So you’ve decided to sell your home, hired a real estate agent, and now you are receiving bids. While a few of the proposed pointers presented within the “Negotiation Strategies for Buying a Home” still apply, such as the need to understand your market, doing your homework, and holding your cards closely; there are additional strategies you could use in order strengthen your position and receive top dollar. A few of those may be:
- Counter at Your List Price
Unless you are under financial stress and need to sell your home quickly, you probably will not want to accept the first offer from a potential buyer. Instead, you should expect a little back and forth and do not be anxious if they offer a lower price than you expected, since they might be testing out the waters. So your next move may be to counter with your list price. While this may be an unorthodox approach to the negotiations, experts believe that it sends a strong message to the buyer (assuming that you have priced the property correctly): you know what your home is worth and you plan to receive the money that you deserve.
- Don’t Get Personal
Frequently, the first offer will be a lowball offer, which is a technique used by potential buyers to test the waters in order to see if they can get lucky. So don’t be angry when someone comes in with a price of $200,000 for a $350,000 home, well beyond the realm of what is normal. It is recommended that you immediately reject this offer, but make sure that you invite the party to bid once again. If they come back with another lowball offer, say $210,000 for example, they are probably playing games and not worth your time and energy. But never forget that this is just business, so separate emotion from the sale as much as possible.
- Forward Pricing
If you are in negotiations with a potential buyer and they are attempting to have you reduce the sale price of your home, don’t forget to play the forward pricing card. This should have been already factored into the price of your home, but if houses in your neighborhood are appreciating at 10% annually and the last comparable home went for $400,000 six months ago, then your home should be priced at $420,000 (half of $40,000 being $20,000). Additionally, if you are in tune with all of the latest developments in your area, you can use these points as support for additional price appreciation, arguing that the rates are forecasted to increase by 20% next year.
- Take Initiative
Let’s say that you set the price of your home at $450,000. This price factors in neighborhood comps, forward pricing, and the fact that you believe that it is a hot market so you are able to get more than normal times. It’s at a relatively high price since you are in no real hurry to sell the property and in the back of your mind the lowest you would be willing to go would be $400,000.
Now a would-be-buyer comes in with an offer of $390,000 for your home after you have rejected their previous lowball offer of $320,000. While it may be tempting to dismiss the offer once again, consider engaging them in a negotiation and showing that you are willing to work with them. Consider coming down $5,000, which in all actuality isn’t a significant amount since your basement price is $400,000. Apart from showing the potential buyer that you are willing to play ball, it will increase the probability of the potential buyer countering with a higher and more attractive offer.
- Let the Agents Handle It
For the most part, it is recommended that you do not play a major part in interfacing with the buyer’s agent or the buyer at all when negotiating the sale of your home. Apart from potentially giving away information about yourself that may change the buyer’s position or strategy, this is why you hired and are paying an agent a commission. So let them handle it while you are behind the scenes making the real decisions and saving yourself time and energy.
- Let the Bidding Begin
This tactic typically only works when the local market is very hot and the demand far exceeds the current supply of homes, but it is a great way to drive up the price on your home. Not for the faint of heart and risk averse, you can offer your home for a bit below the current market value and initiate a bidding war. Some agents recommend not allowing potential buyers to bid until showing the home for a few days, thus driving up the demand for a specific property. Once everyone has seen the house, then let the bidding begin. Ideally, you will receive a number of offers on the first day, with buyers trying to out compete one other, thus driving up the price of your home.
- Keep Negotiating
In most negotiations, the more time you can keep someone at the bargaining table with you, the more likely you will be to have a deal at the end of the day. While this may sound a bit obvious, there is some psychology at play here due to the fact that once someone begins to invest more and more of their time, the more they feel like they have to come to some sort of resolution, which in your case would be the purchasing of your home. An additional small tip, if you are countering an offer, make sure that you counter on the same document the original offer came in on, as this will allow it to feel like the deal is still being negotiated and force the other party to think about the how much time they have spent on the process.
- Don’t Forget About Concessions
During the negotiations is where concessions can come into play and work in your favor. Maybe you aren’t able to go down on the price, but you would be able to offer financing. Before going into the negotiations, make a list and then rank all of the items that you would be able to concede in order to get a deal done. This plays into the psychological theory of the law of reciprocity, which essentially states that when you do a favor for someone they feel indebted to you and desire to return it can work in your favor. A small concession could be quite valuable in the end. It could be as small as moving the closing date back two weeks or leaving some furniture for the future homeowners, but in the end, these small things will let the buyer believe that they won the negotiation, thus increasing the likelihood that they will make the offer that you so desire.
- Wait to Split the Difference
It may be easy to just split the difference and call it a day, but most experts recommend against doing this, especially early on in the negotiations. You don’t want to be perceived as too generous and you most definitely do not want to leave money on the table. To be sure, you never want to be the first person to offer to split the difference, but be encouraged when the buyer offers to do it. Even if this is early in the negotiations and you reject it, this can be a tactic that you use later, since you know that they buyer is already open to it.
- Know When to Fold Them
The ultimate trump card is being able to walk away from the negotiations without fear of losing. So if the negotiations are dragging on and the buyer is beginning to be picky, consider withdrawing your last price offering or concession, as it will show the potential buyer that you are serious and tired of playing games. Use this tactic with caution however, as this may be very off putting, however it is effective at times when you need to send a clear message.