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Articles FAQs Negotiating Virtual Agent

How Low Will You Go on Your Home Sale Price?

Seems like a crazy question, but one of the first factors you need to consider before you enter into negotiations with a buyer who has made an offer is what price you are willing to settle for at the low end of your home sale price range. As you moved through the deciding, preparing and marketing phases of your home selling process, you established a price for your home and advertised that price. If you receive a single offer at your asking price, there really is not much suspense. Unless the buyer doesn’t qualify for a mortgage loan or for whatever reason you feel uneasy about that particular buyer, you are ready to ride off into the sunset together.

But what if you receive an offer that’s lower than your asking price, and no other offers are in sight? Of course, your instinct might very well be to submit a counter-offer, but should that counter-offer be closer to your original asking price, closer to the offer or split down the middle?

To prepare for that kind of decision, you need to establish in your head the price below which you will absolutely-in-no-circumstances go. Ideally, that price will be relatively close to your asking price, say 85-90 percent of what you are seeking, but that number will be influenced by your need/desire to sell your home quickly or your ability to stay in the selling process for an extended period of time.

Most importantly, have a plan. Decide what the absolute lowest price you will accept is and build that into your thinking at every step of the way. You’ll only want to go that low if offers are scarce and you need to get your house sold, but you need to know your basement, so to speak, so if the time comes that it makes sense for you to accept that price you’re not shocked by it.

Back up Your Position with Current Comparables
Ideally, a potential buyer makes you an offer that is in your comfort zone for an acceptable selling price, you accept the offer and move into the closing process. But how often does the ideal happen? It’s more typical for negotiation to be involved, and your process for developing and making a counter-offer can make or break a sale.

Before you make a counter-offer, be sure you’re prepared to back up your numbers by updating your information about comparable homes for sale and recently sold in your neighborhood, focusing on homes you know are similar to yours and homes you know are inferior to yours for very specific reasons.
If you’re flexible about your selling timeline, establish a high “low” price and stick to it, even to the point where you eventually consider taking your home off the market for a time to see if home prices will inflate in the coming months or years.

 

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Articles FAQs Negotiating Virtual Agent

9 Questions to Help Evaluate a Buyer Offer

As you analyze any purchase offer and how/when you’ll respond, the most important step is to determine whether the buyer can fulfill the terms of the contract with financing. Request that the buyer provide a letter from a lender stating that they are pre-qualified, or better yet pre-approved, for a loan.

Once you are assured that the offer is legitimate, build your decision process around these considerations:

• How close is the offer is to your asking price?
• Do you have other offers?
• Can you wait for more offers to come in?
• How will you handle it if no other offers come in after a particular deadline?
• How large is the earnest money deposit that accompanied the offer? (You should expect at least 1 percent.)
• Do you believe your home will appraise for the contract price?
• Has the buyer asked for assistance with closing costs?
• Has the buyer asked you to make repairs or to give a credit for home improvements?
• Is the requested settlement date appropriate for your needs?

You’ll need to balance the answers against your motivation to sell sooner rather than later and your confidence that other offers are forthcoming as you formulate a response. If you’ve thoroughly considered and decided upon your own priorities, you’re equipped as you enter negotiations to offer things you don’t want that much but that might be of greater value to your buyer. That can help develop trust with the buyer and go a long way toward making negotiations go smoothly.

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Articles FAQs Negotiating Virtual Agent

How Much Time Do I Have to Respond to a Buyer’s Offer?

How long is too long to make a buyer wait for your response? Like so many other situations, it depends on many factors. At times, buyers will include a deadline for you to respond to their offer. You may think this is high-handed, but really it’s all just part of the process. Buyers are just as anxious about the process as you are and they don’t want to sit around for days waiting for a response. If there’s a deadline, you have certainty about how long you have to think it over and respond.

One piece of advice agents have doled out for years is to respond to offers within 24 hours. But there are so many considerations when you are selling by owner that responding that quickly just may not be possible. When a buyer’s offer rolls in, you’ll need to balance a number of factors as you decide about then deliver your response.

Take into account where you are in the process. If your home has been on the market longer than you had hoped, and the offer is within your acceptable range, you may want to formulate and deliver your response more quickly to be certain that you lock up your buyer. That 24-hour turnaround time might be just about right in this scenario.

Assuming the offer is at least minimally acceptable, you may need more time to construct a counter-offer. If that takes you 48-72 hours, there’s no harm in that considering you really have no idea whether the buyer will respond positively to the counter-offer, and it might just work to your advantage to let the other party stew a little bit. If you go this route, consider giving the buyer a head’s up via email about what your timeline will be. (But don’t disclose anything about what your response will be.)

