Your agent’s negotiation effectiveness will rely on your communicating with your agent about what’s most important to you during your sale. We find that the best outcome is usually when you find a solution that benefits all parties. This is why our agents are often trained in a collaborative negotiation, which is effective 75 percent of the time while a competitive style is effective only 17 percent of the time.
Information is always power. This is especially true in a negotiation. You want to make sure that you are prepared. Specifically, you want to learn about the buyer.
- Find a collaborative solution while focusing on the other party and what’s important to them.
- Understand the negotiation dynamics, specifically the power-need dynamic.
- Knowledge, time and trust equal power, and your agent will use these to put you in the best negotiating position possible.
- If your buyer has seen your property multiple times but is hesitant to take the next step, write a reverse offer.
- The seller makes an offer to the buyer with some sort of incentive, lower price, home warranty, etc.
- Don’t get hung up on just the price, there are five negotiating points in the contract. The other negotiating points are often more important than sellers realize.
- Price, terms, dates, inclusions/exclusions and contingencies.
- Be informed to be a good seller.
- Know the buyer and their personality type.
- Know the market and where you should be negotiating.
- Develop options and solutions that will be mutually acceptable.
Types of Contingencies
- Financing: Most buyers don’t pay with cash and will make their offer subject to obtaining financing for the purchase. Most buyers will have a pre-approval letter at the time of offer. However, there are still many factors after an offer is accepted that may impact whether or not the buyer can obtain financing.
- Appraisals: Any offers that are subject to financing will also be subject to appraisal. This appraisal is for the bank to verify the property is worth what they’re securing the loan against. If the property fails to appraise at or above the purchase price, the bank’s loan to value will be on the appraised value, not the value of the property.
- Subject to sale: When a seller has a property to sell, they will make an offer subject to the sale of their current property. In most cases, sellers require an option-hour clause (sometimes referred to as the 72-hour clause) that allows sellers to keep their home active on the market until the buyer has secured a buyer for their property.
- Inclusions/Exclusions: Most offers will come with a variety of items that a buyer wishes to include or exclude from the sale. Any fixture that requires a tool to remove from the property is considered real property and will stay unless specifically mentioned otherwise. Any personal property, items that can be removed without a tool, may be requested to remain by the buyer as well. Common examples of personal property would include appliances, home warranties, etc.
- Inspections: Most buyers will hire a home inspector to do a whole house inspection, which is a visual inspection of all the major mechanicals in your home. There may be other inspections done based on any of their concerns with the property. If any deficiencies are identified by inspections that weren’t previously disclosed, the buyer will have an opportunity to request repairs. If a repair request comes in, you will have the opportunity to accept, reject or counter their proposal.
- Other provisions