Your home may be the most valuable asset you own. So when the time comes to sell, you’ll want to get the best price. But that may not be easy because buyers want to purchase your home for as little as possible.
So, who will win this battle between sellers and buyers? The answer to that question depends on the current real estate environment, the buyer and seller’s motivation, and each side’s negotiating skills.
Seller’s Market
In a seller’s market, inventory and demand are low. Therefore, the seller usually calls the shots. If one buyer doesn’t like the deal, others will jump at the chance because there aren’t many listings.
However, a seller with circumstances requiring a quick sale may be motivated to negotiate to close quickly.
Buyer’s Market
Inventory is high in a buyer’s market, and demand is less of a factor. Therefore, the buyer is usually in control. The buyer can easily find another property if the seller doesn’t negotiate.
However, a buyer who falls in love with a home is more motivated to negotiate with the owner.
Neutral Market
In a neutral real estate market, there’s a normalized number of listings and interest. As a result, both sides can actively engage in negotiations with an equal chance of winning. Whichever side of the bargaining table you find yourself on, here are some suggestions to help you reach your goal.
Tips for Sellers
- Price the property at the higher end of comps and be prepared to participate in back-and-forth negotiations. This small step allows buyers to haggle, making them feel more confident that they aren’t overpaying. Handle the offer-counteroffer scenario properly, and you can end up at your target price.
- “Multiple competing offers” is a phrase that will light a fire under buyers and their real estate agents, especially in a seller’s market.
Tips for Buyers
- If you have a compelling reason for purchasing a particular home, include a personal letter with the offer explaining why you would like to purchase and live in the home. For example, maybe you have family nearby, or it’s a neighborhood where you once lived.
- To justify a lower selling price, mention any defects or needed updates you noticed as you walked around the house during the showing. This approach is essential for as-is contracts, in which the seller has no obligation to contribute any money toward repairs.
- Try to discover the seller’s motivation for selling the home. For example, maybe the sellers have new jobs starting in another state. In such cases, they may be willing to negotiate to sell the home quickly.
- Request the seller to pay part of your closing costs. This concession is common in a buyer’s market. However, if you are financing the purchase, check with your mortgage lender to determine the maximum amount the seller can pay.
- Request the seller to make repairs or lower the price to cover repairs.
Tips for Both Buyers and Sellers
- Don’t rush to accept counteroffers. Instead, let the other party sweat a little. Tension is not a bad thing when it comes to negotiations.
- Keep your cool. Real estate agents are professionals accustomed to negotiating. Let them do the actual bargaining while you act as an advisor. Buyers and sellers should not be talking to each other because tempers can flare and ruin a deal.
- Match opposing counteroffers. For example, the seller goes down $2,000, and the buyer goes up $2,000. This process can continue until both parties reach a mutually acceptable price.
- A “let’s split the difference” counteroffer is common. To accept, take half the difference between the last offer and counteroffer and add it to the buyer’s offer or subtract it from the seller’s bid.
Take Away
Agreeing on a sale price is crucial in any real estate transaction. But don’t let your reluctance to negotiate keep you from reaching your goals. Instead, remember these tips, be an advisor, and let your real estate agent be your voice.
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