It sounds simple in theory: you want your home to sell, and for the highest price possible. But if it were as easy as that, we wouldn’t have asked hardballing real estate experts and managerial decision-makers for their top strategies on how to negotiate your house price to the max.
Because honestly, unless you spend your days at the bargaining table in the boardroom, negotiation feels like a foreign concept and total shock from the normal humdrum of daily life. When it’s your biggest asset on the line, you’re bound to be sweating.
So practice your power posing, affirmations, and firm handshake. It’s time to negotiate with an eye on your bottom line—with the help of the pros.
Strategy #1: Start thinking about price negotiations before you get an offer.
The price negotiation process starts before your home even hits the market. With an experienced agent, you should be thinking about list price of your home during your first meeting and how to leverage the initial asking price to your advantage.
Settling on a pricing strategy requires having deep understanding of your market, and where the value of your home fits within market trends, explains Barbara Dopp, a top-selling agent in Meridian, Idaho.
“I’ve got deep, deep statistics that show not just the neighborhood but also the surrounding area based on multiple listing service coverage,” says Dopp. “I show the sellers the trends over the last 10 years.”
To set yourself up for successful price negotiations, what you want to do is land on an asking price supported by a comparative market analysis (CMA), not sentimentality or a pie-in-the-sky number you’d like to “test” the market with. A CMA evaluates homes recently sold in your area that are similar to yours in lot size, square footage, number of rooms, layout, etc.
This type of market research allows you to combat lower offers with cold hard data and facts. That way if a buyer comes to you with a comp to prove you’re overpriced, you can say with confidence that the price is right because your home has an extra bathroom or upgrades like wood floors that make it stand out over the neighbors’.
What’s more, if your house is priced correctly for the market, it’s likely to sell quickly and attract more buyers to negotiate with from the get-go. When offers start rolling in right away, lots of sellers panic, worried they left money on the table. But the reality is, a home well priced will sell quickly because you’ve identified its fair market value, i.e. what buyers are willing to pay for it— it’s as simple as that.
If you price too high from the start, you could risk having your home on the market for longer than you expect—leaving you susceptible to lowball offers and in a position of weakness at the bargaining table.
Dopp also goes by what she calls the Two Rules of Ten:
“If you’ve had 10 showings and there is no offer, or you’ve had 10 days go by, and no one has looked at the house, then the price is probably the issue.”
Strategy #2: Keep price negotiations 100% business and take the emotion out of the process.
Both negotiation experts and real estate agents agree that a home seller needs to begin the process emotionally separating from their home early on, and one good reason for that is to mentally gear up for the price negotiation process.
What you might not realize is that you’re likely influenced by the psychology of ownership, explains Professor Colleen Giblin, who teaches an MBA-level course in managerial decision making. Because of your emotional ties to your home, you’re likely to believe it’s worth much more than others.
“In the real estate market, this can translate to sellers being motivated to list at a higher price than a savvy buyer would be willing to pay,” says Giblin. In other words, feeling too emotionally invested in your home could lead to an unreasonable list price, which in turn means a stale home on the market, and ultimately translates to less cash in the sale.
One strategy to divorce your emotions from the sale as soon as possible is to start tidying up your home and remove personal items, like family photos and mementos, from your living spaces. Not only does this get the property ready for showings, but it’ll also give you some space to emotionally separate from your home.
If this process sounds too daunting at first, take time to memorialize your home as it is now, suggests Dopp. Take photos of your rooms and document the living spaces in their current state. Acknowledge the personal value of your home, then start thinking about its future owners to begin letting go.
Strategy #3: Nudge buyers’ imaginations to help them see your house as their new home.
Depersonalization can toughen up the seller to be a stronger negotiator, but it’ll also help compel the buyer to a higher sale price. When you wipe away the traces of “you” all over the home, you allow the buyer to see a life of their own there, Giblin reasons.
“Tidying up isn’t just aesthetically pleasing—it gives more of a blank slate for buyers to envision their future lives in the space, without having to filter out someone else’s personal touches. This ultimately sets sellers up for a stronger negotiating position.”
It’ll be easier for buyers to envision their lives in your home if you create a blank slate. Consider some aesthetic changes when it comes to staging including:
- Clear away the clutter:
You should spend energy not only on depersonalizing, but also clearing out clutter from your home. It’s recommended to put at least 1/3 of your things in storage before opening your home to buyers. This includes furniture, knick knacks, appliances, and personal items. Clearing your things creates a mental space for buyers to envision their stuff in the home.
- Avoid accent walls:
You may love the bold red accent wall in your living room, but it might turn a buyer off. You want your space to appeal to a wide audience, not your personal taste. If it’s within your time and budget, repaint boldly colored rooms with a more neutral palette. However, neutral can still be on trend; check out Sherwin Williams’ 2019 color forecast for inspiration, paying close attention to subtle shades like Origami White, Misty, or Shiitake.
