Knowing how to negotiate when selling a house can feel challenging whether it’s your first home sale or your fourth. There’s setting your house price, dealing with counteroffers, and considering closing costs, loan and occupancy terms, contingencies, repairs, updates, and more.
Part art and part skill, negotiation takes the art of understanding human behavior and the skill of an experienced agent with a keen awareness of the current housing market to guide you to the best deal for you.
Since 2020 sellers have held their position in the driver’s seat, but with recent market changes such as higher mortgage interest rates and growing housing inventory, will that change the game for sellers?
To offer some insight, we’ve collected data from and interviewed top real estate agents to collect some of the best real estate negotiation strategies when selling a house in 2022.
1. Know the housing market
Since the pandemic, sellers have had the upper hand over buyers due to the high demand for housing. However, in the first quarter of 2022 top agents are now predicting the market will begin to stabilize, according to HomeLight research.
Data from the National Association of Realtors® (NAR) supports HomeLight’s survey results, reporting a decrease in sales of 2.7% from the prior month and 4.5% from one year ago. As the inventory of unsold homes rose to 950,000 at the end of March 2022, multiple offers are beginning to subside. While these numbers are by no means drastic, the extreme bidding wars we saw in 2020 and 2021 are beginning to wane.
“Inventory is still pretty low and I do think we’re gonna see a little bit of a softening in certain price ranges,” says top agent Sarah Carlson from Blaine, Minnesota. “What I’m starting to see [recently] is instead of 20 offers I’m seeing three to eight.”
I always check right before the home goes on the market because it’s rapidly changing. You have to know what your competition is (that would be number one). To stay in the driver’s seat, you have to have your price perfect or you’ll be chasing after the market; you have to be right there on that cusp.
- Sarah Carlson Real Estate AgentCloseSarah Carlson Real Estate Agent at Realty One Group Choice Currently accepting new clients
- Years of Experience 21
- Transactions 134
- Average Price Point $317k
- Single Family Homes 112
2. Keep your eye on the competition
To stay competitive, sellers need to keep abreast of trends of comparable nearby properties, also known as comps. “I always check right before the home goes on the market because it’s rapidly changing,” explains Carlson. “You have to know what your competition is (that would be number one). To stay in the driver’s seat, you have to have your price perfect or you’ll be chasing after the market; you have to be right there on that cusp.”
Carlson also recommends being humble and pricing a little lower to bring in more buyers to compete against one another.
3. Enlist a top agent with rock-solid negotiation skills
A top agent who has negotiated many successful real estate deals knows the difference between a great deal and a poor one. “If the seller doesn’t have any experience in this market and someone comes in and says ‘I’ll give you full price and I want you to pay a few thousand in closing costs,’ they might say, oh, that sounds awesome,” explains Carlson, emphasizing how price isn’t the only factor to consider when evaluating offers. “Agents know about things like appraisal gaps and escalation clauses to boost the sale, so if you don’t know what’s going on, you will not get the most for your money.”
4. Keep your list of upgrades handy
Buyers often bring up things they don’t like about a property as a way to negotiate a lower offer. For example, they don’t like the wallpaper, the color of the paint, or something else. “Be prepared and ready to counter by telling them the positives to the negatives to prove your house is worth the price,” advises Carlson. “You can counter them with, ‘Hey but I also put in a new furnace and a new AC.’”
Carlson says she starts out by listing the 20 things the seller has done. “That’s my job as a listing agent; I’m writing a huge list of all the updates and upgrades even before they come in the door because that counters any negatives.
5. Swap personal items for closing costs
Carlson says trading personal property for closing costs is a negotiation strategy that can sometimes work. When a buyer points out an issue and tries to talk the seller into paying closing costs, a seller can offer an item they don’t really care about (or wish to move) of equal value.
As an example, the seller can say, “I’ll give you this hot tub or pool table” instead of paying your $5,000 closing costs. Is that stuff worth $5,000? Sure. Is it worth it to the buyer? Maybe.
6. Negotiate an appraisal gap guarantee or escalation clause into the deal
As of March 2022, 28% of home sales involved a cash offer, up 5% from March 2021. Furthermore, 58% of agents believe the rise of cash offers will continue for the rest of 2022, according to HomeLight’s 2022 Housing Market Preview survey.
However, financed buyers have raised the stakes by submitting high offers to get into the game, sweetening the pot for sellers. Data from HomeLight’s survey, Top Agent Insights For the New Year 2022 reported that 67% of buyers negotiated an appraisal waiver or appraisal gap guarantee to pay the difference between the appraised value and the purchase price.
Also in the survey, respondents reported that 29% of buyers negotiated an escalation clause into their contracts, agreeing to match higher offers to secure the deal. “The appraisal gap is a big deal where buyers will pay the difference up to a certain amount or the full amount in cash,” says Carlson. “Then there are escalation clauses where you go up, up, up, up.”
7. Waive the inspection contingency with a pre-sale inspection
One of the biggest deal-breakers is the inspection contingency clause. Carlson encourages sellers to do a pre-listing home inspection, especially in older homes because so many buyers walk away or delay the sale due to inspection issues. This way sellers know about issues ahead of time.
“[Sellers will] need to fix some things but [they’ll] get a nice clean offer that goes right to pending when they do a pre-listing inspection,” says Carlson. “Sellers love it, and they won’t be waiting for a surprise after an inspection and have to do all those repairs.”
Carlson says if a seller hopes to get “a bunch of offers that aren’t contingent on inspections, [a presale inspection] is the way to do it.”
On the other hand, If you don’t want to do a pre-sale inspection or get involved in hiring contractors for repairs, consider working the cost of repairs into the closing. “If there is a list of repairs, we are proponents of giving [a buyer] credit on closing costs or price or whatever [so the seller doesn’t need] to do those repairs,” says Marc Takacs, a top-selling agent in Atlanta.
Takacs explains that this also benefits the buyer, since it allows them to “control the quality and level of work.”
Last-minute tips on how to negotiate when selling a house
To stay in the driver’s seat, Carlson says you can set yourself up for success by making your home available for showings. This allows you to invite as many people as possible to come through the door. “Providing access is huge to stay in the power seat,” explains Carlson.
“Another way to stay in the driver’s seat is to get really good feedback [right away]” explains Carlson. “You can quickly change the game if you’re getting poor feedback and reestablish a price or fix something.”
“Always take great-looking photos and be in communication with your agent,” recommends Carlson. If you feel like you’re not getting your questions answered by email and your agent isn’t answering the phone, set up a phone call.
“At the end of the day it’s a personal relationship with the agent that gets the deal done,” says Carlson. “You have to get along and you have to make things work to negotiate it out so that it’s a successful close.”
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