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Negotiate your sale

Step 9 - Negotiate Your Home Sale

Negotiating your sale can be a complicated process, even if you have experience.
Buyers will often try to renegotiate terms, prices and closing dates, long after they’ve signed a contract. To be a good negotiator, follow this advice.

Try to obtain a sizeable earnest money deposit to dissuade a buyer from backing out of a contract.
A good rule of thumb is to collect a deposit of at least one percent of the purchase price. For example, on a sale of $100,000 or less, you should obtain a minimum deposit of a $1000 from the buyer. Obtaining a sizeable deposit will help offset some of your expenses should a buyer default on the contract.

Never cancel any prepaid advertising or discontinue your marketing efforts until you are absolutely sure your property is SOLD!
When selling your property, many circumstances can arise, so it is wise to continue advertising and showing your property until your property closes! Here are some reasons why contracts fail to close.

When negotiating your sale, keep your financial responsibilities and obligations to a minimum.
Pay careful attention to all terms of the contract and do not commit to something you cannot fulfill. Review inspection dates, repair amounts, contract deadlines, seller concession amounts and possession dates. Do not make any misrepresentations or say anything that could jeopardize your sale. Always put everything you agree to in writing and be careful what you commit to!

Take back-up offers just in case the first offer should fail.
Back-up contracts can give sellers extra security, especially if the primary contract begins to fall apart. When selling real estate, you never know when you will close, or if you will close, so always take back-up offers. Back-up offers will allow you to negotiate from a position of strength.

Buyers always want the best deal they can get, so be ready to negotiate!
Buying a house is a large investment and it is usually a stressful and emotional process. Understanding the buyer’s needs, financial capabilities and time constraints are essential to a smooth sale.

Try to eliminate as many buyer contingencies as possible.
If possible, minimize the amount of buyer contingencies and do not leave too many contract issues open for future negotiation. A poorly written contract will cost you valuable time and money. Be sure you stipulate what will be included with your sale and whether it will be in working order. If you are selling your property in “as is” condition, then write it into the contract.

Here are 3 common contingencies that can often delay or terminate a sale.
Property inspection contingency - Inspection reports kill many deals.
Mortgage contingency - The buyer is not financially qualified.
Sale of existing residence - The buyer cannot sell his or her existing home.

In order for buyers and sellers to have a complete meeting of the minds, both parties must agree to all contract terms! Listed below are terms and conditions that should be included in your contract.

  • The selling price.
  • The amount of earnest money deposit.
  • The amount of down payment.
  • The type of mortgage and the mortgage amount - FHA, VA, and Conventional.
  • The amount of closing costs to be paid by seller, if any.
  • A list of all items included with the sale in “working order”.
  • A list of all items included in the sale in “as is” condition.
  • A list of all items that are excluded from the sale.
  • A list of all buyer and seller contingencies.
  • Any special addenda required by the buyer or lender.
  • A seller property disclosure statement, if required by state law.
  • An attorney approval clause.
  • The closing date and terms of possession.
  • A copy of the buyer’s pre-approval letter or verification of bank funds for a cash offer.

If you are not satisfied with the buyer’s initial offer, then provide the buyer with a counteroffer.
Sometimes, you may need to negotiate back and forth a few times before you reach an agreement. To eliminate any misunderstandings, all counteroffers should be finalized in writing. Buyers should be responded to in a timely manner because waiting too long can kill a deal.

When you reach a final agreement, each party should sign the agreement and initial all contract changes.
A copy of the contract should be immediately faxed to your attorney. Never rely on a verbal agreement of any kind and always check to make sure your attorney has received a copy of your contract. Be sure all contract terms are in writing and clearly understood. If a term or particular clause is not clear, then make sure it is clearly defined before you sign a contract.

If you agree to all terms, ask the buyer for an earnest money deposit and his or her mortgage pre-approval letter. If you require a pre or post possession agreement, have your attorney draft the agreement with terms you and buyer agree upon.

In some states, title companies are utilized in the closing process rather than attorneys. If this is the case, you can still obtain advice from a real estate attorney to ensure your interests are properly protected. Print out a copy of our negotiating tips to help you with your sale.

If you receive more than one offer at the same time, what should you do?
If you receive multiple offers, you will need to carefully consider which offer is best for you. Review each written offer and make sure each buyer is financially qualified before proceeding with negotiations. You should tell each buyer you have received another offer and have both buyers submit the highest and best offer. Obtaining the highest and best offer will usually net you more money from your sale. However, in some instances, a buyer may withdraw his or her offer and choose not to get into a bidding competition.

Keep in mind, the highest offer may not always be your best offer, especially if the Buyer’s offer contains several major contingencies. A contract with fewer contingencies will often lead to a quicker and more definite sale. Cash offers are always better than mortgage contingencies. Learn more about multiple offers.

Consult a tax accountant to determine your tax liabilities.
With tax laws constantly changing, many sellers fail to estimate their tax liabilities. Consulting a tax adviser before you sell can help move negotiations along faster. During tax season, determining your tax liability might take your accountant a week or more, so don’t delay, talk with your accountant way in advance. If you need help, refer to a tax consultant in our Helpful Pro Directory.

Good luck showing and selling your property!

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