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Real Estate Information |
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Negotiating the Real Estate Contract
Negotiation is the process of communication back and forth in order to reach a joint agreement. There is no "one size fits all" strategy of negotiating a real estate contract. Many of our clients have been very experienced negotiators, and we have learned a great deal from them, as well as from books on the subject. We would like to share some of our thoughts on negotiating with you: What do we want to achieve in a negotiation? The best negotiators bring an attitude of high expectations to the table. They are hard on the problem and soft on the people. Letting the seller know what you need, in a clear and reasoned way, is the first step toward getting it. We try to keep all of these goals in mind: Enable you to move into your new home. Obtain the lowest possible price for the property. Close within an acceptable time frame. Solve any repair issues fairly. Have no title, survey or loan problems, or solve any that do arise. Develop a good working relationship with the seller. Have no future problems after closing. Is a cooperative or combative approach more effective? Our experience shows that the cooperative style is the most effective and efficient way to complete a transaction. Professional negotiators usually try to preserve the relationship between the parties, and work together to resolve problems. The goal is not to reach an impasse in which neither the seller's nor the buyer's needs are met. Buyers sometimes submit a letter to the seller describing why their house is not worth what they are asking, pointing out deficiencies, etc. This almost always backfires, and starts the negotiation off with a defensive seller. It is best to anchor your price to the marketplace, while remaining very complimentary of their home. How do you work with a combative strategy by a seller or agent? The combative style is sometimes encountered. This strategy includes: negative comments, emotional statements, table pounding, threats to walk out, ego involvement, and stated positioning. Creative solutions and trade offs are not as likely to be found in this environment. Working with a combative style negotiator requires a considered approach: Do not respond emotionally. An angry or defensive response will escalate the negotiation into a no-win battle. Do not argue. Arguing usually positions them more strongly and drags the negotiation process off course. Do not ignore their arguments or statements. Listen carefully, but do not accept or reject. Firmly anchor pricing and other terms to outside data. Show that the price has not been chosen arbitrarily. Reduce misunderstanding by following up with written summaries of discussions. Do not allow hazy or unclear proposals to stand. Offer some "wins" on some of the terms. Face saving is very important. Look for ways to meet their underlying interests. Remember that they may have a beautiful home that satisfies the buyer's goals. Is every point in the contact negotiable? Yes. However, one of the most effective means of coming to an agreement is to rely on consistent standards or norms when possible. For example, it is common practice for the seller to pay for the title policy and for the buyer to pay survey cost. Using accepted standards prevents buyer and seller from haggling over every point. Working within the accepted "norms" for our area helps to legitimize offers, and focus the negotiation on just a few points. On the other hand, all the points in an offer can be used to help structure the deal. They offer trade-off opportunities for both parties to get what they want from the negotiation. The value of trust in a negotiation cannot be overstated. Most people are fair minded and reasonable. They respond well to respectful treatment and to having their concerns heard. If the seller feels that the buyer and agent are acting with integrity, their attitude will be much more cooperative. Contract negotiation is a sensitive area, and anxiety can be high. The buyers may have had an unpleasant past experience with buying a home. The seller may be under pressure, with future plans at stake Acting with integrity does not mean that all "cards have to be put on the table." It is not proper to discuss personal issues that affect the buyer, such as your financial ability or urgency to move in. It is valuable to develop rapport because trust increases your leverage. Here are ways: Listen and understand what the seller has to say. Express appreciation for the seller's home, gardens, decorating. Respond within a reasonable time to counter offers. Reassure the seller of your ability to close. Reveal some personal information about yourselves. Finding common ground with the seller can be a very powerful tool in the event of multiple offers. I can think of several instances in which sellers selected their contract for very personal reasons. (The family reminded them of themselves when they moved in with young children years before. Or, they were both of the same religion. Or, the new owners would care for their gardens.) Understand your leverage. The more we can find out about the seller's needs, the better chance we have to find solutions to negotiation hurdles. We will be able to offer information or concessions that appeal to the seller's deepest concerns. Obviously, if the house has been on the market for 300 days, you have a lot more leverage than you would with a brand new listing. If their time frame is immediate, and you can meet it, you have some leverage. If they have multiple offers, you have very little leverage! How much under list price should you offer? Buyers usually offer less than list price, unless it is a strong sellers market. There is no standard percentage "under list price" that can be used. A market analysis will show recent sales for the neighborhood, which is the best way to establish the offer price. It is usually counter-productive to offer so low that the seller will automatically reject the offer. This will set a negative tone, and may result in an emotional response from the seller. What if we have a multiple offer situation? Occasionally the seller receives more than one offer on their property. The Austin Board of REALTORSŽ has a policy that allows two options: disclosure to all parties that multiple offers have been received, or disclosure to no one that there are multiple offers. We prefer disclosure to all parties. However, the listing agent and seller will make the decision as to how they will handle offers. By simply disclosing that there are multiple offers, they are not "shopping" your contract. Shopping occurs when the seller discloses the terms of an offer to induce a buyer to submit a better offer. This can result in major distrust of the process by the parties, and the likelihood of loss of the buyers. Usually the procedure is to notify each party that multiple offers have been received. Each party is then given the opportunity to raise or adjust his offer by a certain time. After that time, the seller is free to review all offers and choose one to work with. They are not obligated to choose the "first" offer that came in. The selected offer may be countered, or accepted as is. About The Author Roselind Hejl, CRS
