Did you know that stress literally changes the way our brains perceive time?
When we’re faced with a frightening or traumatic experience, anecdotal evidence has shown that the way we experience time fundamentally shifts. A mere split second can feel like something much longer when we’re dealing with extreme stress, like we do when we sense that danger may be imminent.
That’s why it feels like an eternity and a half when you’re waiting to hear from your agent after hearing those magic words: “We’ve got an offer on the way.” Even though real estate negotiations don’t typically take more than a few days once the ball begins rolling, it feels like forever when you’re going through the stress of negotiating a home sale—one that 40% of home buyers rank as the top source of stress in modern life.
While some serious patience is required for smart negotiation, you don’t just have to sit back and twiddle your thumbs. We chatted with the pros to get a sense of how long negotiation takes, what factors can impact negotiations, and how you and your agent help to keep things moving.
Tick-tock! How long til you’ve got an offer on lock?
So just how long will you be in limbo while you wait to lock in an offer on your house?
The good news is that in most cases, the back and forth between a buyer and seller on the purchase offer should only last a short 1 to 3 days, according to top agents in the business.
Barring any circumstances like a bidding war or an especially indecisive or unavailable buyer (which could potentially extend the process by as much as a week or so), negotiations will only take a few hours. You could have an offer at lunch and be signing the paperwork to make it official by dinner.
“Normally, when it comes to pricing and getting a sale price, you’re back and forth at most three times,” said Chris Ognek, a top-selling agent in Fredericksburg, VA who’s negotiated over 400 real estate deals to date. “By that point, you’ve gotten the seller and the buyer to their breaking point. I very rarely ever see it go past that.”
That not only allows opportunity for consideration of counteroffers, but also lets both the buyer and seller know that both parties are serious about coming to an agreement in good faith and a timely manner. Let’s go through a few key points to know about this process:
What’s up for negotiation during the offer stage?
Up for negotiation during the offer stage are the purchase price, closing date, closing costs, earnest money, and buyer’s contingencies such as those terms related to financing, the home inspection, and the home appraisal. If the buyer wants to add any special contingencies, such as buying contingent on the sale of their current home, that could take up more time in negotiations.
This is also the time when the seller would need to disclose any attachments to the home they plan to take in the move (such as a stove, refrigerator, or window treatments) and the buyer would have the opportunity to request it stay.
But of all the points of negotiation, pricing tends to be the biggest make-or-break variable.
When do offer negotiations start and stop?
Negotiations start after a buyer makes their initial offer to the seller. Because it’s often mutually beneficial to move forward as quickly as possible, the length of negotiations comes down to how fast the agents can communicate their client’s interest and get the deal down in writing.
Offer negotiations then officially stop when both the buyer and seller have signed the purchase offer that details the agreed upon price and terms.
Are home sale negotiations over after you’ve signed the purchase contract?
No, the door will reopen for negotiations depending on the results of the home inspection and home appraisal but the process will need to keep moving in order to meet the closing date deadline noted in the contract.
If unexpected issues with the house or a low appraisal throw a wrench in the closing, then you have what’s called a delayed settlement. All in all closing on a house typically lasts between 30-45 days.
How do counter offers work and how can they impact the offer negotiation time period?
A counteroffer is the seller’s response to the buyer’s initial offer. It tells the buyer that you’re open to their offer, but you need one or more of the terms outlined to be tweaked to suit your needs. A buyer can then submit a counter-counteroffer, and there’s no limit to how many times offers can be volleyed back and forth. Again, though, 3 presented offers/counteroffers is usually the max.
According to Ognek, most of the time sellers and buyers make a counteroffer for the purposes of hashing out a sales price, as well as any seller subsidies like covering closing costs. Other issues that are commonly covered by counteroffers include:
- The amount of the earnest money deposit
- Timelines for contingencies
- Closing dates
- Addition or exclusion of personal items (like furniture or appliances)
- Change of service providers (for inspection, repairs, etc.)
Just as buyers can withdraw an offer up until the point when it’s officially accepted, so can sellers. There are many scenarios in which this is a reasonable course of action.
One common reason for a seller to withdraw a counteroffer might be if a better offer is received before the potential buyer agrees to the amended terms. In that case, the seller can simply withdraw their offer, meaning that the first buyer is no longer in the running.
The importance of the “time is of the essence” clause
You’ve may have heard the term “time is of the essence” in relation to real estate contracts, but what does that mean for you as a seller?
When a contract states that time is of the essence, it serves as a legal reminder to all parties involved that the clock is ticking. In home negotiations, “time is of the essence” indicates that the actions of one party depend on a response from the other party within the time specified. If that doesn’t occur, it can be considered a breach of contract.
