Once you’ve received an offer, you must carefully read its terms and conditions then evaluate if the offer meets your needs. There’s a number of questions you need to be asking yourself:
- Is the price fair?
- How much is the buyer asking in concessions?
- Are there any special requests (such as asking that furniture be left, or repairs be made, etc.)?
- Does the buyer want cash toward closing costs?
- Do you have other offers to compare it to?
- What is the general interest in your property?
After carefully weighing these factors and anything else your Realtor advises, you must decide if you want to accept the offer, reject the offer, or make a counter offer.
Negotiation is a fine art and typically works best when both parties get at least some of what they want. For example, you may be willing to take less money for your home in exchange for an all-cash offer or a quicker closing. Your buyer may be willing to pay your asking price, but they may ask you to pay their closing costs.
Before considering your buyer’s offer, make sure they’re a serious buyer. Ask your agent to provide proof that the buyer has been prequalified by a lender or has other means to purchase your home such as proof of cash or letter of credit.
If an offer isn’t what you expected, see if your agent – or the buyer’s agent – can explain why. For example, a nearby home may have recently sold for less than your asking price and your buyers feel you should sell for the same. Be prepared to defend your price by showcasing your home’s condition, updates, size, and other advantages.
A serious buyer will offer close to what you’re asking, but may have a few demands and contingencies. A buyer may ask you to reconsider an exclusion, such as a fine chandelier or custom piece of furniture, because of its decorative importance to the room. Based on the offer received, you will know if that’s a reasonable request. Special requests should be accompanied by a respectfully high offer price. Are the price and terms the buyer is offering reasonable, given your home’s position in the marketplace?
Sometimes buyers find your home before they are ready to move. For example, a family may be transferring from another state and need to find a home quickly. Common requests in scenarios like this are asking you to delay closing or rent back the home and charge you rent until they can move in. You can confirm this with their relocation company (if they have one) and decide if this is reasonable for you to allow.
Buyers will only pay what they believe your home is worth. They respond almost exclusively to price, location, and condition. What you paid for the home or the equity you need out of it aren’t relevant to the buyer.
It’s simple: homes in top condition sell for the most money. If you’re not receiving the offers you’d like, then condition is likely affecting the price. Ask your agent which repairs and updates would increase your property value the most. After making those changes, reconsider your price.
You can also counter with a carpet allowance, offer to pay HOA fees, or offer some other concession that will please the buyer. Your agent can’t tell you what to ask for your home or what you should accept, but he can tell you what you can do to improve your negotiating position.
Keep in mind that your purchase offer is only binding when you agree to the buyer’s terms or the buyer agrees to your counter offer. Every change you or the buyer makes means the other party can walk away from the deal entirely. Don’t lose your buyer over a minor sticking point. Keep your eye on the goal – selling your home.