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NEGOTIATING WITH THE BUYER
Living in America we are accustomed to paying just what the price says and unlike our counterparts in most other parts of the world we generally are poor negotiators. Unfortunately because we do not barter we tend to walk away from an opportunity instead of bartering. Many times a seller will get an offer and instead of counter offering they become angry because the offer is low and close the door on the Buyer. Don’t ever be put off by an offer no matter how low. That buyer out there may be testing the water. Just counter back with what you will accept, maybe you can counter back with a slight price reduction especially if they are not asking for any major repairs or closing costs.
You may do this a couple of times with the same buyer. This is a good thing because if they are still in the game they are really interested. Be patient and back up your numbers with your comparables and receipts for monies you have invested in the property. It may or may not make the difference on this offer but it will pay in the end when you find that buyer ready to buy your property.
Another pitfall for sellers selling their own house is that they may become offended if the buyer is not impressed with their landscaping concept which you the seller worked so hard developing.
DO NOT TAKE ANYTHING PERSONALLY! REMEMBER THIS IS NOT YOUR HOUSE ANYMORE AND IF THIS CONTRACT IS EXECUTED IT IS THEIRS AND THEY CAN DO WHAT EVER THEY WANT WITH THE HOUSE THE YARD WHATEVER, BECAUSE YOU ARE MOVING ON….
Be diplomatic. Because negotiations may be a long and tedious process, it can be very easy to get irritated. Getting frustrated with negotiations that seem to be going nowhere will only perpetuate any difficulties you may be having, and may even result in an end to all talks.
Keep your cool.
Be aggressive. While you don’t want to be hostile, you do want to be assertive and dominate negotiations. When meeting with the prospective buyer, be sure to try to take control of the negotiations. Talk with a strong and confident voice, and be sure to have responses (your comparables, improvements, notes) for any potential arguments that may be thrown your way.
You don’t get something for nothing. Whenever you agree to give something, be sure to get something in exchange. i.e.: if you agree to lower the price, you may want to hold back on any additional goods that you may have initially been willing to give away (like a washer/dryer or something similar.)
Establish trust with the Potential Buyer. TELL THE TRUTH. If the Buyer asks you about the water marks on the attic ceiling;; if you know what it was from and it has been fixed tell them; but if you had no idea it was there, tell them that and that you will find out if it is an active leak or something that was taken care of by the previous owner.
Always, be patient. Relax. This could take a while. It is sometimes give and take. Fortunately, you have done your homework so you will have comparables to show the buyer to substantiate your asking price. And it is always a good idea to have receipts for any major repairs that you have done to the property i.e. repaired or replaced the heat pump, installed new appliances, done any renovation etc.. It is always a plus to be able to show value in black and white.
DO NOT WASTE TIME WITH BUYERS THAT CAN’T AFFORD YOUR HOUSE!
If your house is priced at $280,000 and the Potential Buyer qualifies to borrow no more than $220,000 so unless you know they have $65,000 to $75,000 in cash to put down (which they may have from the sale of a previous home) let that Buyer go.
Require that Every Buyer who presents a contract includes a letter from his/her lender with the amount of mortgage they qualify to obtain. If a buyer says they are going to present a contract let them know you require them to be Pre-Qualified and Pre-Approved by a lender.
Consider every offer as Serious!
First take a look at Lender’s letter to see if they are qualified and approved for the price range acceptable to you.
Engage the buyer in the negotiations. Talk to him/her about their offer if you have any questions.
Let’s say the buyer makes a really low offer and your counter a little under your asking price and then the buyer counters $10,000 less than your asking price. Ask them for an explanation.
Is it a renovation they think is necessary?
Do they have different comparables? (They should have picked up yours from your sales display at the house when they came for the showing.)
Is there a major repair they feel as the reason for the lower offer? Something they are aware of but you are not. Ask them to explain.
By asking then you find out their objections and you can better answer those objections in the negotiations. You cannot overcome an objection if you do not know what it is. ASK???
Not being objective can cost you in the long run. Remember you are paying that mortgage payment every month, Delay in selling this house is delaying your move and closing on possibly your new house. Selling for $2000 less or holding out for 2 more months needs consideration.
THE PRICE IS NOT
THE ONLY NEGOTIATING POINT!
The terms of the contract can be just as important as the price to your bottom line. Also sometimes it is advisable to put time limits on the contract. using "time is of the essence" creates urgency and keeps things moving at a resonable pace.
· How the price is paid (the standard all cash at closing is the best for you the Seller, if the Buyer requires additional time beyond the closing that cost’s you money and the Buyer should pay a higher price for the house to offset this expense)
· Who pays what part of the closing costs? If the Buyer does not ask for any closing costs you can reasonably accept 2% to 3% less. (this decisions depends on what your comparables tell you were the prices on those houses with or without seller paying portion of buyer’s closing costs.
· Terms of financing: (asking price can be firm if Seller provides financing)
· Time and date of closing can make a difference in the amount of prorated costs you will incur at closing. Buyers try to close at the end of the month to save on prorates.
· Contingencies and penalties have impact on your net
· You may want to negotiate the date of closing until you find a new house. (this would entail an addendum to the contract)
· The Buyer may include a contingency for them to hold off closing until they close on their house. In this case you want to make sure there is a closing date and put a date in the contract that you are willing to wait. Also first right of refusal will protect you the seller. This states that if you receive another contract the buyer would have 24, 48, or 72 hours (your choice) to remove the contingency.
· The Whole House and Termite inspection will have an impact on the contract if any repairs are needed. The contract will have to be renegotiated based on any repairs the buyer is asking you the seller to do.
Usually the contract will state that if the appraisal comes back lower than the price on the contract the buyer can renegotiate. The reason for this is that the appraisal is directly linked to how much the Lender is willing to lend which could adversely affect the ability of the buyer to get financing..
*** Whole House Inspections, Termite Inspections and Mortgage acceptance are the top deal breakers!
What to do after you have an Executed Contract:
After the contract has been accepted by you and reviewed by your attorney and both you and the buyer have initialed and signed because you are in fact the “Acting Listing Agent”: you must follow through with the buyer’s lender and closing agent before the sale can close.
The very first thing you will want to do is print the closing checklist and contact the LOAN OFFICER handling the buyer’s loan and let them know this is a FSBO and that you will be calling to check on the status throughout the closing process.
1. ORDER THE PRELIMENARY TITLE REPORT
2. COORDINATE APPRAISAL, SURVEY, TERMITE INSPECTION, WHOLE HOUSE INSPECTION
3. FOLLOW THROUGH ON ANY CONTINGENCIES, REPAIRS, AS PER CONTRACT
4. ARRANGE FINAL UTILITY READINGS AND PAYMENTS CLOSING ACCOUNTS FOR THIS HOUSE EFFECTIVE DATE AGREED TO IN CONTRACT
5. ATTORNEY WILL PREPARE DEED MAKE A CALL TO MAKE SURE THIS IS BEING DONE
6. PRORATA OF TAXES MAKE SURE ATTORNEY OR CLOSING AGENT KNOWS IF YOU HAVE PAID IN ADVANCE AND AMOUNT
7. CANCELLING YOUR INSURANCE COVERAGE EFFECTIVE AT CLOSING DATE OR AS AGREED IN CONTRACT
Copyright© 1973,1978,1981,1996,1998,1999,2003,2005, AEBlake
Copyright© Oct 1, 2009 forsalebyownerhow2 abef Blake Enterprises,
Information deemed to be reliable although not guaranteed
THANK YOU FOR VISITING!
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