Be Sure to Learn How to Negotiate When Selling a House By Owner!
Do not let a buyers agent or buyer take advantage of you. Take the time to learn exactly how to negotiate when selling a house by owner. You need to know the terms of a real estate contract that you can negotiate in your favor.
Check out the below video and learn everything you need to know or read the full transcript just below the video.
Hi Kris again, your real estate broker at Get LISTED Realty
If you want to sell a house by owner, you will be negotiating directly with both real estate agents and buyers directly.
You might be thinking that you are going to be at a disadvantage by going up against real estate agents.
Who negotiate deals everyday for a living.
However, most real estate negotiations that agents do are simply sending an email back and forth with offers and counter offers.
This is usually without much ACTUAL negotiations at all.
This is far from the intense negotiations that you might imagine takes place.
But there are some smooth and savvy real estate agents out there and they could take advantage of you.
If you are not prepared.
You see, with a little preparation and understanding about how the negotiation process works, you can negotiate a deal with terms that are acceptable to you AND hopefully in your favor.
A Quick Tip for How To Negotiate When Selling a House By Owner
But before I get into the different terms you will be negotiating when selling your home.
I want to give you a tip.
Perhaps the biggest advantage of selling your house with a good REALTOR, is that they can be emotionally detached from your house while negotiating.
This means when people view your property, make offers and negotiate, the agent is able to take their personal feelings and attachment to the house out of mix.
You will also need to do the same and take your emotions out of the process when you are selling your house by owner.
This is critical to do when negotiating, do not focus on your emotions and the attachment you have to your home.
Only focus on getting the outcome in your favor.
After all, the goal is to sell your house and move on to whatever big plans you have after the sale.
Keep that tip in mind and you will be well on your way to successfully negotiating the sale of your house by owner.
Or as I like to say DIY style!
Negotiate the Terms of the Sale of Your Home
Now lets discuss negotiating terms for the sale of your home.
The first step you need to think about is defining what acceptable terms look like to you.
You could call this your two lists.
The first list is your ideal contract terms and the second is the bottom line terms you will accept.
By establishing the parameters of a deal you are willing to accept, you won’t end up settling for a deal you don’t want.
When selling your house, the terms of the contract you will need to decide on are usually the following main items.
2. Mortgage terms
3. Inspection terms
4. Closing date
Negotiating the Price of Your Home
First, lets talk about price.
Price is usually the main negotiating point when selling your home.
Sellers want to sell for the most amount of money possible.
But buyers want to feel like they are getting a deal.
As a home seller, you need to figure out what your ideal selling price is AND what the bottom line price is that you are willing to accept.
Hopefully, you will sell for your ideal selling price.
But you need to be realistic on price.
After all the best form of marketing a house for sale is an appropriate price.
If your ideal selling price is not supported by the current market, you will probably end up being disappointed.
So part of learning how to negotiate when selling a house by owner, is have a pricing strategy and not just a listing price.
Negotiating the Mortgage Terms When Selling Your House By Owner
Second, is the mortgage terms.
This is a huge topic, you should do some research on the various types of mortgages out there currently.
Ideally, a cash offer is best because it avoids all the complications involved with a buyer getting approved for a mortgage on your home.
After all, this is one example of where the expression cash is king comes from.
If you don’t luck out and attract a cash buyer, the next best type of financing is a conventional loan.
The underwriters are typically less picky with the condition of your home.
Which leads into the other group of mortgages such as FHA, VA, or even USDA.
These mortgage options are attractive to some buyers because they have special characteristics to make it appealing for them to qualify for a mortgage.
However, they can be a little bit quirky on some of the inspection or appraisal requirements.
Don’t be scarred of these mortgage options, just be sure to do your homework to understand if they would be a good fit for your house.
All the different mortgage options is way too much to dive into in this video but it’s something you need to be aware of.
For some more information on the mortgage contingency you can watch my video, the Home Sellers Guide to the Mortgage Contingency.
Negotiating the Inspection Terms In Your Real Estate Purchase Contract
Third on the list, is the inspection terms.
Ideally, you will get an offer from a buyer willing to buy your house as-is, without getting it inspected.
However, this doesn’t happen that often with traditional real estate sales.
Maybe you can get it once you know how to negotiate when selling a house by owner!
Typically, a buyer and a bank will want to get the home inspected by a licensed home inspector.
If you have multiple offers on your home, you might be able to negotiate an AS-IS rider.
Even if the buyer has an inspection contingency in the contract.
The AS-IS rider basically says that the buyer can get the home inspected and will either accept the home as-is or cancel the contract.
It means they will not be requesting any repairs after getting your home inspected.
Thats the premise of an AS-IS rider but in reality if there is any inspection contingency it still opens up negotiations for repairs.
