|
||||||||
|
||||||||
|
Negotiating the Sale of Your HomeNegotiating a successful sale of your home requires good communication skills. You must sustain the buyer's interest and trust during the process. Many of our clients have been very experienced negotiators, and from them we have learned that the goal is to reach a “good agreement” - one in which the underlying interests of both seller and buyer are met. The results of a poor agreement may come back to haunt the parties after the closing. Here are some thoughts to consider as you prepare to negotiate the sale of your home.What do you want to achieve in the negotiation? Letting the buyer know what you need, in a clear and reasoned way, is the first step toward getting it. For most people, price is the highest priority, and is given the most attention. The buyer's offer must be evaluated in light of a market analysis, marketing time and buyer responses. This will give you an indication of what a reasonable offer should be. In addition to price, there are other needs to think through. Distinguish between “must haves” and “would likes”. Your interests might include: Selling at the highest price possible. Coordinating your move to your new home. Setting the closing to meet your travel, school or work time frame. Resolving any repair issues fairly. Protecting yourself by having complete property disclosures. Locking in a mortgage loan rate for your new home. Having no title or survey issues, or solving any that do arise. Completing your relocation process. Getting settled into a new home and neighborhood. Forging a good relationship with a buyer who appreciates your home. Having no future problems or unexpected issues after closing. How much leverage do you have? A big factor in your leverage is the underlying market condition. If you are in a seller's market you should receive offers at the top of the range. This is especially true if your home is in a hot area and has great appeal. If you have multiple offers, you have very strong leverage! Buyers will make their best offer up front. If you are in a buyer's market, and your home has been for sale for many months, you have a lot less leverage to work with. Knowing the buyers' underlying interests will help you improve your leverage. If you see that they love your house you have some leverage. If their time frame is immediate, and you can meet it, you have some leverage. If you can meet some of their secondary needs, you have some leverage for a better price. If the buyer is a dispassionate investor you have very little leverage. Be careful that you do not accept an offer that contains a high risk contingency to sell the buyer's home, a too long option period or a buyer without approved financing. These offers have a down side that may be difficult to live with. Buyers should submit a letter from a lender giving their qualification status. Understand the Option Period In Texas, our contracts contain a short "option period" during which the buyer can terminate. We all breath a sigh of relief when the option period is over. In the long run the option period protects you, the seller. It allows time for the buyer to do inspections and answer any open questions. Keep in mind that, for many buyers, taking the first step in a big decision is hard. Once the ball is rolling it is easier for them to stay on track. Action creates commitment. There are subtle pressures to keep the buyer in the deal, such as face saving, and time and money investment. Is an adversarial or cooperative approach more effective? There is nothing more destructive to the negotiation process than the adversarial style. Professional negotiators try to preserve the relationship between the parties. The goal is not to reach an impasse in which neither the seller's nor buyer's needs are met. Sometimes buyers include a note with their offer explaining why the house is not worth what they are asking, pointing out deficiencies, etc. No one can read a note criticizing their house without a defensive reaction. In the same vein, your attitude toward the buyer can be effective in solidifying their interest in your home. The negotiation process usually begins with some degree of distrust between buyer and seller. The goal is to move in the direction of trust as quickly as possible. How do you work with a combative strategy? Sometimes you have no choice but to work with an adversarial buyer or agent. Their strategy includes: emotional statements, snide remarks, defensive arguments, threats to terminate, ego involvement, and stated positioning. Creative solutions are not likely to be found in this environment. Working with a combative style negotiator requires control of your own emotions. Here are some pointers: Do not respond emotionally. An angry or defensive response will escalate the negotiation into a no-win battle. Do not argue. Arguing usually positions them more strongly and drags the negotiation process off course. Do not ignore their arguments. Listen carefully, but