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Negotiating The Sale Of Your Home

Here is an constructive overview of negotiating including some very specific points including working with buyer's agents.

Negotiating is NOT power over a person. Negotiating is employed to get from one position to another.

For those of you enamored with respecting so-called "tough negotiators" you may be making a mistake. A negotiator that "sticks his heels in" and won't budge is by definition "not negotiating". Getting angry and saying phrases like "that's it! I won't go down another dollar" or "it's the principle of the thing" proves you are no longer negotiating. A tough negotiator is one who never quits negotiating, one who does not give up and succeeds at moving the other party to his way of thinking.

Never negotiate for yourself. Nixon had Kissinger, Carter had Vance, Reagan had Habib, Bush had Schultz, and President Clinton has Hillary! The point is, under most circumstances negotiating for yourself is a bad idea. This is the reason most buyer agents prefer to be present when the offer is being made to you. The experienced buyer's agent will use the one on one contact with you to make large moves against your position. Meeting directly with you the seller enables the buyer's agent to see your body language and your emotional stature to gain information about your situation and your home. This is when an experienced buyer's agent proves just how meek and intimidated you can be. Don't be caught boasting about your great home selling abilities while the buyer's agents proceeds to make great advances upon your home's value.

We suggest you permit the House Express broker to handle the negotiating, Your House Express broker's many years of working with buyer agents in the local market enables him/her to gain valuable "insider" information about the buyer. This is best explained by stating that although many buyer agents claim to work for their buyers, they are indeed working only for themselves.

Information is power – not over you but over the negotiating. The more the buyer's agent knows about you and your property the more power they have negotiating. For example, if the buyer or his agent knows you are having financial problems they may chose to use time as a tactic and ”wait you out".

Time is one of the most powerful negotiating tools. Listings and ads that say "Seller relocating" say it all – The seller is under a time constraint and cannot wait for a fair offer so insult the seller with a lousy offer! Or perhaps the seller waits too long to answer a buyers offer and the buyer loses interests or finds another house. Move to fast and push the buyer and they back out because of too much pressure. Using the time factor in negotiating is an art.

Negotiating must be done legitimately, in writing. Flying trial balloons in the form of a verbal offer should be avoided. Verbal offers are commonly used by low balling buyers. Whether they are afraid of buying or they don't have the money some buyers tell their agent to give you a verbal offer. We believe they do this to buy more time as they wrestle with their own indecision. Never reply to or counter verbal offers. Responding to a verbal offer weakens your position. The best response to a verbal offer is: "put that offer in writing and I will respond". A verbal offer can at times be confused with "hinting".

Hinting is a good way to keep the negotiating moving in your direction without giving your opponent too much information which in turn can harm your position. For example, when presented with a low offer you may respond, "that's a nice offer but I wonder if the buyer would give more money if I threw in the washer/dryer/refrigerator." Now you did not commit yourself to give away your appliances, instead you want to gain information on whether or not the buyer has more money to give – get it?! Hinting is a way to give the buyer a little information so that you may gain knowledge of his situation.

A give and take is the best way to gain information. Remember we said information gives power in negotiating. In order to get information from the buyer you must give some. For example, as seller you give a little information on your preferred closing date and the buyers tells you they need to close on March 1 because that's when their condo is closing. Or you respond to a low offering price with, "that's a nice offer, but I think we need more if we are going to buy the house we want which is now listed for $275,000. In turn the buyer responds to that with "we sold our house for $125,000". The more you know about the buyer's situation the better.

All parties to the transaction feel at a disadvantage so use this to your advantage. Brokers know upon signing an offer to purchaser many buyers expect the seller will not agree to the offered price. Buyers expect a counter offer. For sellers it is exactly the same – you never expect a full price offer. Moreover it is the same for all other parties connected with the sale – the brokers, the bank, the lawyers. None expect all parties to get everything they want. If you recognize this from the beginning and use it in your negotiating strategy, you will fare better.

Always be positive. Negative comments will kill a sale. A few years ago The New York Times did an article on real estate tycoon Donald Trump. His ego is legendary, and as you shall see, helpful. At a meeting to negotiate the purchase of a particular site was the seller, his lawyers, the bank executives, the architectural firm, and the NYC government zoning officials. All impatiently waiting for "the Donald" to arrive. Before the Mr. Trump's arrival it was noted by the reporter that all present believed the project was doomed. The architects claimed the building could not be built, the bankers were saying they couldn't loan that much of money, the zoning officials said they would not permit the project to be built and the seller was saying he could not sell it for that price. Then Trump strolled in beaming with an air of confidence and know how, The reporter noted that soon all parties had their ears tuned to Trump and his insistence that he will make "project go forward", All parties agreed. One parted later said of the event, when most are saying it can't be done, Trump says it can, and with so much conviction, one tends to believe he is right, because deep down, we want the deal to go through.

