, The Art of Negotiating a Real Estate Contract – For Sellers and Buyers

The Art of Negotiating a Real Estate Contract – For Sellers and Buyers

Well, this seems simple enough – don’t lose your shirt. All kidding aside, most people don’t know how to negotiate a contract, or at least one that they won’t regret later. So, here are some guidelines to making a sound decision while making some money.

This article is for home sellers, but you home buyers, just reverse the ideas here. These are very black and white suggestions so don’t attempt to make them grey just because you want something today that you might not want next week.

Simple Steps to Winning or Let’s Say Making a Win-Win

1. This is a business transaction. Keep your cool. How do you do that you might ask? Well, the first step is to remove yourself from the idea that you might be selling your home to someone that you don’t like, that the neighbors don’t like or someone that you said you would never sell your home to. Ignore all of those feelings and realize that you are selling your home. Period.

2. Leave all prejudices about certain people at the curb. Most buyers who are in your home CAN afford your home and with certain guidelines stipulated in the contract, you will soon find out if they will buy or not.

3. Look at all monetary concessions as just that, a concession. Figure your bottom net with the money that is offered. Don’t forget that you will most likely have a negotiation period and that you might give up some more money after the inspection. Use your gut to figure out what that amount might be, or do a really smart thing and have your home inspected before you put it on the market so you know what to expect and so you can have any necessary repairs made prior to going under contract. When you make repairs prior to attracting a buyer, they can scheduled with the contractor of your choice, and not just who’s available, and at a price pre-determined, not one set with you over the barrel of needing to close in 2 weeks.

4. Don’t take the buyer’s requests that are personal too seriously. This goes with step 3. For example, many times buyers request that the home be professionally cleaned. This does not mean that you or your wife that has stayed home and kept house weekly for the last 12 years is a bad housekeeper. Just figure the amount of money that it will take to bring in a cleaning crew and add it as a concession.

5. Really focus on your selling price and bridging the middle with the buyer instead of all the piddley stuff. So, for instance, if you are asking $250K and the buyer makes an offer at $230K and you can sell for $240K, figure the concessions and make an offer that will yield you $240K, but make sure that you list the concessions and at what price they are worth to you. An example may be if the buyer wants your refrigerator that you got last year. You paid $1800.00 for it then and figure that it is worth $1250.00 now. List that for the buyer to see so that they know where you are figuring that concession to be valued.

6. If the buyer really wants a closing date that will be inconvenient for you, consider moving that date with help, if they pay more of a sales price.

7. Home warranties help with negotiation of inspection items. Make sure that you know that this is an option and what it covers to ease the buyer’s concerns. Most home warranties have a deductible of around $55.00 per occurrence. If you have a hot water heater for instance that is old, but still works, and the buyer is asking for a replacement, tell them that you will pay for the warranty and give them an additional $220.00 for 4 visits under the warranty.

8. Anything that you have to say to the buyer should be on a cover sheet with your counter offer and faxed with the offer and never left for your agent to translate. Speak to your buyer directly when you can.

9. Make the buyer feel good by offering to serve them lunch in advance during the inspection and tell them that you want to share with them all the important stuff about the neighborhood at that time and that you will also ask your neighbors on the right and left side to come over and introduce themselves at that time too.

10. Any qualification for a loan should be rushed and if the buyer is already approved, not pre-approved, you should consider taking less money for the house (just a little) and treat this buyer with kit-gloves. I know that this counteracts some of what I said in number 2, but you will understand when you are in the transaction.

11. Use very tight timeframes for both you and your buyer to respond so that your buyer does not cool off. You really have to focus during this time to push the contract through to binding. If your agent will agree, ask them to conference call you and the buyer’s agent and possibly the buyer in at the same time to talk about any issues. That way there is no resentment on what might not have been said. This way your wishes are clearly conveyed to all parties. Again, nothing will get lost in the translation.

Remember that negotiating is fun and should not be stressful. If you are stressed, you are either judging the buyer, you are not looking at the transaction as a bottom line net or you are taking the special stipulations or requests too seriously.