House negotiations are like a staring contest. Blink and you lose.
A perfect offer is rare and compromises both big and small are inevitable.
In addition, negotiations typically carry on far past the offer stage. Among total residential real estate transactions in 2017, cash sales made up only 21% of sales. The vast majority of purchases require financing, which adds extra points of tension—including the appraisal and for some loans special home inspection standards that must be cleared between the offer signatures and closing.
We’ll help you get a leg up with this expert advice for how to win a house negotiation. Top real estate agents proven to sell homes at full price and on schedule swear by these 10 tactics to move the deal forward in your favor.
1. Decide what “winning” means to you.
If you’re in the heart of negotiations and haven’t poured any thought into your strategy or end game, well, you’re already a step behind.
Before you put your house on the market, take note of your top priorities. Whether it’s closing the deal in 30 days or walking away with enough money for a down payment, tell your real estate agent what you need to get out of it. If time is of the essence, be flexible with negotiations. If your net profit is what matters most, refer back to that bottom dollar amount in negotiations.
For example, in the event that you need to make a fast move due to a job relocation or unexpected life change—your top priority would be closing as soon as possible. Then, you’d formulate your negotiation strategy around a short closing timeline and keeping that closing date set in stone.
It might mean compromising on things like repair negotiations, like offering a credit to fix the crack in the sidewalk rather than hiring a contractor to fix it yourself. The trade off? You could end up paying more than the true cost of the repair job, but handing over a thousand bucks is quicker than lining up professional work.
But if the buyer asked you for a few extra days to get their finances in order for the loan, that’s where you’d draw the line in the sand, and your agent would need to negotiate a timely schedule to keep the sale on track.
“That’s our job. To make sure we get the best money in the shortest amount of time without stress. That’s how we work,” says top real estate agent Gladys Blum, who’s sold over 67% more properties in Salem, Oregon than the average agent.
On the other hand, if walking away with the most amount of money possible is your top concern, then set a baseline amount you’re willing to accept and don’t waver from it.
“What is your bottom dollar?” says Blum. “We don’t care how we get there. We’re just going to be looking at what you’re going to net. If you think this is good, let’s move on. If this isn’t good, then let’s go back to meet where you want to be at the very end.”
2. Research local market trends to weigh how much leverage you have.
Sit down with your real estate agent and make a plan for negotiations based on local market dynamics and who holds the cards. Available inventory, interest rates and the economic outlook all factor into determining market conditions.
The term buyer’s market refers to conditions of supply and demand—there are simply more houses for sale than there are buyers. Characteristics of a seller’s market include low inventory, low mortgage rates pushing up buyer demand, and strong home value appreciation.
To keep tabs on how the real estate market is faring nationally, check the National Association of Realtors (NAR) monthly Existing-Home Sales and Pending Home Sales reports for inventory and contract activity, the Case-Shiller home price index for home value information, and the Census Bureau’s New Residential Construction report (offering the latest data on home starts, completions, and building permits).
Then, pay attention to what’s happening at a local real estate level by chatting up your real estate agent, checking out the number of for-sale signs around the neighborhood, and finding out the selling price of homes in your area.
Figure out how much leverage you’ll have in negotiation––a strong seller’s market signifies more leverage for your demands, and vice versa.
3. Price your house right to attract competitive offers and hold strong to your needs.
The price you set for your house in and of itself is a negotiation tactic. If you overprice from the start, you risk losing leverage as your home lingers on the market without any attention.
After a price reduction, your house may be “tainted” in the eyes of buyers who wonder what’s wrong with it and why it hasn’t sold yet—then they’ll bring that mentality to the negotiation table.
Price spot on or undercut it slightly to stir up a bidding war, and you could find yourself in a multiple offer situation as buyers compete over what they know is a good deal.
Depending on your end goal, consult our collection of top real estate agents’ go-to pricing strategies. The best method to arrive at a fair market value list price is to conduct an evaluation of the comps using a comparative market analysis of recently sold properties in the area.
4. Get your house in top-notch condition so buyers have fewer objections.
You can avoid tedious repair requests with simple home maintenance. Before you list your home for sale, fix things that are broken or nearing the end of their lives.
Things that you’ve gotten used to living with for years (like a broken light switch or a toilet that’s always on the fritz) can really rack up negotiations later on.
Be sure to fix up the following items before your house hits the market:
- Replace broken windows and torn screens
- Tighten leaky faucets
- Patch up holes in the walls
- Update lighting fixtures
- Remove wallpaper
- Repair any leaky areas in the roof
- Clean or replace dirty grout
- Repair faulty wiring
- Unclog rain gutters
- Check for draining issues
- Take care of HVAC or heating repairs
- Apply WD-40 to squeaky hinges
- Replace or professionally clean old carpets
Any little hitch that affects your home’s overall function will show up in the home inspection and give the buyer reason to request a repair or repair credit. Take care of these beforehand, and you can focus on negotiating larger buyer requests.
5. Require a sizable earnest money deposit.
An earnest money deposit is a way for buyers to show that they are committed to the home sale. Buyers make the deposit after they’ve made an offer and you’ve both signed the purchase agreement to move forward.
The typical earnest money deposit ranges between 1-3% of the purchase price, but there’s room for negotiation. In high-demand markets, sellers require larger earnest money deposits to secure serious buyers.
