Many buyers, especially those who are buying their first home, are unsure about the whole process. They don’t want to low-ball the seller. The sellers don’t want to appear greedy, so they often don’t want to do a counter offer. However, this is part of the whole real estate process. It is also a skill that real estate professionals need to be comfortable with.
Tips to Negotiating and Working With Counter Offer
Focus on market value, instead of asking price
Though all real estate agents want to get as much money as possible for their sellers, the truth is that it is really important to focus on the market value. If you price the house way too high, your clients are going to be disappointed when the counter offer comes in. This is especially true when the other side is trying to get a mortgage. They aren’t going to be able to pay more than the house is worth.
On the other side, you want your buyers to pay a fair price. When making an offer, look at comparable homes. Show your buyers why you are suggesting the price that you are. It often helps to show them what homes have settled for what price in the past few weeks. This may put their price into perspective.
Think about adding an escalation clause, especially in a seller’s market
When homes on the market don’t last long, you may want to skip the counter offer step. In fact, you may end up paying more for a home, just to have the highest bid. An escalation clause lets you stay in the competition when there are multiple offers on the table. You will add into the contract that you are willing to pay a certain amount, say one thousand dollars over the highest price, up to a point. This is often the best way to get a home. They will turn to escalation clauses instead of doing multiple counter offers.
Learn exactly what the other side needs
This doesn’t necessarily mean that you need to know why they are buying or selling a home. You just need to know what it will take to get the sale done. Do they want a quick sale or do the buyers need a place to go right away? Do the sellers need extra time to clean out the garage, which may take them over the settlement date? Are they struggling to let go of the home that they have lived in for the last twenty years? This can often help you lead to a sale. Sometimes, both sides learning more about each other can make a big difference when it comes to negotiating. You may be able to find a solution that works for both sides.
If you are serious about negotiating for a home, it is important that you keep the market value in mind. No matter what the asking price is, both sides are going to have to settle on a value that is close to the market value. This is especially true for those that are trying to finance a home with a mortgage. They are not going to be able to pay more for a home than it is worth.
If you are trying to negotiate in a seller’s market, you are going to want to add an escalation clause. Instead of going through counter offers, you can let the sellers know that you are willing to pay more than the highest bidder, up to a certain point. It may also help to learn exactly what the other side needs. You may be able to find a balance that works for both parties, making the negotiation process go smoothly!