How to negotiate house price like a boss

Source: Dana Bull.

Awaiting a response from a sellers on your offer to purchase their home is an exciting and nerve-wracking time. Will the sellers accept it? Will they reject it? They may not do either!

What is a Counter Offer?

More often than not, real estate negotiations are not a one-and-done deal — they can stretch out over several rounds of back and forth. A real estate counter offer is a proposal that revises the initial offer.

Common items that are negotiated include:

  • Purchase price
  • Deposit amounts
  • Important transaction dates/milestones
  • Contingency timeframes
  • Special terms and concessions like including/excluding furniture, warranties, etc.
  • Payment of fees, such as closing costs

Here’s an example of a counter offer situation on a home listed for $330k:

Buyer: Initial offer at $319k purchase price, 5 percent earnest deposit, 60-day closing timeline and all appliances and living room furniture to remain.

Seller: Counter offer at $326k purchase price, 5 percent earnest deposit, 45-day closing timeline and all appliances to remain.

Buyer: Counter offer at $322k purchase price, 5 percent earnest deposit, 60-day closing timeline, all appliances to remain and house to be professionally cleaned prior to closing.

Seller: Accepts

In this scenario, several compromises were made on part of both the buyer and the seller to come to an agreement.

How Many Counter Offers is Normal?

The good news is that a counter offer is not a flat-out rejection from the seller. It also puts the ball back in your court — so let the games begin! How many counter offers is normal? The truth is, no two real estate transactions are ever the same, so there is no “normal.” Generally speaking, balanced markets that are neither a strong buyers’ or sellers’ market tend to have a level playing field and more negotiating can be expected. In my experience working as an active real estate agent, I can assure you that some back and forth is common. One client of mine went through 12 exhausting rounds of negotiations before finally getting on the same page with the sellers, but this was a unique situation.

Tips for Negotiating Your Counter Offer

Stay in Control

“Keep calm and counter offer on.” If this isn’t a T-shirt, it definitely should be! It’s important to remain calm during a real estate negotiation. Buying a home can be an emotional process, especially when things don’t go your way. One of the best things you can do is establish boundaries for the counter offers so that things don’t spiral out of control. Figure out which terms are “non-negotiable” and cannot be changed. Determine a max purchase price amount and draw a line in the sand. Let these parameters help to guide your decision set.

Read Between the Lines

Who has the upper hand in the negotiation: you or the seller? What sort of information can you garner about the seller’s situation? Is he or she carrying a hefty mortgage? Has the person already moved out of the house and seems to be up against the clock? Has the house been sitting on the market for a long time? Does the seller have any other interested parties? What has the feedback been so far?

For example, if the seller counters your “low-ball” offer with a full-priced proposal, he or she is likely sending the message that low offers will not be entertained. If the property sits on the market, the seller may have a change of heart. From your standpoint, how badly do you want the house? Can you risk losing it and, if so, at what cost? Is it worth coming up to meet the seller’s asking price or should you roll the dice and wait it out? Answers to these types of questions may impact how you frame your counter offer.

Time is of the Essence

Time is one of your best negotiating tools. If you move too slowly, another buyer can swoop in and derail your negotiations, or worse — put the house under agreement! After submitting an initial offer, it’s best to make yourself available should you need time to evaluate your options and decide the next move. You may need time to process the information, discuss the situation with your partner and/or real estate agent and pull together appropriate documents. In the midst of negotiating a deal, it helps to leave pockets of time in your day to address these items and to be accessible by phone/email.

Don’t Forget Your Deadlines

Once you finally nail down the details of your counter offer, be sure to include a deadline, the latest time or date by which the seller should accept or counter before the proposal becomes null. The deadline gives your counter offer an expiration, which can help to move the process along. Once the deadline times out, you can reengage the seller or move on.

Get It All in Writing

If you and the seller meet eye to eye, it’s important to lock it down. Sometimes negotiations can span multiple days and verbal agreements are made. The next step is to get all of the particulars in writing. Once everything is signed and authorized, the contract is binding.

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