You`ve made all the right preparations to sell your house. You`ve hired a lawyer and maybe contracted with an agent. You`ve cleaned, fixed and decorated; you`ve prepared a fact sheet, spread the word and actually started showing the house. It`s like being in the boat with a baited fishing rod and line. Whoops! You`ve got a bite. Now what? Now you`ve got to manage to get that fish in.
The objective is to get an agreement on a price, to get a deposit and to get a signed preliminary contract. That`s closing the buyer. It`s not the same as closing the house, because a lot still will have to be done before the sale is complete. But at the present stage of selling your house, you`re working on getting an agreement on price and terms with a ready, able and almost willing buyer.
The prospective buyer says, ”Would you take $105,000?” Or: ”Do the appliances and the fireplace equipment go with the house?” Or: ”Could you move out in two months?” Or: ”Would you consider renting to us and giving us an option to buy?” Or: ”If we were thinking of buying, could you help us with a second mortgage?”
Welcome to the world of negotiating-sometimes known as bargaining or haggling. In this soft market, sellers aren`t exactly in the catbird seat. You can`t bargain bitterly over every last nickel, or stubbornly refuse to let any personal property, not even the old lawn furniture, out of your possession.
On the other hand, don`t just give the house away. If the buyers are serious about wanting to live in your house and not steal it, they should be willing to give a little, too.
Keep in mind that the house price isn`t the only thing you and the buyers can use to negotiate. You can also negotiate over the following:
– The move-in date (the buyers may want to move in quickly, because their lease is almost up, which gives you a bargaining point).
– Whether you`ll help with financing.
– Whether you`ll let them rent for a while, with an option to buy.
– Whether you`ll permit certain contingencies. For example, the buyers may want to proceed only if they can obtain a mortgage for the amount they need at a rate that`s desirable.
Your lawyer should guide you here. If you permit any contingencies, they should expire after a certain time-say, 30 days-and the terms should be realistic; the interest rate the buyers are seeking shouldn`t be so low as to be miraculous. Certain contingencies are acceptable: The purchase may be subject to the approval of the buyer`s spouse back home, or a house inspector`s report and so forth. Here, too, there should be specific expiration dates.
Other negotiating points are really ways to lower the price indirectly, which may allow you or the buyer to reap a tax savings, or to save face. You might offer the following:
– You`ll pay certain closing costs that, in your area, are not traditionally paid by the seller, like the cost of title insurance.
– You`ll pay for a variety of small improvements: for having new wallpaper put up in the living room, for having the outside painted the color of the buyer`s choice or for buying new kitchen appliances.
Some rules of selling
– In a buyer`s market, the first rule is, don`t try so hard to win the bargaining contest that you lose the war and don`t sell your house.
You can tell that your ego is involved if you catch yourself straining over gnats. If you want to sell your house for $200,000, and the buyer offers $2,000 less, note that the difference is only 1 percent, the difference between 99 cents and a dollar. Not that $2,000 is a sniggling amount of money; just don`t let it prevent you from moving to a warmer climate, or a bigger house, or to a smaller house that will free up some of your equity in your current home.
Here`s one way to reduce the pain of giving up some profit: You bought your house for $60,000 several years ago. Now you`re offering it for $105,000, but you would settle for $100,000. A buyer bids $90,000. Is this a $10,000 loss (from your $100,000 rock-bottom price) or a $30,000 gain (above your purchase price)? If you think of it as a gain, perhaps you`ll be more positive about the selling price.
– Become as well-informed as you can. Is the market soft or is it reviving? Are mortgage interest rates going down, going up or remaining the same? What about house prices? Is the type of house you`re selling (style, number of rooms, location, price range) plentiful or scarce? (Even in a dreary market, a four-bedroom Tudor in the best area of the best school district could be in a class by itself.) If the market is reviving, interest rates are sinking, the inventory is shrinking, prices are going up and your particular house doesn`t have much competition, you can be a little less accommodating when you bargain.
– Become familiar with the rules of the game. Often, in house sales, the buyer submits a written offer that`s 10 percent below the asking price. The seller may reject the offer and counteroffer with a price 3 percent below the asking price. The buyer returns with an offer 5 percent below the asking price and, after a little give and take, it`s a done deal.
An axiom about negotiations is that whoever makes the biggest
”concessions,” and makes them fastest, loses. (A buyer`s concession is a boost in the bid; a seller`s concession is a lowering of the asking price.)
Your concessions should be progressively smaller, to dampen the buyer`s expectations. You might reduce your $101,000 price by $3,000, then by $1,500, then by $500. But the buyer should have boosted his or her concessions by similar amounts.
Other tactics
If the buyer says, ”Be reasonable,” reply: ”I`ve thought it over carefully, and I really believe I am being reasonable. You won`t find another house with all these amenities for less in the entire community.” (If your agent says, ”Be reasonable,” maybe you aren`t being reasonable. Your agent, remember, is legally and ethically obligated to sell your house for the best price and on the best terms.)
If you make any concessions, invoke the notion of fairness to win other favors. ”Okay, I`ll lower my price by another $1,000. But then it would be only fair if you change the move-in date, so I can move out earlier.” Or:
”How about you letting us remain two weeks after the closing, free of charge?”
If the buyer refuses to budge, and you yourself can`t budge, and if you have an agent, a last resort is to ask the agent to reduce his or her commission-just to guarantee that the sale goes through. Otherwise, decide if the amount is worth losing the sale over.
