Negotiating the Sale

Do you hate to bargain? If you're like most people, you were taught that bargaining over price is not polite. There are times, however, when getting past that message definitely works to your advantage--and negotiating with buyers to sell your own home is one of them!

Negotiating effectively can be the difference between a quick, satisfactory sale and still owning your house months after you posted your "For Sale" sign.

Negotiating 101

People are used to paying the sticker price for most things. We don't offer to pay the grocer less than the posted price for lettuce. We may ask a TV salesperson if the model we’re thinking about buying will go on sale anytime soon, but that's about the extent of our department store bargaining. When it comes to bigger purchases like cars and homes, we bargain--but when negotiations begin to go awry we don't know what to do.

Even when you are offering the "deal of a lifetime," virtually every potential homebuyer will initially offer less than your asking price. So before you put your house on the market, figure out how you can factor this knowledge into your price in order to cover yourself on the points you think potential buyers may make to justify offering less money.

For example, if the carpet in your home needs replacing, you might offer a carpet allowance and include room in your price to cover most or all of it. Include some room in your asking price to pay for the costs of moving twice should the buyer want possession before the new home you're buying is ready. Having a little extra in your price can make coming down a bit a lot less painful.

Avoid Getting Pushy or Emotional

Failed negotiations are the main cause for failed home sales, and pushing buyers for a quick closing or getting emotional are two big reasons sales fall through. Take time to read and consider all offers carefully. If a potential buyer has offered less than full price because of needed repairs, be sure that the cost of the repairs equals the amount deducted. You may come out ahead by making the repairs yourself and sticking to your price.

We all become attached to our homes, but remember that when you're selling it, your house is a commodity that holds no fond memories for potential buyers. Don't take offense if they don’t care for your taste in paint colors or carpet.

Handling Offers to Purchase

An offer to purchase is a contract that the buyer presents and hopes the seller will agree to and sign. An offer to purchase should include the price the buyer is willing to pay, the amount of the down payment and how the balance will be financed, and the number and type of home inspections to be performed. It should also define the closing costs and who pays for them, any personal property included in the purchase, repairs the buyer wants the seller to perform, and dates for closing the sale and transferring physical possession. An offer to purchase should describe conditions under which the proposed contract may be cancelled and a means for settling disputes.

You have two options for handling an offer to purchase: You can accept the offer as presented or make a counter offer, either by crossing out the terms you find unacceptable and writing in your own terms or by writing an entirely new contract using your terms.

If you accept the buyer's offer without changing anything, the offer becomes a contract. If you make changes, the buyer is not bound to sign the revised or new offer, and the offer does not become a contract unless the buyer agrees to the changes you proposed.

Contingencies Can Be Deal Killers

In a seller's ideal world, the buyer will have already lined up financing, will refrain from requesting inspections and will present you with a contingency-free offer to purchase.

News flash: This isn't an ideal world, and unfortunately, most contingencies in real estate contracts benefit the buyer.

All standard real estate contracts give buyers the right to have the property they have offered to purchase inspected using their inspectors of choice. If their inspectors find problems, buyers can often abandon the contract without penalty (based on contract terms). An inspection that gives buyers a reason to abandon the contract (such as finding termite damage you didn't repair because you didn't know it existed) returns negotiations to square one.

However, a less-than-satisfactory inspection doesn't have to kill the sale. You can always lower your price by the amount the inspector estimates repairs will cost. If you doubt the competence of the inspector the buyer chose, you can always hire another firm to perform the same inspection. If your inspector's findings are different, you can use that to renegotiate terms. Even if that doesn't work and your buyer walks away, you'll have an inspection report you can show to other potential purchasers.

If your sales contract is contingent upon your buyer obtaining sufficient financing and the buyer isn't able to do that, the deal will fall through.

One final word of warning about contingencies: If your buyer wants to make the offer to purchase contingent upon first selling an existing home, make sure that the contract includes a release clause that allows you to sell to another buyer who presents an offer without contingencies.