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<\/a>Strategy #1: Start thinking about price negotiations before you get an offer.<\/h2>\n
The price negotiation process<\/a> 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.<\/p>\n Settling on a pricing strategy<\/a> requires having deep understanding of your market, and where the value of your home fits within market trends, explains Barbara Dopp<\/a>, a top-selling agent in Meridian, Idaho<\/a>.<\/p>\n \u201cI’ve got deep, deep statistics that show not just the neighborhood but also the surrounding area based on multiple listing service<\/a> coverage,\u201d says Dopp. \u201cI show the sellers the trends over the last 10 years.\u201d<\/p>\n 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<\/a> (CMA), not sentimentality or a pie-in-the-sky number you\u2019d like to \u201ctest\u201d 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.<\/p>\n 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\u2019re 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\u2019.<\/p>\n What\u2019s more, if your house is priced correctly<\/a> for the market, it\u2019s likely to sell quickly and attract more buyers to negotiate with from the get-go. When offers start rolling in right away<\/a>, lots of sellers panic, worried they left money on the table. But the reality is, a home well priced will sell quickly because you\u2019ve identified its fair market value<\/a>, i.e. what buyers are willing to pay for it\u2014 it\u2019s as simple as that.<\/p>\n If you price too high from the start, you could risk having your home on the market for longer than you expect\u2014leaving you susceptible to lowball offers<\/a> and in a position of weakness at the bargaining table.<\/p>\n Dopp also goes by what she calls the Two Rules of Ten:<\/p>\n \u201cIf 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.\u201d<\/p>\n 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.<\/p>\n What you might not realize is that you\u2019re likely influenced by the psychology of ownership<\/a>, explains Professor Colleen Giblin, who teaches an MBA-level course in managerial decision making. Because of your emotional ties to your home, you\u2019re likely to believe it\u2019s worth much more than others.<\/p>\n \u201cIn 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,\u201d 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.<\/p>\n 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\u2019ll also give you some space to emotionally separate from your home.<\/p>\n If this process sounds too daunting at first, take time to memorialize your home<\/a> 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.<\/p>\n Depersonalization<\/a> can toughen up the seller to be a stronger negotiator, but it\u2019ll also help compel the buyer to a higher sale price. When you wipe away the traces of \u201cyou\u201d all over the home, you allow the buyer to see a life of their own there, Giblin reasons.<\/p>\n \u201cTidying up isn’t just aesthetically pleasing\u2014it 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.\u201d<\/p>\n It\u2019ll 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:<\/p>\n 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.<\/p>\n Another tactic to consider is writing a seller\u2019s letter. It\u2019s more common for buyers to write the sellers a letter, but sellers can, too. A seller\u2019s 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\u2019s letter to highlight and share things a buyer might not notice, or be able to see on first glance<\/a>. For example, you might have a beautiful garden in the summer, but it doesn\u2019t 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\u2019t 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.<\/p>\n All of these efforts put you in a better position of leverage during price negotiations. Buyers will pay anything if they\u2019ve fallen in love with the house.<\/p>\n Seasoned negotiators consider the Best Alternative To a Negotiated Agreement or BATNA<\/a>, 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<\/a>. BANTA asks a seller to consider what steps they will take if the negotiation comes to an impasse. If you\u2019re confident in your best alternative, it makes walking away from a bad deal easy.<\/p>\n If you don\u2019t know your BANTA before the negotiation process starts, there\u2019s a chance those pesky emotions will cloud your judgment, reasons Giblin. \u201cThe 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.\u201d<\/p>\n It doesn\u2019t take much to establish a BANTA<\/a> in the negotiation process. First, simply consider all the alternatives that could occur if your negotiation falls through:<\/p>\n This is by no means an exhaustive list of alternatives, and there\u2019s no right or wrong answer. But, make sure you take the time to list all of yours out.<\/p>\n 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.<\/p>\n 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\u2019ve got another plan, your best alternative, in place.<\/p>\n It also helps to remember that negotiation is a two-way street. The offers buyers make aren\u2019t a personal interaction as much as a signal of your property being on the market. It\u2019s not about you, but a lowball offer might still sting. Know the number you\u2019ll walk away from in theory, before you see it in real life.<\/p>\n But, if the offer is within your expected range, don\u2019t get too hung up on the first number. \u201cI always say don’t hesitate to counter,\u201d says Dopp, \u201cup to a point.\u201d<\/p>\n When you\u2019re selling a home you cherish, and there\u2019s a lot of capital on the line, it\u2019s unlikely you\u2019re thinking about the feelings of the buyer. However, always create space for respect and understanding in the negotiation process<\/a>, even in the instance when they come back to you with a lowball bid.