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For a variety of reasons, many sellers accept the greatest offer they receive.
However, sellers are known to reject offers for various reasons. Alternately, make counteroffers. This is especially true if you bid low or are competing against many offers.
You must decide whether to accept the new contract, discuss the conditions, or walk away if you receive a counteroffer.
Look to your agent in situations like these. They are your spiritual advisors. Your agent will utilize their negotiation expertise to help you get the best bargain if you decide to negotiate — that is, make a counteroffer to the seller's counteroffer.
But you're not going to do anything. You can rely on them. And encourage them.
Before you — and your agent — start negotiating, here are eight tips to remember:
Act quickly
You should respond swiftly if you receive a counteroffer, ideally within 24 hours. The longer you wait, the more opportunity another buyer will have to swoop in and take the property. If a seller detects your reluctance, they may remove their counteroffer before you have an opportunity to answer.
Price Increase (Within Reason)
While you don't want to overspend buying a home, you may need to boost the ante if you made a low-ball offer at first. Use your agent's knowledge to figure out how much to add to the sales price to entice the seller.
Your realtor can then use their persuasion skills to make the counteroffer even more appealing by pointing out similarly priced "comps" — recently sold homes in your region with comparable square footage and features.
Make a Larger Earnest Money Deposit
Increasing your earnest money deposit — the amount of money you put down to show the seller you're serious (i.e., "earnest") about buying the house — is another approach to demonstrate to the seller you have more skin in the game. A conventional EMD is typically 1% to 2% of the home's sales price, however, it is negotiable between the buyer and seller and can be as high as 10%. Making a counteroffer with a 3% to 4% deposit could be enough to persuade the seller to accept your offer.
Be Patient
Changing your planned possession date - the date you take possession of the property — could also please the seller, depending on their schedule. Offer a later possession date if the seller wishes to stay in the house for a few days after closing. You might also negotiate a "rent-back" agreement, in which the seller pays your rent if you stay in the house after the closing date.
Carefully let go of a few Contingencies
Want to enhance your counteroffer even more?
Limit the number of contingencies you request. It's your way of saying, "Hey, look, I've got fewer ways to back out," giving the seller more confidence that the deal will close.
However, be selective: some possibilities are simply too critical to ignore. A home-inspection contingency, which allows you the opportunity to have a home inspection and request repairs, gives you a way out if you notice severe issues with the house (and protects you from buying a total money pit).
Request Fewer Concessions
Homebuyers must pay taxes, lender's fees, and title company fees at the time of the mortgage settlement. Closing fees vary by area, but they typically range from 3% to 4% of the home's sale price. The seller pays an additional 1% to 3% commission. (You can use easy calculators like Smart Asset and Nerdwallet to get an estimate of your closing costs.)
When making an initial offer, you have the option of requesting concessions from the seller in the form of a cash settlement to help you cover your portion of the closing costs. (If you're up against numerous offers, this strategy is less viable.)
Concessions reduce the net proceeds from the sale for the seller. Making a counteroffer that eliminates the concessions you would have obtained at settlement saves the seller money – and can increase your bid.
Take Care of the Home Warranty Cost
A home warranty is sometimes offered by sellers to potential buyers. This is a plan that pays for the expense of repairing important household appliances and systems, such as the air conditioner or the water heater, if they break down within a specified time frame (typically a year after closing).
Also, keep in mind that a house warranty is not the same as homeowners insurance. If you take out a mortgage, you must have homeowners insurance, which protects your home's structure and belongings in the case of a fire, storm, flood, or other disasters. The annual cost might range from $300 to $1,000.
Know When to Take a Break
Trust your gut — and your agent — when dealing with a seller. If he suggests a deal isn't good for you, pay attention.
If you don't want to make any further compromises — and the seller isn't willing to budge — it's best to walk away. Understandably, this is a difficult decision to make. It's difficult to reach an agreement. It exhausts me.
If you need an expert guide, send me an email today, and let's talk more about it.