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Simple Negotiation Ideas Now that you know what mistakes to avoid, here is how to negotiate for the highest price possible.
Dated: July 3 2020
Simple Negotiation Ideas
Now that you know what mistakes to
avoid, here is how to negotiate for
the highest price possible
Finally, you are where you want to be in the home selling business. You’ve worked yourself senseless updating your home, cleaning it and pretty much creating an appealing abode for home seekers.
Next, you get your first viewers. Yes! Now you’re another first, with someone making an offer on the property. You suddenly realize you’re in a very precarious situation, and you may have no idea how to proceed.
I can help you with that, so don’t sweat it. Try to realize this is one of the most important financial decisions of your life. I know, I just told you not to sweat it, and then I throw that at you.
But, in truth, most people don’t stand a chance for coming into this kind of money more than once or twice in their lives, if that.
So, you want to make the very best of this situation for yourself, for your future and for your children’s futures. The more money you make, the better off you’ll be. But you already knew that part.
That is why I’d like to guide you through more than just the standard approach to negotiating the sale of your home.
I want to see you come away from this deal with a few less debts, a wonderful new home and some extra cash under the mattress.
While there are times when the offer, counter offer, deal approach works best, there are also times when you could come away with thousands more through simple strategic planning.
Let’s explore your options, and then you can choose which is best for you.
Negotiation Technique #1:
The typical negotiating approach
You are probably familiar with the way most people approach the buying and selling process. The home is put on the market, and when an interested buyer comes by, they make an offer to the homeowner.
The homeowner will typically make a counter offer, which can be accepted or rejected by the bidder. Sometimes this back and forth can go on for a while. There are both pros and cons to this particular situation.
One positive to the typical negotiating method is the transaction is fairly straightforward and easy to understand.
It makes the seller seem flexible and willing to work with the buyer’s needs. It’s a bang, bang, boom sort of situation, and everybody knows exactly what’s going on.
This strategy can work quite well for folks who are willing to take lower offers to simply be rid of a home. It’s a pretty straight forward process. That is as much as any home purchasing transaction can be straight forward.
A serious negative to this approach is once you accept and sign off on the low offer, your house is off the market. Let me put that in perspective for you.
Let’s suppose Sally Sue, who checked out your home last week, calls with a much higher bidding price five minutes after you reluctantly signed off on the low offer.
You are now legally bound to put Miss Sue on hold until you see if your current accepted contract works out or not.
The bottom line is you could be making substantially less money and there’s not a thing in the world that you can do about it.
Another con to the standard approach is you might feel pressured to take low ball offers from deal seekers out of fear nothing better will come along.
If the cons outweigh the pros in your situation, let me ease your mind. You don’t have to go through those negatives, because there are many negotiating approaches you can take. Allow me to share.
Negotiation Technique #2:
Reject an offer, but throw the bidder a bone
Let’s just say a buyer comes around, loves your property and makes an offer. You are happy they want the home, but you’re a little less than thrilled with their bid.
You find yourself on the fence. You wonder if you should get the deal over with and take what you can get, or if you should hold out for a better offer in the future.
That’s a valid concern, and there is a way to handle this. Go ahead and reject their offer. That’s right. Take a step most folks have a hard time taking and simply say that one dreaded word, “No”.
Saying no can sometimes take you exactly where you want to go. Just don’t stop with the negative answer. Reject their offer, but invite them to resubmit a higher bid. That takes some of the pressure off to you. There are several ways a deal like this can go.
The potential buyers are not usually going to expect you to take their very first bid, and they might be throwing out a low ball offer just to see how far down you’re willing to go.
You can send your own little message by rejecting that less than desirable offer, but keeping them in the loop.
They’ll know without a doubt they ventured far too low. If they sincerely want your property, and not just a bargain, they are likely to come back to you with a much higher bid.
As always, there are two sides to every coin. In the event the bidders really do want your property, out of all the other properties available, this procedure can work well.
However, you are liable to lose the deal if this is just a person gobbling up cheap real estate the way some people gobble cookies. While that may seem bad at first, in retrospect it leaves you completely open to better offers in the future.
· It’s most desirable to use this approach when your home has just come on the market or if you have an open house scheduled soon.
· Keep in mind that whole legal counter offer thing-a-ma-jig, too. The instant you accept and sign off on a low contract offer, which could be a real estate vulture on the prowl, you’ve tied yourself to dealing with that contract.
During the time you and your bidder are coming to a common decision, you can’t entertain any others. That wastes your valuable time, and could cost you better bids.
Negotiation Technique #3:
Bring on the bidding war.
Did you know there is such a thing as a bidding war? This is usually a carefully crafted situation that can literally bring the bid on a home above the price homeowners are asking for in the first place.
Here, allow me to explain how this can happen.
· The first thing you do is to put your desirable home on the market.
· You also ideally schedule an open house for just a few days later.
· As you put your home on the market, you also put in a disclaimer that you’re going to entertain any bids made on said home until after the completion of the open house.
Well, you’re probably thinking this is ludicrous! How is going through all of this trouble going to help you sell your home quickly, and for top dollar? You could be missing out on real bids!
Hold on to your horses, cowboy, because there’s more to this story. The answers to your questions are simple as can be. Human nature will take over, my friend. You and I have just created a prime situation for competition to abound.
Everyone who sees the home and loves it will want to make a bid. Some really competitive players will want to bid just to see if they can win the prize! They’ll know from the start you are potentially getting offers from countless other people.
You have just been set up to take multiple bids at once, and this gives you the freedom to go with the best one.
Potential homeowners who really want your house for their own are going to start bidding high, and they might keep overbidding each other.
In this type of situation, or a bidding war, it is not uncommon at all for the seller to come away with more than their asking price.