If the offer is way too low, no need to wait. Reject it immediately and let the potential buyer decide about making a new, better offer.

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Articles FAQs Negotiating Virtual Agent

Negotiate Your Way to a Great Sale Price

When selling your home by owner, being a strong negotiator is an absolute necessity. You’re on your own, and if you don’t know how to ask for what you want, chances are you’ll never get it. At the same time, if there is no advantage to you, don’t negotiate. For you to be successful, there has to be something to win. Once you are clear on what it is you hope to achieve, keep this goal in your mind at all times. This will help you remain focused and on target, even when dealing with difficult people.

A strong negotiator knows the hand he/she is playing. You’ve already done considerable research about home prices in your neighborhood as part of the process of deciding on a sale price for your home. Your may also have invested in a professional appraisal. Because you’ve already done the necessary legwork, you have concrete evidence as to how you derived your figures, and that puts you in a strong negotiating position.

At the opposite end of the spectrum, plan your approach if you get more than one offer at or near your listing price. Will you go with whoever offers more, or use that as one decision data point along with each buyer’s likelihood to get a loan (the pre-qualified vs. pre-approved factor), who submitted the first offer (if they are close in dollar figures) and perhaps an intangible such as whether you really don’t like the other person or couple? Draw up a list of factors that will contribute to your decision about which one of several offers to accept.

Also, decide ahead of time if you will try to negotiate upwards if you get more than one offer at your asking price. That may not seem likely but it does happen. Just be careful how you broach the subject so you don’t alienate both buyers. Don’t make it a take it-or-leave it counter-offer. If you do ask for more, approach the buyers without making it sound like a demand. Their reactions should give you a sense of whether they are staying in the game and you can adjust your approach accordingly if you’re getting bad vibes.

Be Realistic

Whenever you are in a negotiating situation, it helps to remain flexible and open. This includes maintaining realistic expectations. It is rare that you will get everything you want while negotiating. Think about what you are willing to give up and what are absolute deal breakers. When selling a home, be honest and upfront about any damage or flaws a buyer may point out about your house. Discuss these problems, and let the buyer know he’s welcome to have any perceived damage or defect inspected at his own cost. If there is indeed a problem, offer to reduce your asking price to help offset the cost of repairs.

It also helps to try to negotiate other terms to counterbalance a low offer. As you get to know the buyer through the showing and negotiating processes, you’ll develop a sense of what issues motivate the buyer. Use that to your advantage.

For example, if you know the buyer is planning to pay closing costs out-of-pocket and you’re close on prices, consider offering to split those costs. If the buyer has a young family, consider offering to fence the yard. Remember, the longer it takes to sell your home, the longer you have to drag out the process — and pay the mortgage. It might be worth your while to swallow some minor costs that will make the deal happen.

Remain Detached
The process of transferring real estate ownership can be stressful. One thing we can assure you: It doesn’t pay to show that stress to the other side of the transaction. Keep your emotions in check when you are face-to-face with a buyer who has made an offer, and, equally importantly, when you respond via email or voice mail. It’s easy to fall into the trap of firing off a fast, snarky email or leaving a sarcastic message when you get an offer that offends you, but resist that temptation.

Be polite. Be firm. Be clear and logical and present your argument on a factual basis. But don’t let your emotions get in the way. There’s nothing to be gained by insulting a potential buyer, and, in this day of instant exposure, you might get bad-mouthed via social media, and that certainly wouldn’t help your cause.

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Articles FAQs Negotiating Virtual Agent

Should I Negotiate My Home Sale In Person?

When you receive an offer on your home, you have several choices. The simplest choice, of course, is to accept the offer and move on to the closing process. Choice #2 would be to reject the offer and refuse to entertain offers from that same buyer. Likely you would only do this if the offer was so ridiculously low that you don’t feel it’s worthwhile to continue. Your third option is to submit a counter-offer and anticipate negotiating with the buyer from that point forward. As you move through the negotiating process, is it better to negotiate online or in-person?

Experts’ advice? As much as possible, negotiate in person.

“The most effective way to influence or persuade — which is what negotiation is all about — is to do it face to face,” said Tom Hayman, the president of Negotiation Expertise, which trains people in negotiation techniques. “Because then you get your words, you get your voice and you get body language — or nonverbals — all into the equation.”

