Negotiating to sell a home

If you are fortunate enough to be selling your home in a fast market where there are many buyers vying for a few homes, you may think that you don't need any advice on negotiating the deal. But in a seller’s market, it can be even more critical to negotiate carefully, especially if you are considering multiple offers. In a buyer’s market, when you may be glad just to have an offer, you may think that you have no bargaining power. But even in that situation, it's important to negotiate and avoid making unintended concessions.

In either situation, it pays to understand the dynamics of and recognize that the best real estate transactions are those in which the seller and buyer both believe they got the best deal.

Why deals fall through

Negotiations gone awry are a major cause of failed real estate transactions. Buyers can become frustrated by too many counteroffers and sellers may not be able to accept a realistic price. If communication breaks down, then the deal is destined to failure.

Try to avoid falling into these negotiating traps:

Moving too fast: It can be tempting to push negotiations through quickly, especially if you need to sell for financial or relocation reasons or if the market is slow. Take the time to read offers carefully. If a lower offer has been made because of needed repairs, make sure that the buyer's estimate of the cost of those repairs is accurate. It may be better to make the repairs rather than accept a big price cut. If so, go back to the negotiating table.
Letting emotions rule: Remember, the house you are selling is a commodity. Don't take offense at buyers' comments about the landscaping or décor, especially when they make a lower offer based on those factors. If the market is not in your favor, you may have to offer a decorating allowance or accept a lower price. If it is a seller’s market, counter with a full-price offer. In any case, don't avoid dealing with a buyer because you’ve been insulted.
Reluctance to counter: Few sellers will accept an offer without amendments. Countering an offer is a time-honored tradition in real estate. Countering means that you come back at the buyer with a different price or different terms. Remember, negotiating to sell a house is a give-and-take process. If you fail to counter offers, you may not connect with a buyer. Also, make all counteroffers in writing to avoid misunderstandings and continue negotiations.
Bad-faith bargaining: Whether you are a seller or a buyer, engaging in bad-faith bargaining not only can result in a failed sale, but possible legal action. If you aren't serious about selling your property--that is, you won't accept anything but an overpriced offer--you probably shouldn't be in the market. What you want to avoid as a seller is a bad-faith buyer. Such a buyer can waste your time by making unacceptable low offers or engaging in endless negotiations. Even worse are bad-faith buyers who misrepresent their ability to purchase your home and take you off the market for several weeks before their credit report or failure to secure financing nullifies the contract. If you have any qualms about a buyer's means, ask for a preapproval letter from a lender.
Failure to meet deadlines: Time can be an ally and an enemy in negotiations. It is vital that both sides meet deadlines. But this doesn't mean that you can't be flexible. A long line at the lender may hold up a buyer's financing. Make sure that your closing date allows for contingencies that may take a longer time than usual to satisfy. Also, make sure that the buyer or the agent asks for extensions promptly so that you can make any adjustments.

Hold the contingency

One reason home sellers like contingency-free offers is that they minimize the possibility of a sale falling apart. But most contingencies in a typical purchase contract benefit buyers, such as contingencies for financing and inspections. Financing and inspection contingencies don't often result in a sale falling through. But avoid contingencies that leave you little or no room to maneuver. If the buyers want to make the sale contingent on the sale of their current home, make sure that the contract includes a release clause that will allow you to back out of the first contract if an offer without contingencies is presented.

Do-it-yourself deals

Most agents will manage negotiations in consultation with you. You also may want to consult a real estate lawyer in the process, especially if the purchase contract contains complex seller-financing terms. If you feel comfortable negotiating the deal, you can help write the counteroffer or amend the initial purchase contract, as well as participate in face-to-face negotiations with the buyer's representative. Before you jump into negotiating your own deal, however, make sure that you are prepared to discuss your property's weaknesses or whether you can consider a lower price without bristling. Remaining calm and focused is the best modus operandi in negotiations, whether you are a seller or a buyer.