- Envision vignettes:
It’s easy to get carried away when depersonalizing a home, but remember you want the space to look like a person’s house, just not your home specifically. Create Pottery Barn-esque vignettes in a few spaces in the home. Feature lights, candles, or potted plants to give the house a lived-in feel, without the personalization.
The more a seller entices the buyer to flesh out a vision of how they would live in this specific property, the more the buyer will be eager to make that dream a reality.
Another tactic to consider is writing a seller’s letter. It’s more common for buyers to write the sellers a letter, but sellers can, too. A seller’s letter creates an opportunity to tell buyers what you love about your home, pointing out certain features and encouraging a buyer to envision themselves there. You can also use a seller’s letter to highlight and share things a buyer might not notice, or be able to see on first glance. For example, you might have a beautiful garden in the summer, but it doesn’t bloom in the early spring. You can include photos of the garden in your letter and leave it out during showings. Or perhaps your deck is perfect for entertaining, but you can’t throw a party during your open house to showcase it. Instead, including photos or anecdotes in the letter can help paint a picture for the buyer of what it might be like to live there.
All of these efforts put you in a better position of leverage during price negotiations. Buyers will pay anything if they’ve fallen in love with the house.
Strategy #4: Know your ‘BATNA,’ or Best Alternative To a Negotiated Agreement.
Seasoned negotiators consider the Best Alternative To a Negotiated Agreement or BATNA, Giblin says. Before an offer hits your inbox, you should have a clear idea of at what point you will walk away from the bargaining table. BANTA asks a seller to consider what steps they will take if the negotiation comes to an impasse. If you’re confident in your best alternative, it makes walking away from a bad deal easy.
If you don’t know your BANTA before the negotiation process starts, there’s a chance those pesky emotions will cloud your judgment, reasons Giblin. “The risk of not thinking this through beforehand, and arriving at a specific figure, is that otherwise, sellers risk letting their emotions guide their decision-making. Getting what is perceived as an unfair offer can feel painful or insulting, and drives people to reject offers that might still rationally benefit them.”
It doesn’t take much to establish a BANTA in the negotiation process. First, simply consider all the alternatives that could occur if your negotiation falls through:
- Take the house off the market and renovating.
Maybe you had an inkling your home could’ve used some improvements before it hit the market. Instead of accepting a lower than anticipated offer, your BANTA might be taking the house off the market, and investing in some renovations or improvements.
- Leave the house on the market.
You might have a lax timeline when it comes to selling your home. It’s a simple alternative, but perhaps you feel confident to walk away from a deal and just leave the house on the market as is.
- Rent the home.
If you don’t mind managing a property, your best alternative might involve renting your property until the market improves, or you’re ready to list again.
- Invest in professional stagers.
As an alternative to accepting a low offer, you might decide to invest in professional stagers in your home. It might not be a cost you want to take on right off the bat, but your BANTA could be hiring stagers to create a more compelling open house with the hopes of getting more offers.
This is by no means an exhaustive list of alternatives, and there’s no right or wrong answer. But, make sure you take the time to list all of yours out.
Then, make a plan for each of these, considering how much renovating your home would cost, or how much you would rent the property out for. Finally, evaluate each of the above alternatives, deciding which works best for you.
Remember that alternative plan, and keep it in your back pocket during the negotiation process. If worse comes to worst, and the negotiation falls through, you know that you’ve got another plan, your best alternative, in place.
It also helps to remember that negotiation is a two-way street. The offers buyers make aren’t a personal interaction as much as a signal of your property being on the market. It’s not about you, but a lowball offer might still sting. Know the number you’ll walk away from in theory, before you see it in real life.
But, if the offer is within your expected range, don’t get too hung up on the first number. “I always say don’t hesitate to counter,” says Dopp, “up to a point.”
Strategy #5: Remember the Golden Rule in your house negotiations.
When you’re selling a home you cherish, and there’s a lot of capital on the line, it’s unlikely you’re thinking about the feelings of the buyer. However, always create space for respect and understanding in the negotiation process, even in the instance when they come back to you with a lowball bid.
If a buyer makes an offer that’s below your list price, try to respond with honesty and respect. Try phrases like, “This isn’t the price we’d planned on receiving based on our research of the comps,” or “I don’t think this is going to work at this particular price for us,” instead of shutting the offer down entirely, suggests organizational psychologist, Kira Nurieli.
“What that does is position you as a person of dignity, and there’s a value to that,” explains Nurieli. “They will associate that kind of dignified voice with you, as well as the property.” In other words, taking the high road can lead a buyer to think more highly of your property.