MORE RESOURCES: How Jordon Hudson, 24, amassed $8 million real estate portfolio within months of meeting Bill Belichick New York Post Real estate transfers in Adams County from April 21-25, 2025 Muddy River News Real estate report: Three key factors are behind Louisianaâs surge in investment Baton Rouge Business Report Hyderabad blues: Real estate sales in city see biggest drop The Financial Express Exclusive: Trump's first real estate project in Qatar to be announced by Qatari Diar, Dar Global Reuters Graham Nortonâs Manhattan Carriage House Is Listed for $5.595 Million The New York Times Downtime: Local real estate agents team up on âChasing Cambodiaâ cycling doc - Richmond BizSense ArchCrest opens new real estate division Northern Nevada Business Weekly Two key real estate bills take aim at industry regulations Real Estate News by RealEstateNews.com Advocacy Scoop: New NAR Poll UnveiledâTax Reform, Real Estate Policy and Voter Opinion National Association of REALTORSÂŽ Cattaraugus County: Ellicottville home, Machias property lead March real estate sales Olean Times Herald Licking County real estate transfers for April 14-18 reach $1.4 million in Newark The Newark Advocate Richland County property transfers recorded April 21-25 Mansfield News Journal Fond du Lac County property sold for $530K in latest real estate transfers for April 21-25 fdlreporter.com Ranking Arizona: Top real estate law firms for 2025 AZ Big Media The Pipeline: Commercial real estate roundup for 5.2.25 Richmond BizSense People on the Move: New execs at HomeServices, RE/MAX Real Estate News by RealEstateNews.com Mid-America Real Estate closes sale of 34,431-square-foot shopping center in Midtown Detroit REJournals Real estate veteran named president of regional Berkshire Hathaway HomeServices Hartford Business Journal Property transfers: Nursing facility, rental complex sell for more than $1 million Canton Repository Alexandria Real Estate Equities Looks Juicy But Uncertainty Keeps Me Sidelined (NYSE:ARE) Seeking Alpha Startup radar: Seattle-area tech companies build software for robotics, real estate, and more GeekWire Raith seeks to raise $700m for non-core US real estate fund IPE Real Assets Blackstream opens luxury office near Lake Keowee GSA Business Report Household Struggles Weigh On Real Estate And Spending Seeking Alpha April real estate transactions CraigDailyPress.com Franklin Real Estate Development finds inspiration in Greenvilleâs history upstate business journal 'Slow and steady': How a couple retired early by buying one rental property a year with 5% down payments Business Insider Solano Real Estate Scene: Slow down, buy a house Daily Republic Secluded estate near Ann Arbor is Washtenaw County's most expensive home. Price: $8.99M Detroit Free Press Job Market Defies Tariff Fears to Remain Strong in April, Offering Jolt of Confidence to Homebuyers Realtor.com Solano Real Estate Transactions: May 2, 2025 Daily Republic Berkshire region real estate sales â May 2, 2025 The Berkshire Edge How the Dallas Commercial Real Estate Industry Could Fare in the New Tariff Environment - D Magazine Here's what local experts say the Baton Rouge real estate market will look like in 2025 The Advocate Real estate performance in Quarter 1, and some perspective Garden City News CENTURY 21 Real Estate and Institute for Luxury Home Marketing Launch Collaboration With New Q1 2025 Luxury Market Report Franchising.com Abundant listings and stable prices not enough to drive April sales in the Fraser Valley GlobeNewswire SDSU: SDSU Imperial Valley alumnus finds new meaning in real estate career Imperial Valley Press Online What's the most expensive property sold in Rhode Island? May 2 real estate transactions The Providence Journal What properties sold in Bryan, Chatham and Effingham counties this week? Search the list here Savannah Morning News Real Estate Magnolia Reporter Report: Health care real estate gains greater favor in Twin Cities Finance & Commerce US Commercial Real Estate Leader Peachtree Group Launches 114-Room Residence Inn in Ocean Township, Tapping into Jersey Shoreâs Expanding Hospitality Market Travel And Tour World Real estate transactions: Week of May 2, 2025 Inside Tucson Business Real Estate: Market Pulse (April 2025) Seyfarth Shaw LLP Status update: 7 Upstate commercial real estate projects upstate business journal When Donald Trump mocked a real estate icon for having a 'Trophy Wife' The Economic Times How to Choose the Right Real Estate Broker Investopedia Tarek El Moussa Calls for 'Real Reform' in Real Estate Industry: 'I Saw Families Lose Everything' House Beautiful Commercial real estate listings: Wingstop leases space on Three Chopt Road - Richmond Times-Dispatch Commercial real estate listings: Wingstop leases space on Three Chopt Road Richmond Times-Dispatch Compass goes retro with launch of âPrivate Exclusives Bookâ Real Estate News by RealEstateNews.com Real estate report: Industrial market remains âchronically underbuiltâ Baton Rouge Business Report Windermere âconfusedâ about Compassâ claims of collusion Real Estate News by RealEstateNews.com Allied Properties Real Estate Investment Trust (APYRF) Q1 2025 Earnings Call Highlights: ... - Yahoo NexPoint Real Estate Finance, Inc. 2025 Q1 - Results - Earnings Call Presentation (NYSE:NREF) Seeking Alpha Inside the Family Office Advantage in Private Real Estate WealthManagement.com Woman Arrested Again on Real Estate Forgery Charges Rural Radio Network What Will Happen to Australiaâs Housing Market After the Election The New York Times |
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