There is a lot of advice out there for buyers on how to negotiate purchasing a home. I don’t know why anybody would want to do that on their own (unless they are a professional negotiator) but I wondered why there isn’t much advice for selling your home!
So I am going to give you some pointers here on how to negotiate offers on your home. Even though the first offer may be the best offer, I like to know exactly what my seller’s needs/wants are and then I draw a line in the sand. If you have a great home and follow my suggestions when we listed it, I am confident that we can generate the offer that meets everything that you want and need.
- Read the Entire Offer: Although it is tempting to react to the purchase price alone, read the entire offer. It can help to write down the key items. A lot of language in purchase agreements is standard or similar. However, you need to pay attention to the offer amount, the earnest money deposit, the closing date, occupancy, due diligence periods, any addendum and timelines.
- Offer Price: How much are they offering and what type of financing are they using? Are they borrowing money from a bank to buy your home? If so, how much are they putting down? The more money they are putting down, the stronger the buyer. Are they paying cash? That’s great! That means no appraisal (only lenders require an appraisal to justify their loan to the buyer). This could accelerate the closing timeline or it makes closing much easier (one less player without the lender now).
- Earnest Money Deposit (EMD): As a general rule of thumb, the more earnest money the buyer attaches to their offer, the better. I typically like to collect 3% of the offer price as the EMD. This helps to keep the buyer committed to the deal. Buyers can put up $0 if they want. As a seller you don’t want that. If the buyer ever decides to walk after contingencies are removed, there is no cost for them to do so.
- Home Inspection Period: The more time you give to the buyer to make a decision based on the home inspection, the more damaging it is to your marketing if they back out. When a buyer backs out due to a home inspection, they get the EMD back. The most common is 7 day inspection period. Anything between 5-10 days is pretty common.
- Occupancy: This is where the seller closes and the buyer is the new homeowner but the seller will continue to live in the home for an additional agreed upon time period. This is common if the seller is purchasing a home but needs to sell their current home to fund their new purchase. The amount of time and the daily rate are negotiable. Buyers will typically want the seller to pay based on the buyer’s new payment.
- Home Inspection Repairs: Everything is negotiable. The buyer might want you to pay for the whole new roof that needs to be tore off and replaced. However, you can say no (leave it all on the buyer if they still want the place). You can also pay for partial (seller gives a credit for half the cost of a new roof). A third option is to just pay for it all. Do this if you don’t want to lose this buyer and there is plenty of equity to cover the cost.
These are just some of the things that can be negotiated between a buyer and a seller. Having a professional who has years of experience dealing with these type of negotiations can really help guide you to making the best decision possible for you and your needs, when selling your home.
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