A sizable deposit lets buyers know that there’s competition and other offers standing by. This gives you the upper hand when it comes to negotiations, because buyers won’t want the deal to slip away from them.
6. Double check repair requests with trusted professionals.
Most buyer negotiations come after the home inspection, which reveals issues with the function and safety of a home.
Buyers can request repairs or repair credit for issues brought up in the home inspection. Always double check the repairs with a professional before you fork over money to fix it.
“If an inspector says something should be done, we have a repair guy that’ll come in and say, ‘That really is necessary and this is what I would charge to do it,’” says Blum. “We always get bids on things that are requested so that the seller can see the dollar amount that they would have to pay to do it.”
7. Make repairs that affect the buyer’s loan requirements first and foremost.
Don’t let the buyer get carried away with requests for miniscule imperfections. Cosmetic flaws don’t affect the home’s function, the buyer’s loan, or the home’s value––so they aren’t a top negotiation priority.
In general buyers should not ask you to:
- Make nit-picky repairs that cost under $100
- Fix cosmetic imperfections
- Fix loose door knobs, handrails, etc.
- Repair a broken outlet or lightswitch
- Fix unsealed windows
- Redo any landscaping work
“We know what things have to be done and what doesn’t, depending on what lender it is,” says Blum.
“The seller can go back and say, ‘You’ve got 12 things you’re requesting me to do. I’m going to do number one and number three if you want to move forward. If not, we’ll go back on the market.”
It’s key to work with a real estate agent who knows loan requirements and can deflect requests based on what’s necessary and what isn’t.
8. Negotiate closing costs with the big picture (your bottom line) in mind.
At the end of a real estate transaction, both the buyer and seller have to settle up on closing costs, and there are certain fees that are customarily the seller’s responsibility. These include:
- Listing agent and buyer’s agent commission
- Loan payoff
- Transfer taxes and recording fees
- Title insurance premium for buyer
- Unpaid HOA dues or fees
- Buyer repair credits
As opposed to the buyer’s closing costs, which include:
- Application fee
- Origination fee
- Underwriting fee
- Prepaid interest
- Appraisal fee
- Home inspection/pest inspection
- Credit report fee
- Title search
- Lender’s title insurance
Buyers typically bear the brunt of the closing costs because most of the fees are associated with the process of obtaining a mortgage. However, it’s possible that the buyer will ask you to cover some of their costs throughout the course of negotiations. Some fees that could go either way are the pest inspection, title search, and home warranty.
When you’re going back and forth on closing costs, it’s important to evaluate how a concession would impact your overall bottom line. For example, if you agreed to cover a two-year home warranty but decided against offering a repair credit for the crack in the driveway, that might be a breakeven negotiation.
Understand which costs you can expect to pay so that you know when you’re making a compromise. Then, if the buyer asks you to cover one of their customary costs, you can try to ask for something in return depending on your leverage point. Then be sure to check that all the fees are in the correct columns when you and your agent (or real estate attorney) do the final review of the seller’s settlement statement.
9. Walk away before you accept the offer, rather than after you sign the contract.
You need to get all of your big negotiations out of the way (i.e., contingencies and price) before you sign the purchase offer. That’s because it gets significantly hard to walk away from the deal once you’re legally bound with your house under contract.
When a buyer makes an offer, you can counterback with a higher number and ask for different terms, such as a longer closing date to give you more time to move or a stipulation that you want to take your Viking range stove with you as part of the sale. If you can’t come to an agreement with the buyer, well, at that point you can simply reject the offer and move on.
However, if you were to walk away from the sale after the offer is signed because you realized you don’t personally “like” the buyers or you’ve decided you’re not ready to sell, that could put you in legal trouble. In fact, the buyers may be able to enforce the “specific performance” remedy to take you to court and force the sale.
Buyers, on the other hand, will likely pencil in a number of standard contingencies that protect them in case any surprises like a low appraisal or bad home inspection report crop up between contract and close.
But that doesn’t mean you have to cave to every buyer demand. Over the course of the home inspection, for example, buyers may request that you replace the dated HVAC or make roof repairs, but technically you are not required to do any of it. If you hold firm, the ball is in the buyer’s court to decide if they’ll accept your terms.
Blum says that this happens a lot––the buyer walks away and the house goes back on the market. And if you know the inspection turned up issues, you’ll legally have to disclose them to every new buyer.
“Sometimes we don’t even see the inspection so we don’t have to share anything. They do have to disclose if there was something that was told to them. If there’s dry rot or something, then the seller would have to disclose that,” Blum says.
Winning a house negotiation as a seller: Stand your ground when it comes to your largest financial asset
The reality is, everyone can’t always be happy. If you can’t come to an agreement with a buyer, don’t settle for less than your house is worth.
“We have no problem just walking away,” says Blum. “If it doesn’t work, that’s fine. We’ll put it back on the market.”
Your house is your life’s biggest investment. If buyer negotiations cross the line and put you outside of your desired profit, don’t be afraid to walk away and go back to the drawing boards. Your real estate agent always has your best interest in mind, so they’ll help you negotiate until you’re satisfied with the outcome.
With every real estate negotiation tip you hear, remember that your end goal is more important than winning every negotiation. A top real estate agent will help you successfully sell your home faster and for more money––a win every time.