Negotiating With Sellers

Know Your Competition: Find out how many other offers there are by having your agent call the listing agent just before you send your offer over. Also, look at similar pending sales on MLS within a ½ mile radius of the house you’re writing an offer on, and ask your agent to call the listing agents from those properties to see how many offers they each had. Formulate your offer keeping in mind the level of competition you face. If you are the victorious buyer where there are multiple offers, remember this throughout the transaction; the seller will have MUCH less incentive to renegotiate the price or do repairs knowing there are 5 or 6 other buyers out there who are ready and willing to take your place.

Be A Great Buyer & Let the Seller Know How Great You Are: A Seller’s biggest priority is getting a buyer that can actually qualify for the loan and close the transaction. Make sure you are well-qualified, pre-approved and putting an earnest money deposit down that lets the Seller you know you have some skin in the game and are serious enough to justify taking their place off the market. Have your mortgage broker call the Seller while your offer is being considered to brag about your great credit, income, job tenure or down payment. If you have assets that you are NOT using for a down payment, let the Seller know that you could come up with down payment funds if it became absolutely necessary. Have your agent write a polished and professional cover letter summarizing your offer, and call the listing agent ahead of time to build rapport and let them know what an easy transaction is ahead if they choose your offer. I have actually seen Sellers accept lower offers than others that were on the table because (a) the buyer appeared so well qualified the deal seemed sure to close and (b) the listing agent thought the buyer’s agent was professional and on top of things.

Think Like a Seller – no – Think Like The Seller: During the pre-offer phone call to the listing agent, your Realtor® should collect as much information as possible about the Seller’s wants, needs and priorities. This will allow you to understand how to make your offer strong and how to negotiate other items during escrow. For example, if the Sellers have already moved out, they are probably making two house payments (including one on the vacant house you’re looking to buy). So for that Seller, time might be more important than money; consider writing an offer for a short escrow or negotiating for the Seller to do some repairs in exchange for closing escrow more quickly. If the Seller needs a rent-back, you can use free rent-back time as an incentive for the Seller to agree to provide some credits toward your closing costs. The important thing, though, is to learn as much as you can about the Seller’s needs as early in the transaction as possible, so you can use that knowledge in formulating your negotiations.

Decide How Much You Want It & Know Your Numbers: If you have to have it, don’t try to be a hardcore negotiator – make an offer that the Seller can’t refuse. This is easier to do if you know in advance how much any given price increase interval will affect your monthly payments. Say you’re making an offer on a property which is listed at $450,000. If, for example, you know in advance that your monthly payment will only go up $50 for every $20,000 you add to the purchase price, you can instantly calculate how much you can offer without making your payment too high. Also, knowing this in advance can empower you to make quick and competent decisions on counteroffers; if you offer $460,000 and the Seller counters, asking for $475,000, you can quickly accept the counteroffer without giving another buyer the opportunity to get into the bidding.

TIME KILLS DEALS. If you see a house you know you want, make an offer then. Don’t wait. Inevitably, those who wait to make a decision seem to wait just long enough for another buyer to appreciate the same property. This is an easy way to end up paying $10-$100K more for a place than you would have if you were the only interested buyer. On the other hand, if you like it and have your Realtor® call immediately to express your interest, sometimes you can find out that the Seller was almost about to accept someone else’s offer, but will wait to consider yours. This can be the difference between having an opportunity to secure your dream house – or having it go to another buyer while you sit and think about it. The same applies to counteroffers – reply quickly and protect your position.

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