Negotiations When it comes down to on paper negotiating you will more often than not get a counter offer situation. To what extent purely depends on the negotiating skills of your agent and/or the motivation of the seller and buyer. The goal, when you’re countering a buyer’s offer, is to get the highest price and best terms possible. Any change to a buyer’s offer is rejection of the entire offer. This change caused the offer to cease to be an offer to you and becomes your offer to the buyer. The buyer can accept, reject or counter your offer to them. Once you reject the initial offer, you must decide how much to counter. The answer is easy when the market is hot. You can counter at full price or even more. In todays market you may receive offers less than full price for your property. In this case, one strategy would be to set your asking price higher than normal. How much lower than your asking price will you counter-offer?
What should I counter at?
Setting a firm minimum counter price is a big mistake that some sellers make. Depending on the deal and the buyer your counter offer should be flexible. For example, after investigating the market, you set your asking price at $300,000. Your minimum price may be $275,000. If you are offered your minimum, you sell. If you are offered lower, you don’t sell. It sounds simple. Unfortunately, in this mindset, you box yourself into a limited deal. You want to be flexible when negotiating. Look at this example and see how it can go.The buyer offers $250,000. The seller rejects and counters with the minimum of $275,000. The buyer counters with $260,000. Where do you go from here? You have already offered your lowest minimum counter offer. The only recourse would be to repeat your same offer. One strategy would be to counter lower at $270,000. But what if the buyer is willing to pay more than your minimum? The buyer might be willing to pay $280,000. You will actually have lost money again by countering too low. Sometimes you need to set a minimum price so that you can cover the mortgage, commission, lawyers fees and any other things associated with moving. But if this isn’t the case you should always be lenient and be willing to move on your bottom dollar if the situation arrises.
Judge where your buyer is with your property.
Your counter offer is not the final transaction. It is just one step in the negotiating process. The buyer may counter on your counter offer. You can then counter back if you wish. This process will repeat until the a deal is made. Therefore, your counter offer should not be your best and/or lowest. But one that is fair for the buyer concerned.The buyer’s first offer is usually a low-ball offer. A seller’s first counter is usually a high-ball offer. Both parties are testing to see how the other will respond. Let the buyer know you are willing to negotiate. You ask $300,000, the buyer offers $250,000. You could counter at $290,000. You must also send the message that you are not willing to drop your price too much. Some buyers will cave and accept the counter offer and others will not. Anytime you reject and counter, you are opening negotiations but you are also taking the risk of losing the deal. There are some buyers who are just looking for a desperate seller. They make a lot of low-ball offers until they find the property. You are not going to find a good price with that type of buyer. Others will counter with close to what they originally offered, in this case say $255,000 (now you’re still around $30,000 apart).
What should i do if the negotiating is close?
After a few counters, you are only a few thousand dollars apart. You countered at $275,000 and the buyer countered back at $270,000. Now you’re only $5000 apart. Should you accept the buyer’s counter? You could simply accept the deal. Another strategy would be to tell the buyer or the agent that you want to split the difference. They may accept. You will then have sold your property at $272,500. Splitting the difference can be an effective way of closing out negotiations to bring about a win-win situation. But every situation is different. Take the process seriously as you are making a big descission on your biggest asset.
What should I do if negotiations are still far apart.
You counter at $285,000 and the buyer counters at $255,000. You’re $30,000 apart. That’s serious money. There are only two ways of handling this situation. You could stay with your original counter. The buyer would understand that this is your final offer. But the danger is this could be a deal breaker. If you are highly motivated to sell, a steep decline of your price would get the ball rolling again. You counter at $270,000 saying this is your best but last offer. This action could spark the buyer’s interest. He/She could accept or at least make a higher counteroffer. But again you need to judge each situation as it comes in.
Is There a Time to Walk Away?
You can always walk from negotiations at anytime. If you havent settled on a price there is no deal done. There are other reasons you may walk from negotiations. Some of these are mainly for effect but shouldnt be used as a tactic. You could say, “Take my last offer or leave it. I’ll give you an hour to decide.” As a tactic, walking away can restart negotiations. You could get your price or you could lose the deal. There are no guarantees when negotiating real estate. This is a very staunch way of negotiating and in the current market with alot of choice this may not be the best way o go. As was said earlier you need to gauge the buyer and where they are at with your property. Only use the hard ball tactic if you know for sure that a buyer is very nterested in your property.
Remember these are only some things to enlighten you in the process. Every situation is different and you need to understand it when it happens. If your working with an agent, he or she should know the buyer and be able to help you judge what is the best way to approach your offer. But if your at the stage of negotiating well done. YOur on the right track to a sucessful sale.