In order to avoid being intimidated and to maintain power and control in negotiating situations, it is a good idea to prepare the setting, and you can only do that if you plan to meeting in person. When you’re comfortable and confident, it’s easier to start negotiations in a winning position. Think about where you want the negotiations to take place, who you are negotiating with, how to best present your case and the timeframe you are working within.

With the agents out of the way, you have more room to negotiate unusual elements in to the deal; for instance, if you need more time in your place before you move, talk to the buyer about it face to face.

It’s easier, too, to go over the fine points of the sale contract if you do it in person with the buyer. Download a sale contract for your state here, and bring it with you to your negotiating sessions to be sure all issues are covered.

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3 Phases of Negotiating Your Home Sale

Let’s be frank. One of the more distasteful tasks an agent normally performs that you will be doing yourself when you sell by owner is negotiating with a buyer. It’s one thing to discuss your response to an offer with an agent then send the agent off to do battle with the other side, and quite another to wade into battle yourself.

Negotiating sounds intimidating, but it doesn’t have to be. When you think about it we all spend time negotiating almost every day, with our spouse and children, at work, even at a Saturday morning garage sale.

Take what you’ve learned from those everyday encounters, add preparation time and minimize your emotions to the greatest extent possible, and you’ll be ready to negotiate your way to a great outcome.

Successful negotiation is the art of “getting to yes.” Your negotiating process should flow in three phases:
 
• Preparing
• Assessing an offer
• Getting down to brass tacks
 

1. Good News: You’re Preparing Already

As soon as you seriously begin to think about putting your home on the market, you begin preparing to negotiate the final outcome. That’s just natural. Your first question will no doubt be: How much can I get for my house? From there flows a series of questions about how much you can afford to pay for a new home, what your bottom line is for your house sale, can you afford to carry two houses for a time, when you want to move, etc.

Once your house is listed and you start scheduling open houses and showings, you should begin to more actively prepare for negotiating by creating a list of terms you might end up negotiating with a buyer, then prioritizing those terms from most to least important.

Typical terms of a house sale include:

• Price
• Closing Date
• Inclusions – these can be appliances, grills, patio furniture, rugs, window treatments, light fixtures and other elements that may or may not appear to “go with” the house
• Closing costs
• Contingencies
• Other transaction-related fees

Decide in advance what negotiation points are most important to you. Would you rather stick with a higher price but be flexible on when the sale closes, potentially even renting the house back from the new owners for a few weeks to give them time to move? Or maybe you’d rather offer a garage full of garden equipment in lieu of contributing money to the closing costs. Knowing your own priorities equips you to offer things you don’t want as much and that might be of greater value to your buyer.
 

Update Your Research
Because you did considerable local market research in the process of deciding upon your sale price, you have already have a great feel for how your home and asking price fit into your market place. But now’s the time to update that research so you have up-to-the-moment facts you can use to bolster your argument as you negotiate.

If your home has been on the market for a while, this is especially important since the balance may have tipped in favor of buyers or sellers. A change, one way or another, can affect prospects for future offers as well as prices. Most importantly, it will give you a frame of reference, a context, in which to consider the offer. Answer these questions:

• Is the number of homes on the market on the rise or declining?
• What do the most recent statistics show?
• Are prices holding firm or are they edging up in your neighborhood and for your type of property?
• Take a look at the lending environment. What is happening with interest rates? Are they holding steady or moving up or down?
• How does your home compare to others currently on the market? Condition and location are as important to value as are features typically associated with homes in your area.

These answers will give you a better sense of how your home fits into today’s market in your neighborhood and give you the power to negotiate based on the most current data rather than opinion. For example, if prices are edging up and you set a realistic price in the beginning, it will be much easier to make the case for your price with this information. A declining inventory means the buyer will have fewer properties to select from in the future and there is a good chance that prices will go up in the future.
 

Decide on a Negotiating Strategy
It’s very important to decide on a negotiating strategy before an offer comes in the door. If the offer is great and you jump right on it, you should be all set except for some minor negotiating over a few terms of the contract.

In case you receive an offer that is below par but could be negotiated to be more in your favor, begin developing a negotiating strategy by revisiting your goals, objectives and future plans. Since your listing went live your motivations and goals might have changed based on the time your home has been in the market, activity in the market place and your urgency to move if you have found a new home. All of these factors will affect your bottom line and your negotiating strategy. Review where you stand on acceptable final price and what you are willing to negotiate about as the time you expect to receive an offer nears.