While it’s not always a guarantee, this tactic could lead to the buyer raising their offer, or being more open-minded when you deliver a higher counteroffer.
Strategy #6: Keep in mind it’s not always about the money.
At the end of the day, buying and selling a home is a financial transaction, but the negotiation process doesn’t have to be all about money. If a buyer makes an offer you want to negotiate on, it’s worth understanding what they prioritize in the sale. Keep an eye out for smart trade-offs.
Harvard’s Program on Negotiation explains that a smart trade-off means to “identify issues that your counterpart cares deeply about that you value less. Then propose making a concession on that issue in exchange for a concession from her on an issue you value highly.”
Maybe your buyer is in a rush to move into your home. If you’re looking to maximize the offer, you might suggest trade-offs like a smaller window for closing, or even offering some of your furnishings to make their move easier.
Or, you could offer to pay a portion of the buyer’s closing costs, a small but annoying expense for the buyer, but at a higher list price for the home. You can also consider appliances on your property that you could take with you in favor of accepting a lower offer.
“Thinking more broadly about negotiation beyond just the financial is always a good thing,” Nurieli says. Maybe a buyer won’t meet your list price, but they’re willing to close faster, or perhaps put down more earnest money.
While your goal is to fetch the highest price for your home, remember there are other elements on the table you can use to come to an agreement.
Strategy #7: Prepare your responses for the tough questions.
Preparing yourself for the hardest questions a buyer could ask helps ease the burden of the negotiating process.
The hardest question varies for each seller. Take some time to consider what you’d prefer not to talk about when it comes to the sale of your home.
As the Harvard Program on Negotiation suggests, it might be a buyer asking “What’s the absolute minimum you’d take for your house?” Your hardest question is likely an uncomfortable one—a query that might make you feel flustered or trapped if asked it on the spot. Not all sellers have the same hardest question, but some of the following occur often:
- Here’s my offer, take it or leave it. Can you give me a response in the next hour?
- What’s the real reason you’re selling this house? Do you think its value will decline in coming years?
- Do you have any offers? What are they?
- Why do you think your house is worth this much?
Just as there’s no one “hardest question,” there’s no right way to answer them. However, brainstorming how to react to this question, and in turn how to use it as a strength can bring you more confidence at the bargaining table. However, there are a few tactics recommended Harvard’s negotiation program:
- Reframe the question:
Let the potential buyer know that you’ve received and understand their question. In the example of the buyer who asked about other offers, you can let them know you’re open to hearing multiple offers, but reframe the question to focus on the buyer. Ask them why they might be the best fit for the house, or why you shouldn’t consider future offers from other prospective buyers.
- Flip the script:
This tactic works best with the common hardest question, “What’s the lowest you’ll take?” If a buyer is going to come out and ask about your lowest threshold, you can ask what’s the absolute highest they’d pay for your home. Sure, it might be cheeky, but it signals a willingness to negotiate, and shows the buyer you aren’t rattled by hard questions.
- Be objective, back it up with data:
This tactic deals with data and logic. If someone asks why you think your home is worth this much, you can feel free to share your research and data on the home sales in your market. This removes any personalization from the negotiation, instead focusing on logic, research, and precedent in the market.
When it comes to this strategy, identifying your hardest question is more than half the work. Anticipating that this question might come up, and having a canned response to it can put you at ease when you head to the negotiation table.
Strategy #8: Adopt the negotiator’s ideal state of mind.
While we’d all like to be as cool, calm, and collected as a professional negotiator, the reality is, emotions will get in the way. But there’s a simple way to combat the type of stress and excitement that can cloud your best judgment: don’t let yourself get hungry (or hangry, as they say).
Have a full meal, drink lots of water, try a meditation app, and while it’s not always easy, aim to be rested before you start discussions with a potential buyer.
“All of these things are going to help you feel physically better,” explains Nurieli, “so then you’re going to be able to respond more powerfully at the negotiation table when something unexpected comes up.”
Strategy #9: Negotiating on home price: Go in it to win it, but be ready to compromise.
“A fellow mediator once turned to me and said, ‘You know a mediation is successful when both parties go away from the table feeling angry,’” Nurieli jokes.
But in most negotiations, neither party gets exactly what they want. Going into talks with a potential buyer in this state of mind can help ease the pressure. Rarely do both parties come out feeling like they won—instead, each side makes small concessions to please the other.
While you should certainly have a goal of what you want your home to sell for, it helps to remember that these are guidelines. You can have a list of goals for the sale of your home, but until you’ve signed on the dotted line, these are merely goals. Coupling your ideal home selling scenario with realistic expectations opens the door to compromise, and a conflict-free sale.
Armed with these negotiation tactics, and an experienced real estate agent, you can feel like a bargaining pro when the offers start rolling in.