Contract Negotiation
A prospective buyer is interested in your house and submits an offer. What happens next?
Your agent will advise you of the offer and you’ll begin the negotiation phase. Although the price that the buyer offers for your home is incredibly important, it’s not the only thing to consider. For example, buyers may write in the contract that they expect the seller to pay closing costs. Or they may include a contingency that they are obligated to complete the sale only if their current house sells. Other conditions include inspections, items (such as appliances) that convey with the property, required repairs, earnest money, and financing issues.
Simply put, a contingency is a condition that, if not met, renders the contract void and not binding. For example, a contract might include a condition that title issues be cleared up by a certain date. If you, as the seller, don’t get the title cleared by the deadline, the contract is void and the buyer is released from any obligation. Some contracts are written to be contingent on the buyer securing financing (sometimes at a specified rate) within a certain period. If the buyer cannot get financing, the contract is null. Oftentimes, buyers include a condition that the contract is contingent up on a satisfactory home inspection. If a home inspector finds any issues – say, the roof is in need of repair – the buyer can ask the seller to repair the roof prior to closing or reduce the sales price to cover the cost of the work.
All of these matters, along with the price, are negotiable. As the seller, you have the right to refuse an offer if it doesn’t satisfy your needs. Your agent is experienced in these negotiations, and he or she can guide you through the process. Oftentimes, a contract goes through several iterations before both parties agree to it.
As you’re negotiating, keep these tips in mind:
1. Buyers will know a fair price. With information widely available, buyers who have done their homework will be aware of the rough market value of your home. If you overprice your home, you will turn off some buyers or make them believe that you’re not willing to negotiate to a fair price.
2. Understand who you’re negotiating with. The more you know about your prospective buyer, the better you can reach an agreement that’s acceptable to both of you. Know where they stand firm and where there’s wiggle room.
3. Be willing to compromise. It takes two parties to negotiate, and if you’re unwilling to work with the buyer, he or she may walk. Remember that this is big transaction for the buyer as well as you. If you reach an impasse on an issue, consider meeting in the middle.
4. Focus on the big picture. If there’s a minor point that’s causing a snag, agree to set it aside and work out the main agreement. Don’t let little things get in the way of an otherwise good deal.
5. Let your agent work for you. We have negotiated many contracts between a variety of buyers and sellers. We may be able to offer a perspective that you haven’t considered. Please feel free to ask us for advice, and tell us frankly what you want.
Sometimes a real estate negotiation goes smoothly; sometimes it’s a lot of give and take. Either way, we’ll work with you to make sure you’re satisfied with the contract.