The reality of the situation is you might only get one bid out of the whole shebang. However, the bidder isn’t privy to that information. The fact they know they could be competing against other offers also works in your favor.
They are going to try to make an offer that’s better than everyone else, because they don’t have a clue there is no one else at all.
Negotiating Technique #4:
An expiration date for extra motivation
Let me remind you. Once you and the buyer agree to an offer and sign the contract, you are legally bound to see the process through until you and the buyer close the deal or agree to cancel the contract.
This means you can’t take a higher offer if one comes along.
That is a rotten situation to be in. However, there is a way you can counteract this problem.
You can set yourself up for a higher selling price and a shorter waiting time all at the same time. To help your cause, in order to sell your home quickly for the most money possible, put an expiration date on your counter offer.
It means you give your bidder a certain amount of time to either agree or disagree with your terms. This benefits your outcome in a couple of ways.
Benefits of a short expiration date
· First, a short expiration date motivates your potential buyers to make a speedy decision. Either you’ll go into a contract with them, or they’ll move on to greener pastures.
· If the bidder moves on, you are free to negotiate with other bidders quickly.
· If they accept your terms in short order, you sell your property faster.
I encourage you to be reasonable about this. The last thing you want to do is turn your buyer off by making the timeframe too short, particularly if they aren’t that far off from your ideal price with their current offer.
However, feel free to go below the standard time used in your state. If the typical deadline is three days, make yours two.
The potential buyers will know you mean business, but you also recognize this is a life changing decision for them, as well as for yourself.
There’s another reason to expedite these contracts besides quickly closing a deal or being free to negotiate with other buyers. The longer your home is on the market, the less desirable it appears to potential buyers.
If the deal falls through, you’ve extended the number of days your home has been on the market. Valuable time has been wasted.
By shortening that time, you’re shortening your overall number of marketed days in the event that this deal doesn’t go through.
Negotiating Technique #5:
Pay the piper, but raise the price
Buyers are increasingly asking seller to pay their closing costs, which are normally around 3% of the actual price of the home.
I know it makes you shudder to even think of handing out that kind of cash. However, this kind of deal could actually work to your benefit. Let me explain.
The Buyer’s Perspective
Let’s look at this from a buyer’s perspective for a moment. Many homebuyers just can’t afford to come up with those kinds of additional costs.
Often, they are strapped for cash after coming up with the down payment for your home, money for new appliances, moving expenses and re-decoration needs.
On the other hand, it isn’t quite fair for you to come up with that much cash so they can buy a home, now is it? After all, they not only want you to pay the closing costs but also to come down on your original price.
I’ll give it to you straight. You should pay those closing costs. Wait! Before you decide I’ve lost my marbles and toss this book out of the nearest window, allow me to show you how paying those costs will work for you and not against in the long run.
You should pay the closing costs, but you should also increase the price the buyers pay for your home by the same amount. Let me restate that.
If the only thing preventing you from selling your home is the out of pocket cost closing fee, and you’re able to afford it, it would be beneficial for you to do so. You should recoup that money by raising the price on your home by the same amount.
You see, buyers may not be able to come up with extra cash for closing costs, but they can often borrow more money with their loan.
Many buyers don’t realize if you pay their closing costs, you are giving up some substantial profit on your home’s sale. You should help them realize that fast in your counter offer.
Here’s how you handle the situation. When the buyer submits an offer that includes you paying the closing costs, simply counter with an offer that says you’ll do just that. That is, you’ll do just that as long as they agree to the higher price you’re proposing for your home.
Show me some numbers, please!
· Let’s say, for instance, you're asking price is $250,000.
· Closing costs would be approximately $7,500.
· Your bidder makes an offer for $240,000 and additionally asks you to pay the closing costs.
· We understand this means you would be letting your home go for $17,500 less than you asked for it. That’s nice chunk of change, and often more than anyone with a brain and a house worth the asking price is willing to go.
· So you make a more reasonable requests. Simple counter offer by agreeing to pay the $7,500 in closing costs as long as the bidder is willing to pay the original price of $250,000 for the property.
· You’ve reduced it to a more reasonable amount of loss at $7,500.
· The bidder is still getting a deal, and you’re getting a fair price.
(Keep in mind these numbers are only approximations. I’m a real estate agent, not a mathematician. I think you can see the point, though. Thanks!)
Ideally, this approach allows you to come out smelling like a rose, because you’ll get back the money you invested for closing costs as soon as the deal is done.
However, there is one major hurdle that could hinder you. In the event your home won’t actually stand for the amount of money you’re asking, you’ll have to go back to the drawing board.
A bank is not going to loan more money than your home is worth in any event, and especially in today’s economy.
However, paying closing costs in many situations can be a great way to close a deal. It can actually mean the difference in your possible buyer choosing to go into debt for your home rather than the guy’s down the street.
It’s just a matter of asking a fair price for an outstanding home from the very beginning.
A Final Tip: How to immediately gain
the upper hand in any negotiation
If you ever feel you are getting “taken advantage of” in any negotiation, do this. Tell the buyer you are changing your mind. Yes, that’s right. You are taking your home off the market.
The dynamics of the negotiations will change right away. The buyer will now have to sell you on why you should sell the home to them. In addition, they will have to make a really sweet offer in order to have any chance of you accepting it.
I’m not saying you should use this tactic in every negotiation. However, this is a very effective strategy when you feel you are losing the negotiation. I only recommend using it in that type of a situation.
If the buyer doesn’t buy the house, you can always change your mind and continue to try and sell it.
After all, there is nothing wrong with changing your mind. Lying, cheating, and stealing are wrong. But changing your mind isn’t! Does that make sense?
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