<\/p>\n If a buyer makes an offer that\u2019s below your list price, try to respond with honesty and respect. Try phrases like, \u201cThis isn\u2019t the price we\u2019d planned on receiving based on our research of the comps,\u201d or \u201cI don’t think this is going to work at this particular price for us,\u201d instead of shutting the offer down entirely, suggests organizational psychologist, Kira Nurieli<\/a>.<\/p>\n \u201cWhat that does is position you as a person of dignity, and there’s a value to that,\u201d \u00a0explains Nurieli. \u201cThey will associate that kind of dignified voice with you, as well as the property.\u201d In other words, taking the high road can lead a buyer to think more highly of your property.<\/p>\n While it\u2019s 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<\/a>.<\/p>\n At the end of the day, buying and selling a home is a financial transaction, but the negotiation process doesn\u2019t have to be all about money. If a buyer makes an offer you want to negotiate on, it\u2019s worth understanding what they prioritize in the sale. Keep an eye out for smart trade-offs<\/a>.<\/p>\n Harvard\u2019s Program on Negotiation<\/a> explains that a smart trade-off means to \u201cidentify 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.\u201d<\/p>\n Maybe your buyer is in a rush to move into your home. If you\u2019re 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.<\/p>\n Or, you could offer to pay a portion of the buyer\u2019s 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.<\/p>\n \u201cThinking more broadly about negotiation beyond just the financial is always a good thing,\u201d Nurieli says. Maybe a buyer won\u2019t meet your list price, but they\u2019re willing to close faster, or perhaps put down more earnest money.<\/p>\n 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.<\/p>\n Preparing yourself for the hardest questions a buyer could ask helps ease the burden of the negotiating process.<\/p>\n The hardest question<\/a> varies for each seller. Take some time to consider what you\u2019d prefer not to talk about when it comes to the sale of your home.<\/p>\n As the Harvard Program on Negotiation suggests, it might be a buyer asking \u201cWhat\u2019s the absolute minimum you\u2019d take for your house?\u201d Your hardest question is likely an uncomfortable one\u2014a 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:<\/p>\n Just as there\u2019s no one \u201chardest question,\u201d there\u2019s 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\u2019s negotiation program<\/a>:<\/p>\n 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.<\/p>\n While we\u2019d all like to be as cool, calm, and collected as a professional negotiator, the reality is, emotions will get in the way. But there\u2019s a simple way to combat the type of stress and excitement that can cloud your best judgment: don\u2019t let yourself get hungry (or hangry<\/a>, as they say).<\/p>\nStrategy #2: Keep price negotiations 100% business and take the emotion out of the process.<\/h2>\n
<\/a>Strategy #3: Nudge buyers\u2019 imaginations to help them see your house as their new home.<\/h2>\n
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\n<\/b>You should spend energy not only on depersonalizing, but also clearing out clutter from your home. It\u2019s recommended to put at least 1\/3 of your things in storage<\/a> 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.<\/li>\n<\/ul>\n\n
\n<\/b>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\u2019s within your time and budget, repaint boldly colored rooms with a more neutral palette<\/a>. However, neutral can still be on trend; check out Sherwin Williams\u2019 2019 color forecast<\/a> for inspiration, paying close attention to subtle shades like Origami White<\/a>, Misty<\/a>, or Shiitake<\/a>.<\/li>\n<\/ul>\n\n
\nIt\u2019s easy to get carried away when depersonalizing a home, but remember you want the space to look like a person\u2019s house, just not your home specifically. Create Pottery Barn-esque vignettes<\/a> in a few spaces in the home. Feature lights, candles, or potted plants to give the house a lived-in feel, without the personalization.<\/li>\n<\/ul>\nStrategy #4: Know your \u2018BATNA,\u2019 or Best Alternative To a Negotiated Agreement.<\/h2>\n
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\nMaybe you had an inkling your home could\u2019ve 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.<\/li>\n<\/ul>\n\n
\nYou might have a lax timeline when it comes to selling your home. It\u2019s a simple alternative, but perhaps you feel confident to walk away from a deal and just leave the house on the market as is.<\/li>\n<\/ul>\n\n
\nIf you don\u2019t mind managing a property, your best alternative might involve renting your property until the market improves, or you\u2019re ready to list again.<\/li>\n<\/ul>\n\n
\nAs 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.<\/li>\n<\/ul>\n<\/a>Strategy #5: Remember the Golden Rule in your house negotiations.<\/h2>\n
Strategy #6: Keep in mind it\u2019s not always about the money.<\/h2>\n
<\/a>Strategy #7: Prepare your responses for the tough questions.<\/h2>\n
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\nLet the potential buyer know that you\u2019ve received and understand their question. In the example of the buyer who asked about other offers, you can let them know you\u2019re 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\u2019t consider future offers from other prospective buyers.<\/li>\n<\/ul>\n\n
\nThis tactic works best with the common hardest question, \u201cWhat\u2019s the lowest you\u2019ll take?\u201d If a buyer is going to come out and ask about your lowest threshold, you can ask what\u2019s the absolute highest they\u2019d pay for your home. Sure, it might be cheeky, but it signals a willingness to negotiate, and shows the buyer you aren\u2019t rattled by hard questions.<\/li>\n<\/ul>\n\n
\nThis 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.<\/li>\n<\/ul>\n<\/a>Strategy #8: Adopt the negotiator\u2019s ideal state of mind.<\/h2>\n