Closing with a frugal buyer is a tricky business to say the least. Buyers will often do their best to get a deal on your property, and it’s easy to concede small bargaining chips that end up costing you more than you thought they would.
While it’s understandable that the buyer wants to get the most and spend the least, it’s important to remember that this is one of the biggest deals you’ll ever make, and that the return on investment you stand to gain matters more than the buyer knocking off a few dollars on their future monthly loan payments.
With that in mind, here are five real estate negotiation tips for sellers to help you clearly communicate and ultimately receive the value you deserve for your home, even with a difficult buyer.
1. Real Estate Negotiation Tip for Sellers #1: Get Your Home Inspected
We know, this sounds counterintuitive. But one of the keys to striking a good deal is to know your cards, and getting your home inspected is one of the best ways to understand exactly what it is you’re selling. Some of the things you’ll learn in a home inspection include:
- The state of your home’s structure
- The state of electrical and heating systems
- Any safety hazards that might crop up as a nasty surprise during the negotiation phase
Why Getting Your Home Inspected Will Help You Negotiate
There’s nothing worse than an ultra-astute buyer walking into your home and telling you what’s wrong with it and why they plan to pay less. Getting your home inspected ensures that you know exactly what is and isn’t wrong with your home long before the buyer, and it arms you with all the information you need to have a straightforward sale.
Real estate agent Thomas Braunagel of Bridgefield, CT advises you to explain your purpose to the inspector. “Say, I want you to not only come in and look at safety and hazard issues but anything that might be a barrier to selling the house.”
Once you’re armed with this report in hand, get any problematic items fixed. The money you stand to gain from a well-outfitted house is much greater than a few cosmetic issues your buyer may ultimately use against you to negotiate down the price.
2. Offer A Home Warranty
Before you go down the long and messy road of negotiations, be prepared to offer some affordable solutions to your frugal buyer. One of the top buyer strategies used today is to point out the age of certain home features (or even the home itself) as a bargaining chip.
The buyers aren’t necessarily wrong here— certain expensive features like a roof or a furnace will eventually have to be replaced, and without knowing the full history of how you’ve cared for the home, the last thing a buyer wants is to get slammed with a hefty investment just months after purchasing. One of the best ways to get around this type of depreciation-negotiation is to simply be ready with a home warranty.
Why Offering a Home Warranty Will Help You Negotiate
“In negotiation, instead of addressing all of the potential issues that may come up,” says Braunagel, “offer a home warranty. For $350 you can get a warranty for the next 13 months, if something leaks or if furnace goes down.” This is piece of mind for the buyer and significant savings for you.
By being prepared to offer a warranty you can maintain your high asking price, and won’t need to stand there with a calculator offering your buyer half the price of a new furnace (that may or may not go down anytime soon).
Says Braunagel, “[As a seller] I’d rather pay $350 than $10k.”
3. Price Ahead Of The Market
One of the best tricks to never wasting too much time on negotiations is to simply price ahead of the market. To price your home ahead of the market, work with your realtor to understand local market trends, and what your home will be worth in the coming weeks (while it’s up for sale). If done well, you’ll save a ton of time by selling your home at a price that’s in-line with current market trends.
Says luxury real estate agent Pam Zaragoza of Burlingame, CA, “It’s really is a question of the market and if it’s a buyer or seller market, or if a house has been on market a long time— then the buyer has more asking power. In a seller’s market [sellers] expect to sell house as is. Some sellers even just test the market to see what they can get.”
Why Pricing Ahead of the Market Will Help You Negotiate
If you know what market you’re currently negotiating in, this gives you a better idea of how much negotiating power you have vs. your buyer. But it’s not just about the market you’re currently in says Braunagel, it’s also about knowing where the market will be in the immediate future.
“Understand the market you’re in, and price your home in advance,” says Braunagel, “[Know] what’s gonna happen tomorrow and next month. If [the market] appreciating, price a little high, if it’s falling go a little low.”
If you price ahead of the market then you’re giving yourself the best chance to have your home sold at a fair price, and you’re also minimizing the amount of haggling by basing this pricing on current trends (something your buyer will have a hard time arguing with).
4. Create Competition
Creating healthy competition is an important part in getting the best possible price for your home. Amy Fontinelle of Investopedia recommends listing a house and scheduling an open house but refusing any offers until after the open house takes place.
Why Creating Competition Will Help You Negotiate
“Potential buyers will expect to be in competition and may place higher offers as a result,” she says, “You might only get one offer, but the buyer won’t know that. On the other hand, if you get multiple offers, you can go back to the top bidders and ask for their highest and best offers.”
Zaragoza agrees, “Multiple counter, if two people really want a house then you just keep counter offering both. One person will eventually max out. Counter back and forth to get the highest price.”
5. Make A Timeline, and Stick to It
If and when things do turn into some sort of endless back and forth with a buyer, consider putting an expiration date on your counteroffer. Says Fontinelle, “When a buyer submits an offer that you don’t want to accept, you counter their offer. You’re then involved in a legally binding negotiation with that party, and you can’t accept a better offer if it comes along.
In the interest of selling your home quickly, consider putting a short expiration time on your counteroffer. This strategy compels the buyer to make a decision so you can either get your home under contract or move on.”
Why Making a Timeline Will Help You Negotiate
Much like creating the illusion of competition, a timeline forces buyers to put aside small issues and make a decision fast. If they like your home enough, this might just be the difference between them taking two weeks to ultimately walk away, or pulling the trigger in a few days out of fear of losing the opportunity.