If you don’t use the phrase in your contract, it can come back to bite you in a big way. In one legal case from 2008 where two parties entered a contract without using the term, a court found that the agreed-upon closing date was not enforceable because the contract didn’t specifically state that time is of the essence. These five words act as legal protection if the process starts to drag on for longer than it should.
So, since time is such an important factor when selling your home, what can you do to make sure negotiations keep moving?
1. Get your priorities together before negotiations even start.
Price is a huge sticking point when it comes to selling your home, but it’s not the only issue to consider when you’re figuring out what you really need to get out of your sale.
Before you even start fielding offers from prospective buyers, take the time to think about what matters the most to you and identify your priorities accordingly.
There are so many factors that go into every home sale, so it’s important to pinpoint ahead of time where you have room to compromise (and where you don’t). If you haven’t figured out whether you really want to fight to take your window treatments with you or even where your price bottom line lies, you’ll be put on the spot when it’s time to make those decisions during negotiation.
Establishing your priorities ahead of time means that you’ll be able to act more swiftly (and confidently) when the clock is ticking.
Choose one or two must-haves, and be willing to negotiate on the rest. Whether you’re most focused on price, timing, contingencies or anything else, your listing agent will be able to help you remain focused on the bottom line.
2. Gain leverage off the bat with a smart pricing strategy.
Pricing your home correctly is the number one way to tip the scales in favor of a swift sale with quick negotiations. Go into your negotiations with the understanding that the process takes time, and that the strategy for closing quickly is going to be different than negotiating with a high price as a priority.
“To move negotiations along, you should offer your best position. This will not result in the highest price,” explained Bruce Ailion, an award-winning real estate broker and licensed attorney.
“Skillful negotiation takes time. It requires understanding of the other person’s needs and concerns. It takes time to cook. Roasting a chicken in 15 minutes doesn’t turn out a great roasted chicken.”
Work with your agent to pinpoint the lowest offer you’d consider accepting and think of any higher offers as a bonus. Aggressive pricing right off the bat can make a huge difference when it comes to getting bites on your listing. On the other hand, if you’ve got time to kill, then negotiate away but know that buyers won’t wait around forever.
3. Whatever you do, don’t ice out your prospective buyers.
Game theory might tell you that it’s a power move to make your opponent sweat waiting for your next move, but that couldn’t be further from the case in real estate negotiations. Not only does a prompt response go a long way in generating trust and good faith, but it could be the difference between making a deal and missing out.
“If it goes too long—and sometimes too long is the next day—both sides start to get nervous,” said Ognek. “Buyers don’t stop looking at houses, even after they’re in a contract. They continue to look at houses.” Because of this, the clock starts ticking for sellers from the moment the buyer submits an offer.
Ognek advises sellers to be expeditious when moving forward. During the negotiation process, your agent should communicate with buyers frequently.
As your representative, the agent needs to check in with the buyer’s agent every 4 to 6 hours, even if it’s just to let them know that you don’t have an update quite yet. Proper communication will put everyone’s minds at ease, and stress levels will be significantly lowered.
4. Give yourself more time than you think you’ll need.
The last thing you want when selling a house is to be forced into bad decisions because you’re pressed for time.
For example, if your goal is to sell your home sometime during the spring, talk to a listing agent 6 months before you’re hoping to put it on the market.
“Planning is everything,” said Ognek. “I take my springtime sellers’ pictures in the fall. March is an ideal time in my area to list, but the grass is still brown and the trees don’t have any leaves. That doesn’t help for marketing.”
Instead, Ognek’s photos show green grass and lush foliage, giving his properties a leg up over those with less appealing photos.
The worst case scenario that could come from connecting with an agent too early is that they’ll tell you to come back in a month or two and give you advice on what projects to tackle in the meantime. Either way, you’ll know you’re on the right track.
5. Work with an agent who’s got negotiating experience.
The decision to hire a top-ranked real estate agent may have an even bigger impact on your offer negotiations than you realize. When you set out to select your agent, you should look at their performance when it comes to sale-to-list price ratio—the higher the ratio, the more money they are able to net their seller clients on average.
An agent who’s facilitated a lot of transactions will also have negotiated through a broad range of scenarios and know how to navigate your home sale accordingly.
So, how long does negotiation take? The answer is, it depends.
The truth is we’re all about as impatient as a kid in the back of the car yelling “Are we there yet?” every 10 minutes. But the back and forth nature of a home sale means that the length of negotiations is largely dependent on how quickly and efficiently you’re able to communicate with the buyer and where you rank your own priorities.
If you’ve got a need for speed, then you can negotiate faster but potentially will have to make more compromises to keep the deal moving. On the other hand, crafting a deal that checks all your boxes when it comes to terms and pricing might take a little longer. Tell your agent what matters to you most and leave the hardballing to the pros—then, no matter how long negotiations go, you can trust you’ll end up with a “Sold” sign in the yard.