For most of us, selling a home is the biggest financial transaction we’ll ever make. Considering this, it’s surprising how many people make the two biggest mistakes of negotiation:
- Failure to prepare.
- Letting their emotions get in the driver’s seat.
While most of us can only wish for the unshakeable calm of a Zen master, the good news is that taking steps to prepare will also help you handle your emotions.
The Best Negotiators are the Best Prepared
While there’s a lot you need to do to prepare, the smartest thing you can do when negotiating the sale of your home is to have an experienced realtor on your side. Even if you’re experienced with negotiating in other situations, a real estate specialist will:
- Have access to market data that non-realtors just don’t have. Knowing the real closing prices (not just asking price) for comparable homes in your area is a huge advantage – it’s like being able to read some of the cards in another player’s hand.
- Be up to speed on the latest market conditions. The market can change at any time, and if the agent does a lot of sales volume (we’re talking selling a house every week or so) they’ll see that happening. Whether it’s a buyers market or a sellers market can change from neighbourhood to neighbourhood.
- Have lots of practice with the tactics that other realtors will try.
- Understand who your home is perfect for, and who wouldn’t be that interested. This goes well beyond the description for the listing – it will help determine how seriously to take offers.
It’s important to walk through what really happens during your negotiation with your real estate agent so that you’ll never be surprised.
Real Market Value
Study the potential trading range for your property. Be aware of what other homes in your area sold for, and why. Know how your home stacks up. Don’t forget that while location matters, the features of other homes, like number of bedrooms or a new roof, furnace, and granite countertops will have a part to play too.
There are other aspects to preparation. For example, we’ll assume that your home is already in sale condition and that it’s well staged. This will mean that that the buyer will have less to quibble about.
You should also have a detailed list of any upgrades you’ve done and their worth. You may not necessarily be bringing out these details, but in some cases they really come in handy.
Get the Facts on Your Side
Know other details of your home and the area:
- The crime rate for the area.
- Location of any nearby transit options.
- Proximity of any amenities like shopping, parks, schools, gyms, public pools, or other features.
- Any other advantages, like a good view.
Understand that the First Offer Will Usually be Low
Buyers are most likely to start at the lower end of that range for your home, unless the marketplace is so competitive that there are multiple offers by default. It’s rare for buyers to agree to the listing price right away.
Here’s where controlling your emotions comes in. You can’t get offended by low offers. Your home is just a property to buyers at this stage, so they are trying to make a deal for as little money as possible. Your memories of the house don’t matter to them, and the care you’ve taken to make it perfect only matters if it ticks the boxes on their personal wish list.
Keep the Reality Range in Mind
When presented with that lowball offer, take a breath, and smile to yourself. Talk with your realtor and understand that if the offer really isn’t fair, you can make a counter offer.
Your final sale price will most likely fall within the reality range that your agent reviewed with you at the beginning of the home sale process. When you’re aware of this range you’ll avoid over-reacting negatively to lower offers.
Keep the Ball in Play
The next step will be to counter any and all offers, even if it’s a small token counter. The idea is to keep the discussion moving. It doesn’t matter where a buyer begins their opening bid, it only matters where they end up.
Always give a counter offer to at least encourage the buyer to continue. Harsh, negative responses from sellers end more potential deals than anything else. Every buyer needs to experience their own process and many will increase their offer dramatically when they encounter a positive inviting reaction.
Don’t Overthink – Stay Connected With Why You’re Selling
Don’t overthink what the buyer’s strategy might be. There are endless personality types and it’s too easy to get lost in what they “might be thinking” and still be completely wrong.
For example, say you get a ridiculously low offer. Would you be able to tell if the buyer is:
- Playing hardball.
- Clueless about the actual value of the home.
- Getting bad advice.
- Casually kicking the tires and not in a hurry to buy.
- Desperately hoping to somehow get a house for a price that’s really out of their range.
- Something else? There are endless possibilities.
In the end it doesn’t matter which one it is. Instead, focus on your needs and your situation, and realize that it’s just a business transaction, and the marketplace is simply trying to find the true, current market value for your property.
Stay calm and professional, check in with your realtor, and do what’s right for you. In order to move on with your life, you’ll have to sell to someone.
Conditions and Timing
There’s more to a real estate sale than the price. There’s also lots of “wiggle room” for things like bully offers and the closing date of the sale. Moving the closing date forward or back can make life a lot easier for your buyer (and more awkward for you if you’re trying to buy and sell at the same time).
If you’ve reached a stalemate on price there are sometimes little things you can do to sweeten the deal, like throwing in your old snow blower, an additional appliance, or even a piece of furniture they loved from the showing.
Everybody Has to Agree in the End – Think “Win-Win”
While in many ways you’re in competition with your buyer, if you try to win on every point it’s likely that you’ll lose the sale. In the end, both buyer and seller have to co-operate, say “yes”, and agree on price and terms. The truth is that neither party will ever feel that they’ve achieved a perfect deal, because there’s no such thing.
The final deal is influenced by so many variables that it’s impossible to experience a perfect negotiation. Be thankful that a ready, willing, and able buyer has agreed to buy your property, which ultimately is a win-win situation.
Find Out the Real Worth of Your Home
Throughout the negotiation process, the real worth of your home is your guiding star. It’s easy to find out your home’s market value with our fee home appraisal service.