Home Inspections to renegotiate your selling price: Some buyers employ the problems home inspectors find with your property to justify renegotiating the sales price. Here are some true examples: furnace stack pipe too close to gas line, fireplace box 1 inch too narrow, loose stair banister, peeling paint, evidence of past termite infestation, cracked window pane, casement window crank missing, garage door remote inoperable (dead battery), roof leak in back yard utility shed, etc... These "problems" are a good way for the buyer to renegotiate the price weeks after the purchase and days before the closing.

As seller you are placed in a position of coughing up the dough to keep everyone happy. To avoid this your contract of sale should have the following: "seller shall only pay up to $100.00 for any repairs needed". The $100.00 is your token of good faith. Of course a major repair like a bad furnace or a crumbling foundation is a totally different situation where the buyer has a definite right to ask for repair if not previously disclosed by you.

Know the value of your home – we mean you should be able to prove it's value as if you were in court. The buyer's agent will come to the negotiating table armed with proof of what you paid for the home and with a list of comparable sales to make the case for his buyer. If you are unaware of these comparables you are negotiating without credibility and you will lose.

It's not the principal of the thing – stupid. Many times sellers lose sight of the objective to sell the house. Instead they begin to focus on the buyer and how good a deal he's getting. When you begin saying I won't move another inch, it's the principal of the thing – you are in trouble. It's one thing not to cave in because the facts are in your favor, it's another not to budge because things are not working out the way you want. House Express brokers suggest you keep your eye on the prize.

Buyer backing out of the contract? Let 'em go! Thinking you can sue for "specific performance" or keep the deposit ernest money when a buyer backs out of the contract makes money for the attorneys. It rarely happens. Courts are too busy dealing with 0J Simpson type trials of life and death to be bothered with your "fight". Of course your attorney may not tell you this until you have spent $5,000 in legal fees. The courts want you and the buyer to work it out. You will find the judge's job is NOT to hear the case. Moreover most courts want the parties to "mitigate damages", that is, realize you may be hurt by the buyer backing out so do your best to alleviate your expenses. Put the house back on the market and find a new buyer. Waiting around for the courts to help you "get even" with the naughty buyer rarely happens. If you sue the buyer, your home will be entangled in the legal proceedings and should you find a new buyer you will be unable to close as their will be a "cloud" on your title. House Express brokers suggest you give the money back and find another buyer. Move on!

Nothing closes on time. Our real estate law is based on old English common law. Do you remember in 1982 Prime Minister Margaret Thatcher on NBC's Today show saying "we are on our way to the Falklands, we will be there any day now”? Remember how that went on for two weeks? In real estate dates are rarely specific and are written as "on or before" a certain date. There are remedies. Serving "time is of the essence" is one of them, but is very dangerous. We suggest you speak to your attorney about that one. You should add a clause specifying a daily penalty of $25.00 for every day the buyer does not close after the date stated in the contract of sale. But you better be careful you are not at fault as you will find yourself paying the penalty. House Express brokers' advice is, be patient, know ahead of time there will be delays.

Creating competition for your property is an effective but dangerous tactic. In today's market we suggest you employ this tact only as a last resort to push a lethargic buyer into making a decision to buy your home. However never, never give an ultimatum. Do not tell a prospective buyer you have another offer before the offer is made. The buyer or buyer's broker will not want to get into a bidding war and waste time when their exists a 50/50 chance they may lose. More importantly the previous "good" buyer may also get wind of the side negotiating an assume you are not acting in good faith and he too may drop his offer, leaving you with nothing! Most buyers know multiple offers are reminiscent of the go-go 1980's. Many remember those days and nobody wants to overpay for a home. House Express brokers advice is to never let the buyers or their broker know you have a "back-up" offer unless you feel you have nothing to lose by offering this information.

Never give an ultimatum. Ultimatums have no place in negotiating. Playing the heavy and standing on principal by telling the other party ”agree to my position or else" is a gamble you will probably lose. Sometimes permitting the buyers to feel they are in control, keeps you in control.

Should the buyer ask you to take less than what you want, answer with "I will give it serious thought". When they ask if "well have you had enough time to think and what is your answer?" say "I'm still thinking about how I can make it work". When they call you the next day, say "I think I can make it work for this amount". Keep stalling, but continue moving them in your direction. Answering with a "this is it" stops the negotiating and any hope the buyer subconsciously has for the property. On the other hand you should also realize that the other party and their agent may be lousy negotiators. If this is true, it should be easy to move them to your position.