Clothes, computers, sandwiches at the deli nearby — the vast majority of the purchases we make come with a set price tag. That also means many of us don’t have much experience trying to bargain and negotiate.
Now’s the time to get ahead of negotiation norms and strategies, especially if you’re thinking about buying or selling a home — one of the biggest financial transactions you’ll make.
Check out these tips for buyers and sellers before you head into the process.
Negotiation tips for buyers:
1. Know that negotiation may be an uphill battle.
There’s more than just money at stake for a lot of sellers – there are major feelings attached to homes. Between money put into the house for improvements or fond memories, there are a lot of emotions at play.
The sellers’ expectations will also be shaped by the market. If your market is hot and sellers are used to escalations, that listing price might be the lowest they expect to go.
2. Don’t make assumptions about what the seller will and won’t accept.
Even if the house has been sitting on the market a while, you can’t assume the seller is desperate.
It might still be on the market because they won’t drop below a certain price, or it might have hit the market during the slower winter season.
This is where having a trusted real estate agent comes in handy, because they can talk more with the listing agent and get a sense for the seller’s thoughts here.
3. You can negotiate on more than just the asking price.
Keep in mind that you can bargain by asking the seller to leave behind appliances or fancy fixtures, take care of repairs or lower the asking price based on repair costs, or handle closing costs.
Talk with your agent about everything that’s up for negotiation. Depending on your market, there may be a lot more room for these types of asks than other markets.
Negotiation tips for sellers:
1. Make sure the known flaws in your house are already reflected in the listing price.
Present research and numbers to back up your assessment, and share it all up front. Ask your real estate agent to do comps of similar homes in your neighborhood so your asking price is solid.
If buyers try to bargain you down on the basis of their inspection, ideally you’ll already have solid data to back your asking price.
2. Consider agreeing to make important repairs.
If a buyer does find something you didn’t expect when looking at the house, it may be worth it to pay for the repair. Refusing to do so might give the buyer the impression that you’re hiding other flaws or trying to pull one over on them.
Many buyers are happy to perform repairs themselves, so long as the estimated costs are reflected in the asking price. And this also depends on the market — in more competitive markets, you may have multiple offers and someone who is willing to foot the repair costs to close the deal.
3. Don’t give the buyer everything they want just so you can sell quickly.
Unless you absolutely need to sell your home quickly, keep in mind that other potential buyers are out there. Depending on your market, you might have some flexibility.
Also remember that buyers expect a back-and-forth, so their first offer is probably lower than what they’re willing to pay. Keep those paths of communication open.
4. Talk to your agent about the potential stigma of days on market.
Depending on your market, potential buyers may be closely watching the status of your house online. You’ll want to be prepared for questions they might have.
If your listing shows a “pending” offer and then becomes available again, the next buyer is going to have some suspicions. Or, they might see that “days on market” ticking upward and wonder what’s wrong.
Talk to your agent so you can be clear with potential buyers about these concerns. Your agent is a great resource here, because they’ll know the best path forward in your specific area.
Negotiation tips for everyone:
1. Let your agent lead the process.
Involving your agent every step of the way makes it possible for you – and your feelings – to take a step back. Your agent is the expert!
2. Remember, a negotiated deal can fall through. It happens all the time.
Advocate for yourself, but don’t get too aggressive unless you’re fine with seeing the seller or buyer back away.
3. Communicate early and often to avoid surprises.
As you head into the negotiation, make sure the other party knows what you have in mind. Pulling a 180 on closing day is a huge risk.
4. You’re not trying to “win” – you’re trying to reach an agreement.
This isn’t a game, and you don’t want to get caught up in trying to drive a hard bargain. At the end of the day, the real “win” here is closing on your dream home or making that sale.