Is there a secret to good negotiating?
Negotiating is a key step to getting the price—and the terms—you want in any kind of real estate transaction. So the question is, is there a secret?
There are several cardinal rules to negotiating effectively. One is to do your homework and learn as much about the buyer (and their agent) as you can. Another is to play your cards close to the vest and not reveal too much information to the other party or their agent. Don't let yourself get rushed into any decision, no matter how tempting it may be. Finally, if you have doubts about your negotiating skills, hire someone to help.
Here are a few other key things you should know about negotiations during the home selling process.
What contingencies should be put in an offer?
Most offers include two standard contingencies: a financing contingency—which makes the sale dependent on the buyer’s ability to obtain a loan commitment from a lender—and an inspection contingency—which allows buyers to have professionals inspect the property to their satisfaction. A buyer could forfeit his or her deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract.
The purchase contract must also include the seller's responsibilities, such as passing clear title, maintaining the property in its present condition until closing, and making any agreed-upon repairs to the property.
How is the price set?
It's very important to price your home according to current market conditions. Because the real estate market is continually changing, and market fluctuations have an effect on property values, it's imperative to select your list price based on the most recent comparable sales in your neighborhood.
A so-called comparative market analysis provides the background data upon which to base your list-price decision. When you prepare to sell and are interviewing agents, study each agent's comparable sales report (the data should be no more than three months old). If all agents agree on a price range for your home, go with the consensus. Watch out for an agent whose opinion of value is considerably higher than the others.
Do I have to consider contingencies?
If you are a seller in a seller's market, in which there is more demand than supply, you probably won't have to entertain too many contingencies. But if you are selling in a buyer's market, when buyers are few, prepare to be very flexible.
Granting contingencies also depends upon what kind of price you want to get and on the condition of your property. Remember, contingencies are written into the contract and are negotiable during the negotiation phase only.
What is the difference between market value and appraised value?
The appraised value of a house is a certified appraiser's opinion of the worth of a home at a given point in time. Most lenders require appraisals as part of the loan application process.
Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker. Either an appraisal or a comparative market analysis is the most accurate way to determine what your home is worth.
Are low-ball offers advisable?
A "low-ball offer" is a term used to describe an offer on a house that is substantially less than the asking price. While any offer can be presented, a low-ball offer can sour a prospective sale and discourage the seller from negotiating at all. Unless the house is very overpriced, the offer will probably be rejected.
However, it’s important to consider all aspects of the offer before accepting or rejecting it. For example, a low cash offer or an offer without contingencies can be very appealing—and the escrow process will likely move more quickly. A lower offer in a buyer’s market may also be more appealing, since buyers are likely few and far between.
What is the best time to sell a home?
There is no "best" time to sell per se. Selling a house depends on supply, demand, and other economic factors. But the time of year in which you choose to sell can make a difference both in the amount of time it takes to sell your home and in the ultimate selling price.
Weather conditions are less of a consideration in more temperate climates, but most of the time, the real estate market picks up as early as February, with the strongest selling season usually lasting through May and June. With the onset of summer, the market slows. July is often the slowest month for real estate sales due to a strong spring market putting possible upward pressure on interest rates. Also, many prospective home buyers and their agents take vacations during mid-summer.
Following the summer slowdown, real estate sales activity tends to pick up for a second, although less vigorous, fall market, which usually lasts into November, when the market slows again as buyers and sellers turn their attention to the holidays. If this makes you wonder if you should take your home off the market for the holidays, consider the advice of veteran agents: You are always more likely to sell your house if it is available to show to prospective buyers continuously.
Still Have Selling Questions?
Still have questions about negotiations or the selling process—or are you ready to get started listing your home in the Triangle? Gilliam & Associates Realty is here to help! Contact us today with any questions at all.