Home sale negotiating strategies for offers that are below asking price basically fall into three categories:

1. My price is firm and my comparables support it. Message to the buyer: “I’m not budging much off my asking price. Improve your offer significantly or move on to another house.”
2. Let’s meet in the middle. Message to the buyer: “Your offer’s not terrible, I like you and I want to get moving; let’s see if we can find a happy place in the middle.”
3. Show your cards. Message to the buyer: “This is what I need to make this work for me; let’s figure out together how to get there.”

Chances are you understand your own motivations better than you did during the run up to listing your home and, consequently you’re likely that much more confident than you were at the start of the process. That will serve you well as you move forward into assessing and negotiating offers.
 

2. Assessing an Offer

When an offer comes in, price grabs the most attention but an offer is actually a bundle of conditions which, in one way or another, usually affect price. Along with price, an offer to purchase will lay out the deposit, financing, time, contingencies and final walkthrough. To arrive at a meeting of the minds with the buyer, both sides typically end up compromising. A contract or an offer to purchase also includes a description of the property and lists fixtures, appliances and any personal property that might be included in the sale. Last minute disputes often revolve around personal property, so pay attention to how these items are stated in the contract.

For example, curtain rods might be fixed or attached to the house but the curtains aren’t. However, the buyer might assume you are leaving the curtains with the rods. Appliances often are another bone of contention. Be sure to spell out what appliances are included in the original property listing. If you aren’t planning on leaving a chandelier or other light fixtures, be sure to include this information on the original listing sheet. Great idea: Remove the temptation for buyers to include it in the offer and install a new fixture in its place before you list the house.

The point is, if you’ve thoroughly considered and decided upon your own priorities, you’re equipped as you enter negotiations to offer things you don’t want that much but that might be of greater value to your buyer. That can help develop trust with the buyer and go a long way toward making negotiations go smoothly.
 

3. Getting Down to Brass Tacks

The buyer, or their agent, will typically present the offer to the seller in writing. This can be done by email, fax or in person. The seller has the option of accepting the offer or rejecting the offer and responding with a counteroffer. Usually the offer or counter will spell out a period of time, 24 hours for example, for the other party to respond.

Don’t be put off by a low price, often called a “lowball offer.” Sometimes that’s all the buyer can afford, but quite often buyers will make a low offer to test the waters and see how the seller reacts or how firm they are with their asking price. This is a business transaction. Give yourself time to cool off but still respond within the timeframe (if it is reasonable) of the offer. If you are not sure why the offer came in as it did, ask the buyer for some context and what comparables were used to arrive at the price.

Frame your counter price in terms of what the market commands rather than what you personally must have. Use your recent market data to justify your counter and present relevant stats such as changes in the number of homes on the market, recent sales of comparable properties, and the number of homes with pending sales. Knowing your local market also helps you be realistic regarding price, and understanding your own goals helps you know when and how much to compromise.

Keep the conversation flowing; don’t rush the process. Even if you are countering on the price, respond to each element of the offer to show that there are some parts you accept. Look to see if there are other aspects of the offer that might be important to you, especially if you are willing to accept a lower price in exchange for an early closing date, the ability to rent the house back after closing, an “as is” purchase or any number of other scenarios. Is there something else you can offer the buyer to make the deal work?

 

Contingency Planning Is a Must
Typically closings are scheduled for 60 days from the date of the contract, but that can vary with the offer. For example, an all-cash offer will not be contingent on a mortgage and can close in short order. Buyers who have a home to sell might want more than 60 days to close and may want to make the purchase contingent on the sale of their existing home. The debate on the wisdom of such a contingency continues. Some believe it reduces interest from other buyers. Make sure it is worded so you can continue to show the property and consider other offers. Additionally, it’s always wise to review any exceptions to a contract such as this type of contingency with your attorney.

If you attract an all-cash offer without any financing contingencies, you might consider closing sooner than anticipated or accepting a lower price. Or would you rather stick with a higher price but be flexible on when the sale closes, potentially even renting the house back from the new owners for a few weeks to give them time to move?

 

Meeting of the Minds
Negotiating can take days. To keep the conversation flowing and not let the negotiations drift off into space, be sure to include a deadline for a response to each counter. But give buyers enough time to consider the offer. Quite often real estate agents will limit that time to 24 or 48 hours.

Compromise can be hard to reach. Sometimes not even the best real estate agents can arrive at what the industry calls “a meeting of the minds.” Stalemates over price do happen, and it’s best to remember that some people are simply looking for a steal rather than a good deal.

Again, if you know the market and have a realistic assessment of your own property, you will know when it’s time to simply keep on marketing the property and let the buyer know they are always welcome to come back with a new price.