Got your eye on a property? After you've done your research, it's time to make an offer. Let the negotiations begin! In real estate, there are really two ways you can play the negotiation game. The first is to play hardball, and the second is to offer your best offer first. Let's talk about each.
Negotiating a Counter Offer in Real Estate: Playing Hardball
If a potential buyer comes at you with a lowball offer, you may decide to play their game. In order to play to win, however, you need to have some information at your disposal.
Show Your Comps
The first thing you should show your buyer is comparisons of homes in the area. Your real estate agent should have already completed a CMA prior to listing your home. Attach that information to the counter offer to add credibility for your listing price.
Make a List of Repairs and High-Value Features
It's likely your high-value features are already highlighted in your description on the MLS. Are there any updates you might have missed? Maybe you added a deck a few years ago and it has natural gas hookups for summer barbeques. Highlight things like updated kitchen cabinets, appliances, new roofs, updated bathrooms, and new flooring. Attach this list with your counteroffer as well, to back it up even more.
Know Your Numbers
Establish your bottom number, and don't go below it. What's the lowest you can feasibly go, while still making a profit from the sale? What has the house sold for in the past? Knowing the amount you purchased it for, along with the repairs and updates you did on the house, you should have a strong case.
Play the Waiting Game
Don't counter with an offer immediately. Make the buyer sweat a bit. You don't want to seem like you are on a timeframe-- even if you actually are. Take a few days to mull it over, and then slide over your counter offer with the stats to back it up. You may even suggest that you are looking into other offers, to help them get to their best offer faster.
Stand Firm With Your Offer
Once you counter with the best you can do, have the confidence to walk away from the offer. Let them know that you know how great this deal is, and they can either take it or leave it. Remember: you know the house's worth. If it is really worth as much as you're asking, there will be more offers. Turning down lowballers will empower you to get the price you feel comfortable with.
Negotiating a Counter Offer in Real Estate: Best Offer First
If you don't want to try haggling, then you need to jump on your best offer first. You want to sell your house as soon as possible. You also want to get the most out of the sale of your house. You'll need to be absolutely sure of your sale price, and know how low you can actually go. You also need to know what the lowest price you are willing to negotiate on, including things like closing cost.
If someone comes to you with a lowball offer, let them know that you know the home's value, and it's not worth what they're offering. Give them your best offer, and let them know you aren't going to drop any further.
A great way to ensure you get an offer you can sign off on quickly is to do as much negotiating in person. When you get your offer, rather than countering with a letter or email, get in a room together and talk it out.
Let them know your best offer, and ask if they feel like that's in the ballpark of what they're willing to pay. If it is, then you can negotiate further with closing costs, repairs, etc. Then, it's really easy to sit down and draft up a counter offer that will get signed almost immediately.
Establish Your Goals
As with everything in real estate, you need to keep sight of your goals first and foremost. Many get a thrill from the negotiation process and love seeing how little they can bend for the most profit. If your goal is to “win” the negotiation, then you are going to want to go with our first option of negotiation. This promises a fight that others will need popcorn to sit and watch with suspense. It involves a lot of poker faces and side-eyes and really puts you at odds against your buyer.
If your ultimate goal is to get the most money you can with the least amount of negotiation, then our second option is for you. It cuts down on the nonsense and games of negotiation, cuts straight to the chase, and eliminates those not interested in the value of the home.
Imagine you are going to purchase a car from a used car salesman. They have a reputation for negotiating, and you've got your game face on. You know exactly the car you want, you know how much you'd like for the car, but you didn't really do much research on the price of the car, other than comparing it to the new model's price.
You stroll up to the car salesman, and offer your price, readying for a fight. Instead of arguing with you, he nods his head, acknowledges your offer, but says he knows that this car is the best value you'll get anywhere, and the price is firm.
He's not negotiating.
At that point, you can either choose to go home and not purchase the car, or look it up on the internet, see that he's right, and purchase the car. The choice is yours, and you haven't spent all day negotiating on price.
The used car salesman was in control of the price of the car. By not negotiating, he showed that he had complete confidence in its value, and would get that price from someone else if you chose to back out. Have the same control in your negotiations, and you will come out on top every time.
Don't let real estate negotiations ruin your chance of getting a great deal. Choose a real estate agent who will go to bat to get you the best rates possible! At Clever, we provide you with a top-rated local agent, and that's not the best part! Our agents are also discount agents, which means you'll never have to negotiate their fees. Call us today at 1-833-2-CLEVER or fill out our online form to get started.