I recently blogged about some simple but powerful negotiating tips for Buyers – ways to make their offers more tempting, if not outright acceptable.
What about Sellers? Are there negotiating tips for sellers which can result in a property being SOLD instead of just listed? Yes, here are some tried and true tips for you (the seller):
1) Price it right from the get-go. Sellers, if you overprice your property, you are helping your competition sell! Ask a reputable and trusted agent to do a candid and up-to-date comparable analysis to reveal what’s happening in your market area today. Remember that 80% of your lookers will come through during your first 30 days on the market. After that, the buyer traffic will slow significantly. You only get one chance to make a good first impression and 80% of your first impressions will happen during your first weeks on the market.
2) Treat that first offer with care. The first offer may not start out as an attractive offer, but I assure you that it will end up being the best offer. That first buyer is the most interested person in your property and you should negotiate with that buyer until you’d rather burn the property down than take less than your last proposal. NOTE: I’m NOT advocating arson here, simply stressing that negotiating is free and risks nothing. Mr. and Mrs. Seller, how will you feel if you find out later that this same buyer purchased the property down the street for $500 less than your “lowest” price? If you would be sick to your stomach, you’re not yet finished negotiating.
3) Don’t be afraid of pricing your property for EXACTLY what your bottom line is. Sure, buyers may make lower offers (in fact they would be foolish not to), but your reply is, “I wish I could negotiate more but this is my price.” I’ve had multiple situations in which the buyer then replies, “We knew it was a good price, but wanted to ask anyway. We’ll pay your price.” Don’t believe me? Try it.
4) Offer owner financing or an owner second mortgage if at all possible. If you own the property free and clear and can act as the bank for a buyer with an acceptable down payment, your phone will ring off the hook! This is a win-win for all involved. The buyer gets a loan without many “closing costs”; you get an income stream at an interest rate better than putting money in a regular bank and you have a recorded Deed to Secure Debt allowing you to take the property back in the event the buyer doesn’t pay. Similarly, if the buyer can afford an 80% loan but has only a 10% down payment, you can hold a “second mortgage” for the missing 10% at a good rate of return and still have a recorded Deed to Secure Debt to protect your interest in the property.
5) Don’t offer merchandise “extras” to buyers like cars, cruises, furniture, etc. Unless your buyers are paying cash, their lenders will not allow these “prizes” to be included in any Purchase and Sale Agreement. Banks can’t foreclose on a car or a cruise, therefore, they will not lend money on one either. Lenders will place a value on the “prize” item and reduce the loan amount they are willing to give by that amount. Talk about shooting yourself in the foot! Simply price the real estate for its own value.
6) Offer a competitive or above-competitive sales commission! There are currently about 20 properties on the market for every single qualified buyer. Why should an agent show your property? Trying to penny-pinch on the commission hurts, rather than helps, your bottom line.
I know many of you have more negotiating tips. Leave a comment below sharing your story.