Negotiation Tips
Once you have a person who is seriously interested in buying your house, it is time to start the negotiation process. If the interested buyer has hired a buyer's agent, you will negotiate the final price and other details through that agent. If the buyer has not hired an agent, you will conduct the negotiations directly with the buyer.
Before you get into the negotiation process, you need to get a better idea of the potential buyer's financial situation. Therefore, you must ask whether or not the buyer has been approved by a financial institution and, if so, how much that buyer has been approved to receive from a loan. You also need to know how much the buyer has available to put down on the loan. If the buyer is not even qualified to obtain the financing necessary to purchase the home, there is no need to move on with the negotiation process.
It is not necessary for you as the seller to intimately know the buyer's finances. If the buyer is prequalified, however, you should be given permission to talk with the lender in order to verify the buyer's ability to close. When paying in cash, it is also common for the buyer to prove the source of the funds, such as a bank account, stocks, etc. They should be able to copy a recent statement and remove any personal or account information.
If the buyer has the financial means to purchase the home, the first step in the negotiation process is for the buyer to make an offer on the home. There are many ways a buyer can submit an offer. Examples include making a formal written offer with a deposit, submitting an offer via email, or giving a verbal offer in person or over the telephone. A formal written offer is preferred, but negotiations usually can start without one. Once the details have been ironed out, they should be put in writing and submitted to the title or escrow company. If you make changes to the price or closing terms at a later date, make sure they are acknowledged in writing by both parties. Consult with an attorney to make sure you are taking the necessary steps to protect yourself and create a legally-binding agreement,
Making a Counteroffer
In most cases, the original offer made by a buyer is less than the original asking price. Therefore, you are likely to make a counteroffer in response to that offer. When writing a counteroffer, you are rejecting the buyer's first offer while making concessions of your own. For example, you may counteroffer with the original asking price, but you might throw in a home warranty as part of the offer. Or, you may lower the price by only a fraction while also offering to cover all of the closing costs.
There are thousands of ways to structure an offer and counter offer. Again, this is a point in the process when the real estate attorney you hired should look over the paperwork to ensure it is properly completed.
Handling Multiple Offers at Once
TIf you have received multiple offers, be sure to let all of the buyers know there has been more than one offer made on your home. Include this information in the counteroffer paperwork. Notifying buyers of multiple offers puts pressure on the buyer to offer the best terms when making an offer.
Ideally, you should finalize one offer before moving on to another. After all, you can only sell your home to one party and having multiple counters out at the same time can become confusing to everyone involved. If you want to be sure to keep your options open, however, specify in your paperwork that the buyer's acceptance of the counteroffer does not necessarily mean the sale is final. This way, you can review all of your offers before deciding who to sell the property to.
When reviewing offers and counteroffers, keep in mind that the offer with the highest price is not necessarily the offer that will provide you with the largest profit. This is because your profit margin can be greatly affected by other aspects of the offer. For example, if you have to pay the closing costs with one offer, these costs could be thousands of dollars. Furthermore, some counteroffers may include a contingency that allows the buyer to wait to purchase the home until after he sells his current home. This could result in a loss of money on your part while also significantly slowing down the closing process. Take all of these factors into consideration when determining which counteroffer to accept. With multiple offers in play, the engagement of an attorney would be very helpful.