For most people, selling a house is one of the biggest financial transactions they will ever make. It’s also a transaction that most people will only make a few times in their lives. Due to the money involved, the complexity of real estate transactions and the pressure and stress of the sales process, there’s plenty that can go wrong.
Understanding the process, having the right people around you and getting the right advice are all important. Even with all this, you will still need to be prepared to negotiate.
Most people have little experience with the process and stakes of negotiating, and it can be a nerve-wracking experience. Playing it too hard could lead to the buyer simply walking away. On the other hand, being too soft with your negotiation could see you leaving tens of thousands of dollars on the table. And finding that sweet spot can be extremely tricky.
To help out and get you prepared for sale time, let’s have a look at a few real estate negotiation tips and tricks from the pros.
Know Your Position
Before you start negotiating, before you even list the house for sale, you need to have a clear understanding of your financial position and your property’s position in the market. These factors can greatly affect your negotiation strategy.
Some factors that can affect your position include: being in a hurry to sell; other plans that are contingent on you reaching a certain price (e.g. making an offer on another property or a divorce settlement); the amount of equity you have in the property; the demand for your property or in your area; and the strength of the housing market. All these factors and more are going to have an impact on your negotiation position.
It’s also important to keep as much of this information as possible to yourself. While it’s important that you have a firm understanding of your position, you don’t want to give too much away to potential buyers or their advocates. For example, if you need to sell quickly, letting buyers know this could weaken your negotiating position.
Obviously, having a clearly outlined financial position is important as well. Before doing anything you should lay out some realistic price points including your absolute minimum selling price (based on financial requirements), as well as the desired price range that you’re willing to negotiate within.
It’s also vital to make sure the property is professionally valued and appropriately priced.
Don’t Write Off Low-ball Offers
In nearly all cases, the first offer you receive is likely to be well below your asking price. If the first offer is outside the range you’re willing to consider, your instinct may be to simply decline the offer and write off the buyer completely.
But even if the offer is not of interest, it’s worth engaging with the buyer. An offer, even a low one, shows that the buyer is interested in the property and at the start of the negotiation process you will likely have no idea how high a buyer is willing to go.
A low-ball offer is usually a starting point for negotiations, so by not providing a counter-offer you may be refusing to engage with a buyer who may be willing to meet your asking price with a little prodding.
Other factors to consider beyond the dollar figure of the first offer are things like how quickly the buyer is willing to settle, whether they have financial approval, and how flexible they are willing to be on contract terms. A buyer that is flexible and ready to settle could be an incentive for you to take a slightly lower price.
Keep Contact With All Potential Buyers
When negotiating on price, remember that you’re not just negotiating with the buyer who has made the offer. Other potential buyers who have expressed interest may just be biding their time, and finding out an offer has been placed could be the push they need to place their own offer.
If your potential buyer doesn’t yet have their finance approved or is yet to complete a building inspection, it may be worth alerting other potential buyers who have previously expressed interest.
Your agent will have the contact details for everyone who has attended the open house or expressed interest in your property. Reaching out to these contacts to let them know that an offer has been placed can be a good way to get other potential buyers into the negotiations.
Put Dates on Counteroffers
A ticking clock can be a powerful motivator. It can help to speed up the decision making process and create a sense of urgency around the sale. However, don’t put buyers under unnecessary pressure by making the deadline too short. If for one or two days. That will give them enough time to think it over.
Know When to Keep Quiet
As the old saying goes: Silence is golden. And this can be true for real estate negotiations as well. Knowing when to keep your mouth shut can be an invaluable tool in property negotiations. A misplaced word or letting slip a key piece of information could be enough for the buyer to walk away, or at least significantly reduce their offer.
Many buyers will be looking for any reason not to up their offer and it could be something you say that gives them that reason. Know when to keep quiet and simply let the property speak for itself.
Work With a Vendor’s Advocate
Working with a vendor advocate is a great way to alleviate the stress of negotiations and ensure that your sale is being handled by a professional. A vendor advocate will have extensive experience handling all sorts of real estate negotiations across private sales, auctions and more. They can also negotiate with real estate agents regarding commissions.