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NEGOTIATING AS A SELLER

The current economic conditions are such that most areas of the country are in what is called a “buyer’s market” for real estate.  That is, there are more homes on the market than there are buyers for those homes.  Taking the number of current homes on the market and dividing by the number of homes sold during a 30 day period will equal the number of months to sell the current inventory.  The average number of months to sell that inventory of homes  is usually 3-4.  In many areas of the country the current inventory of homes is taking 12-15 months  to sell because of the downturn in the economy.  This affects negotiating and you need to be aware of what type of market you are in.

Negotiating requires the knowledge of what to look for in an offer to purchase.  The following is a list of points to look for in an offer and what to consider in negotiating the points of that offer.

1. There are State approved forms for the purchase and sale of real estate.  I recommend that those forms be used.  Most generally if you are working through a real estate agent they will be using the approved forms.  There is a lot of legal language needed that neither party would be knowledgeable of so it is important to utilize those forms approved by your State.  You have the right to have an attorney review any contract that is presented to you.  That is usually written into an approved form.
2. The agents involved, the buyers, and the property to be purchased are identified in the body of the contract.  Make sure the property information is correct.
3. The purchase price along with the amount of earnest money is identified and both are negotiable.
4. How the buyer is to purchase the property is also identified.  Is it cash?  If so, the buyer should stipulate a time frame inwhich proof of those funds would be made available to the seller.  If the buyer is borrowing to purchase, then a pre-qualification letter from the lender should accompany the offer.  Along with the amount of the down payment and  the amount that is being borrowed, the offer should also state the interest rate for the loan, the type of loan (FHA, VA, or Conventional), the points to be paid by the buyer,  and the points the seller is being asked to pay.  A time frame should be given as to when the lender will give final approval of the buyer’s qualification.  The time frames and any cost to the seller is negotiable.
5. The buyer will identify any conditions that need to be met in order to finalize the purchase.  The most common condition is the sale of the buyer’s home.  If this condition or contingency is written into the contract, it should state the address of the property, whether it is currently listed for sale, and a date by which a future sale of that property should be closed.  You can negotiate any condition.  You can refuse any offer that has a contingency of selling a buyer’s home.  You can negotiate the date by which the buyer’s current home should close.  You should also demand that the buyer list their house for sale if it is not currently listed.  With a first right of refusal, you can leave your house on the market while the buyer attempts to sell their home.  Usually a time period of 24 hours, 48 hours, or 72 hours is provided to the buyer to remove their contingency if another acceptable offer is received.  Other conditions may be receiving an inheritance, selling a car or boat, or collecting an insurance claim.  A deadline to accomplish these conditions should always be stipulated in the agreement.
6. Personal items of the seller can be written in as exclusions or inclusions.  Review the items carefully.  You can negotiate personal items.  One common item is a refrigerator.
7. The cost of title insurance and which title company will be used to close the purchase is negotiable.
8. The condition of the property and having the home inspected should also be written into the contract.  A buyer may choose to list items to be repaired at the time the offer is written, list the items after the inspection, or submit a list both before and after the inspection.  Again, items for repair are negotiable. The buyer and seller may agree on certain items to be repaired before closing or they may agree to have the seller give an allowance at closing for repairs yet to be done.
9. The seller should expect that the buyer will release the condition of inspection and repairs once they are completed.
10. A property disclosure report from the seller to the buyer should be included as part of the purchase agreement.  The buyer will have a day or two to review and sign the disclosure.
11. The buyer shall also have the opportunity to review and approve the covenants, conditions, and restrictions of the neighborhood association.  They should sign off on their review and approval of that document as part of the offer.  Included in that review will be the disclosure of any fees associated with ownership in that neighborhood.
12. A home warranty plan for the buyer is also negotiable if the seller is being asked to provide one.
13. The costs of closing for both the buyer and the seller will be listed in the contract.  Any item that the buyer requests of the seller in regards to these items is usually negotiable.
14. The final walk through date, closing date, and occupancy date are all negotiable.
15. Finally, the buyer will usually give the seller a time frame to respond to the offer.  This time frame is negotiable.

Any changes made by the seller to the buyer’s offer will be made on a form called a “counter offer”.  You can make as many counters back and forth between buyer and seller as both are willing to make in order to come to an agreement.  Each counter offer should be numbered and include all approved items that the previous counter offer requested.  Until both parties agree to everything in writing,  the home is still on the market and open to other buyers to make an offer.  If more than one offer is received, it is up to the seller as to whether you counter all offers at the same time or work with one offer at a time.