do not accept or reject. Acknowledge the fact that certain emotions are present, without responding in kind. Strong emotions arouse emotions in others, including fear and anger. The anger may have a source outside of your contract, or it may be a negotiation tactic. The agent may try an “us against them” strategy . If this happens, write “cover memos” with your responses to the buyer in order to break down the barrier. Firmly anchor pricing and other points to outside data. Show that your proposals have not been chosen unreasonably. Do not allow hazy proposals to stand. Put everything in writing. An emotional negotiator will usually produce an unclear agreement. Offer some wins on some of the terms. Face saving is important. Make your counteroffer as attractive to them as possible. Look for ways to meet their underlying interests. Remember that they may be qualified buyers who can satisfy your goals. Is every point in the contact negotiable? Yes. However, one of the most effective means of coming to an agreement is to rely on consistent standards. For example, it is common in our area for the seller to buy the title policy and buyer to pay survey cost. Using accepted standards prevents buyer and seller from haggling over every point. On the other hand, all points in an offer can be used to help structure the deal. How do you move in the direction of “trust”? Most people are fair minded and reasonable. They respond well to respectful treatment and to having their concerns heard. If the seller feels that the buyer and agent are acting with integrity, they will be much more cooperative. Contract negotiation is a sensitive area, and anxiety can be high. Both buyer and seller are under pressure, with future plans at stake. Acting with integrity does not mean that all cards have to be put on the table. It is not proper to discuss your cost basis in the house or urgency to move. It is valuable to develop trust because trust raises the level of cooperation and forwards the negotiation. Here are ways: Listen and understand what the buyer has to say. Take their questions seriously and get back to them quickly. Express appreciation for the buyer's interest in your home. Respond within a reasonable time to offers or proposals. Disclose the property condition thoroughly. This usually has the effect of improving the buyer's interest. Reveal some personal information about your use and enjoyment of the home. Leave out bottles of water for your prospective buyer. Offer a small gift such as a neighborhood directory, list of service people, babysitters, etc. Give the buyer first choice on any items your are planning to sell or give away. Give an orientation to your home to show how to operate your pool, sprinkler, security, etc. Accommodate the buyer's requests to drop by and measure the house or show it to relatives. (We know this can be annoying.) Finding common ground with the buyer can be a very powerful reinforcement of the buyers choice of your home. If you meet the buyer during a visit to your home, make the buyer feel welcome and look for some common interests, children's needs, etc. Responding to a "Low Ball" Offer There is a point at which an offer is so low and poorly considered that it should not be given a response. However, most of the time it is best to respond to offers: The buyer may be unfamiliar with your market. In his market, greater price reductions may be commonplace. The buyer may be unfamiliar with the comparable sales for your home. By providing sales data, we can build his confidence in the property. The buyer may be starting low, but be willing move up. It may be in the buyer's background or culture to negotiate aggressively. Once terms are settled, he may be be very relationship oriented. By refusing to counter you are adding a little slap to the buyer's ego. He may not submit another offer, and you will not see how high he will go. Responding to a Reasonable Offer Buyers expect sellers to take an evening to discuss the offer. If an offer is accepted within 5 minutes, the buyer may feel uneasy. Multiple offers must be presented fairly. You should either disclose to all parties, or disclose to none, that multiple offers have been received. We prefer disclosure to all parties in most cases. This will maximize your ability to obtain the best price. By disclosing that there are multiple offers, you are not "shopping" your contract. Shopping occurs when you disclose the terms of an offer to induce a buyer to submit a better offer. This results in distrust of the process, and possible loss of the buyers. There may be lot of emotion on the table. Future problems will be avoided by a formal procedure for handling offers. About the author: Roselind Hejl, CRS, is a Realtor with Coldwell Banker United in Austin, Texas. Her website: www.weloveaustin.comoffers homes for sale, search MLS, buyer and seller guides. "Let Roselind help you make your move to Austin." Top 25 Residential Agents - Austin Business Journal Circulated by