, seller subsidies may be the norm. Know that buyers will do their homework about what houses are selling for and so should you.

Look at the Entire Offer NOT just Price

Of course price is very important, but don’t immediately toss a lower priced offer until you review all the terms before making a decision. Imagine that you receive two offers. The higher offer has settlement 45 days from ratification, but the offer is contingent on a home sale and the house isn’t under contract yet. This means that the buyers can void the contract if their house does not sell and you are back on the market after weeks of waiting. I’m not saying this will happen, only that it could. The second offer would net $6,000 less, but the well qualified buyer can close in 30 days. Which offer would you accept? Only you can make that decision, but price is one of many factors to evaluate before ratifying a contract.

Don’t Delay

In Virginia, the residential sales contract alone is 16 pages without any contingencies or addendums. As the seller, you should absolutely take the time to fully understand an offer. Look to your realtor to explain the offer and answer any questions. That said, it’s best to respond in a reasonable time frame. There’s no hard and fast rule, but a maximum of a day barring extenuating circumstances is a good start. Buyers are anxious and emotions are high after submitting an offer. Delaying too long can quickly annoy buyers and may even cause them to withdraw their offer before any negotiations even begin.

Know the Implications of Contingencies

A ratified contract does not mean that your house is sold. Unless there are no contingencies, there will likely be additional negotiations beyond the initial offer. For example, the sales contract will outline the deadlines to complete and negotiate findings from the home inspection contingency. Your agent should suggest a response strategy and assist with getting estimates for requested repair items. One strategy that I often use is offering buyer credits to apply towards closing costs in place of doing actual repairs. This places the responsibility on the future homeowners to have the work complete and you satisfy their request for a repair. Of course, the buyer needs to agree to this and the lender needs to approve of the extra credits. There are so many moving parts to get from contract to close and your realtor should be addressing each of them as you progress towards settlement.

Make a Counter-offer

Think back to when you were writing an offer on your home. It was a big decision, right? No one wants to overpay for anything. That said, some buyers are quite comfortable writing a low-ball offer because believe-it-or-not sometimes sellers accept! Rather than get offended or dismiss the offer entirely, I say play one round of their game. The buyers may be madly in love with the house and were trying to get a deal, but are willing to pay much more. You won’t know either way unless you make a counter-offer.

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