You’ve decided to list your home and, working with you realtor, you’ve set the right price, done a great job of preparation and staging, and now you have an offer – it’s below your asking price, but it has merit. Let the negotiations begin!
Obviously, your first choice is whether to negotiate at all. As you weigh what to do next, be sure to consider the following:
If you have the luxury of time and can risk letting this prospective buyer walk away, you may want to hold to your asking price; if the market is sluggish and you want to sell quickly, negotiating may be the better choice.
Once you decide to negotiate, you have options regarding which elements of the transaction are negotiable – selling price, timeline, concessions, etc. Bear in mind that accepting the offer is only the first round of negotiation; more may come if a home inspection is performed that reveals unexpected issues. As you move through the process, being aware of the various negotiating chips that may be put into play can be helpful.
Time is negotiable and unusually short or long timelines can impact your buyer pool. If you have a qualified buyer who needs to move quickly, you could consider putting your gear in storage and finding temporary housing to make it all possible. If so, your costs need to be part of the consideration.
While you no doubt listed all known issues on your Seller’s Disclosure, others can be uncovered during inspection, and this may re-open the negotiation discussion. If so, you are under no obligation to address them, but if you do not negotiate, the buyer has the right to walk away. If the inspection raises concerns about the home’s systems or appliances, you can offer a warranty rather than reduce the price; this may reassure your buyer and keep the deal moving forward. It is in your best interest to address structural issues, as these will continue to limit your ability to sell. You may choose to repair the issue yourself, or you may prefer to negotiate a concession (a reduction in the price) at the time of closing to cover the cost of the repair to the buyer. Again, the decision rests equally on both sides – in the case of such findings, both the buyer and the seller have the option to walk away from the deal.
If the cash proceeds from the sale are of primary importance, consider negotiating with other home assets. If your buyers are moving from a smaller property, they may need furniture, appliances, theater/sound equipment, window treatments, patio furniture, etc. If they want to negotiate price, perhaps you can instead work with something you already have which the new owner would otherwise need to go out and buy.
The buyer may offer your asking price, but request that you cover some or all of their closing costs. Because closing costs are out of pocket costs, some buyers are qualified to borrow, but have limited cash resources or get caught underestimating the costs to close. So long as you net out where you want to be, getting your asking price while contributing to closing costs can help move the sale along.
During negotiation, it is important to know where you need to net out, your timeline, and what assets you have that you are willing to leverage as bargaining chips. If you have the luxury of time and a seller’s market, you may opt not to negotiate much or at all. Bear in mind that negotiation is an expected part of the home buying/selling process; if realtors know you are not inclined to be flexible and often decline offers, they may choose to show other homes before yours. If you have realistic expectations and are open to negotiation, you will expand your options and navigate your way to a closing that enables you to move forward to your next place.