Article Emporium Real Estate Inspection - Do It Yourself Why should you do your own real estate inspection? To get a better deal. It isn't necessary to learn building codes, and you probably should use a professional inspector in any case. The point of learning what to look for is to have negotiating points. Home Inspection Chec... 13 Extra Costs to be Aware of Before Buying a Home Whether you're looking to buy your first home, or trading up to a larger one, there are many costs - on top of the purchase price - that you must figure into your calculation of affordability. These extra fees, such as taxes and other additional costs, could surprise you with an un... The Right Time to Buy Your First Home There are many real estate market forecasts and predictions available - however the bottom line is that if you want to buy your first home—there is no wrong time. This is because the motivation to buy is not determined by regional market conditions or by location, but rather by yo... How to Create a Simple Real Estate Business Plan Becoming a full time property rehabber is actually a very easy process. So why do so many investors get it wrong, or even worse, do nothing? Simple: NO BUSINESS PLAN! Make no mistake about it: This is a business!. If you invest time and capital with the aim of... Tips & Advice on Choosing an E-Lender/Broker WHAT TO AVOID - WHAT TO LOOK FOR! • E-Lenders/Brokers who are solely web-based. These include mortgage sites that promise you three to four quotes on your loan. • Lenders that will not give you their loan officer's last name, cell phone or home phone number. ... Sell Your Real Estate Notes People sell real estate notes to raise cash quickly. A real estate note is just the loan document created when you financed the sale of your house or investment property. It could be a mortgage note, or a land-contract or contract-for-sale. The point is that the buyer is making pay... Real Estate Investor Question: Rehab and Sell, or Rehab and Keep? Here's another awesome question I received from my discussion board. The question; Why bother keeping property after it's rehabbed? Why not sell it after the rehab and GET PAID! Of course, the first questions that you must answer is how emergent is your need for quick ca... Protective Covenants – Buying Land or Homes In addition to zoning, some properties have covenants recorded at the courthouse that “run with the land.” These “protective covenants” can put a serious pinch in your plans for a piece of property. Protective Covenants A protective covenant remains in effect as... Selling Your Home – What Can Go Wrong With Pricing and Loans So, you're selling your home (house, townhouse, condo, apartment, land, lot, farm, ranch, etc.), what can go wrong? The sad fact is that a lot of things can go wrong. However, don't despair, there are almost as many solutions as problems. In this article, we look at problems rela... Pricing Your Home To Sell When you're selling your own property, whether it's a house, townhouse, condo, apartment, a finished lot, raw land, a farm, a ranch, or whatever, the first thing to get right is the price you ask for it. If you work with a broker, the legwork is done for you. When you work as a F... LIGURIA, MAY 2004. In a small, hill-top village home, overlooking the sea in the Italian region of Liguria, one can find the heartbeat of a vibrant, new, online marketplace, which - up against some of the world's e-shopping giants LIGURIA, MAY 2004. In a small, hill-top village home, overlooking the sea in the Italian region of Liguria, one can find the heartbeat of a vibrant, new, online marketplace, which - up against some of the world's e-shopping giants, like E-Bay and Amazon – is quickly becoming a for... Fix And Flip - A Real Estate Formula Making money with a "fix and flip" property is a great way to make money in real estate. However, it isn't about repairing drywall and planting flowers. It's all about how you do the numbers. People often buy and sell a fixer-upper without a definite plan. They buy a house... Real Estate Appraisal - Do Your Own For single family homes, there are two basic methods used in real estate appraisal. They are replacement cost analysis, and using comparable sales. A third appraisal method, based on capitalization, is used for income properties, and is covered in another article. In figur... Negotiating the Sale of Your Home Negotiating a successful sale of your home requires good communication skills. You must sustain the buyer's interest and trust during the process. Many of our clients have been very experienced negotiators, and from them we have learned that the goal is to reach a “good agreement... Hard Money Lenders -- "No Money Down" The Easy Way Would it help you as a real estate investor to be able to "Close For Cash in Days," even if you're tapped out financially? Hard money lenders are perhaps the best way to get 100% financing with easy qualifying, money for fix- up, and fast closings.
|
|
|||||||
|
||||||||