Important Things to Consider When Negotiating
The negotiation phase of the transaction process is different than any other part of the transaction. Here are a few things to keep in mind when negotiating:
Know who is on your side It might seem unbelievable, but more than a few sellers have torpedoed their own transactions by revealing crucial facts to the buyer or buyer's agent, such as how desperate they are to sell the home, or how much they would be willing to drop the price. Discuss strategy and pricing only with your immediate family and your paid representation (me).
Likable people get more money Years of experience (and a large body of research) have proved that likable people enjoy higher closing prices, have easier transactions, and secure more favorable terms than people who are unpleasant during negotiations. Buyers are more likely to give in on important sticking points if they like the person on the other side. Be friendly and positive whenever you are talking with the buyers, the neighbors, the buyer's agent, or anyone else directly or indirectly related to the transaction.
Responding vs. reacting When an offer or counteroffer comes in, it's natural to have an immediate emotional reaction--positive or negative. For instance, you may be so overjoyed by the price of an offer, that you immediately decide to accept it--failing to realize that there are contingencies that make the offer completely unworkable. Take the time to collect all of the facts before we craft our response to any offer or counteroffer.
Stay focused on the end goal Ultimately, everyone involved in the negotiation wants the same thing--for your home to be sold. Obviously, we should still insist on top dollar and favorable terms, but we need to be careful not to get so bogged down in the details that we forget the big picture.
What to Do When an Offer Comes In
When an offer comes in, you have the choice of having the buyer's agent present the offer in person, or you may wish to have the offer faxed to us. Many years ago, most offers were presented in person by the selling agent; today, most offers are faxed to the listing agent. The best agents will also prepare a buyer's profile letter and a lender pre-qualification that accompany the offer.
There is more to an offer than just price. Price is very important, but the terms and details of the offer are also very important. We will review all areas of the offer.
After we have reviewed the offer, it is time to give the potential buyers a written response. You have three options:
1) Accept the offer. If you accept the offer, escrow is opened.
2) Reject the offer. If you reject the offer, you are sending a message to the buyer that we no longer wish to negotiate.
3) Counter the offer. If you counter the offer, the buyer has the same three options--to reject, to accept, or to counter your counteroffer.
As you can see, an acceptance or rejection ends the process of negotiation, and a counteroffer continues the process.
The Residential Purchase Agreement
As late as 1980, the Offer to Purchase, now called the Residential Purchase Agreement, was one 8 ½ x 11 form with mostly blanks. Today's Residential Purchase Agreement with addendums is more than ten pages.
Whether the Residential Purchase Agreement is one page or ten pages, it has the same purpose--to detail the terms of the sale.
With the complexity of today's Residential Purchase Agreement, most of the details are covered in the preprinted matter. The following is a list of some of the basic issues covered in the Residential Purchase Agreement:
Deposit amount Offering price Financing details The length of escrow An itemization of costs paid by seller An itemization of costs paid by buyer Time periods for all aspects of the transaction Defines fixtures and personal property Effective time period for the offer.
Above are just a few of the areas covered in the Residential Purchase Agreement. There are many more that will be explained before the agreement is finalized.