But it is a tool for you to use as a home seller to set the tone with the buyers.
Its up to you if you want to push for it or not.
Really it depends on if you are in a buyers or sellers market.
And how competitive your house is in that market.
For more information on the home inspection contingency, you can watch my video, the Home Sellers Guide to the Home Inspection Contingency.
Finally the Closing Date Needs to Be Negotiated
Last on the list is closing date.
If your buyers are getting a mortgage, they will probably need about 45-60 days for getting approved and ready to close.
If they are cash buyers, you can close in as quickly as a few days with an expedited title search and the attorney’s agreeing that they can support that quick of a close.
Or maybe you need more time and want to negotiate a longer close in order to make it work on your end.
For example, say you are selling now and building a new house.
But your new house will not be ready for a few more months.
You could negotiate that the closing be pushed out to when your new house will be completed.
You have to figure out what is important to you and make it clear when you are negotiating.
Because once the contract is signed, making big changes will have an impact and the buyers may not be in agreement with the changes.
So those are the 4 main items that make up negotiating a real estate contract.
But in reality, anything is open for negotiation.
And that’s part of the fun about the process!
How to Get to YES When You Negotiate When Selling a House By Owner
You need to figure out what is important to you AND the buyers.
When you do that you can figure out how to get to yes and get the contract signed!
Getting to yes is an important negotiation strategy.
It’s the opposite of taking a heavy handed, take it or leave it attitude.
Which in my opinion, in most situations is not the best way to negotiate.
When you are trying to get to yes, you inquisitively ask questions to try to understand what is important to the other side and WHY it is important to them.
Once you figure that out, hopefully, you can use it to your advantage and make a deal with the buyers.
So don’t be afraid to get creative with your negotiations.
Which is why you are learning how to negotiate when selling a house by owner!
You see, when you try to get to yes, you explore opportunities rather than close doors.
Sometimes, you can’t make it work.
But you should always try.
As an example, lets say you receive an offer from a buyer.
But the offer is lower than you want to accept.
Instead of taking offense to their offer and just countering, you could ask them how they arrived at that number.
You can also inform them of comparable house sales and home improvements you have made to your property that justify your asking price.
Maybe they are not informed about everything your house offers.
Also, there could be something about your house that could be important to them and they don’t even know about it.
If you can figure that information out and then explain the price you need to make it work on your end.
They might be more agreeable to come up on price and you can then get to YES!
Understanding Negotiation Power During Negotiations
Getting information is very powerful in negotiations.
Which leads me into my next point for how to negotiate when selling a house.
This is understanding your negotiation power.
I talk a lot about negotiation power in my video “Sell Your House Fast and Get More Money”
In that video, I breakdown the different stages your house goes through while being on the market.
And how your negotiation power decreases as your house has been on the market longer and longer.
When your house first hit the market, your negotiation power is at the highest it will ever be.
But don’t get cocky.
Your goal is to get people to put in an offer, not to turn them off from working with you.
After all, if you can get multiple people to put in an offer, then negotiations just got a whole lot easier for you.
Because you can play them against each other and sell your house for the most amount of money possible.
If you priced your house correctly and made it look it’s best, this is usually what happens.
Watch my video “the Magic Formula to Sell Your Home” so you can do just that.
If you don’t sell you house quickly or end up with multiple offers, then your negotiation power decreases.
Sometimes real estate agents or home owners can rely on risky negotiation tactics that can often backfire.
One such tactic, is to lie to prospective purchasers and say there is other interest on the property even though there isn’t any serious interest.
This is to try to increase the perception of their negotiation power, especially if they don’t know how to negotiate when selling a house by owner!
I don’t like doing this and suggest you don’t do this as well.
It’s very easy for a buyers agent or buyer to call this bluff.
Then whatever negotiation power you had left is decreased even more.
Applying the Golden Rule to Real Estate Negotiations
So my advice is don’t try to over think it.
Like most things in life, just keep it simple.
I always just try to be nice and helpful to people when negotiating, while maintaining the position my clients want me to take to help them reach their goals.
I suggest you do the same.
Remember take emotion out of it and try to move the negotiations forward.
Don’t view the other side as the enemy.
You don’t have to become friends with the other side but there is no reason why you can’t treat them with respect and apply the golden rule.
Which is to treat others the same way you want to be treated.
After all, if you negotiate in a contentious way then it sets the deal up for headaches and trouble down the road.
After all, there are plenty of opportunities for a buyer to get you back once you are under contract.
They could play games with both the inspection contingency or the mortgage contingency.
Are You Prepared for How To Negotiate When Selling a House By Owner?
So, that’s how to negotiate when selling a house by owner.
By taking the time to watch this video, you are preparing yourself for success when negotiating the sale of your house.
Chances are your real estate negotiations will be an anti-climatic back and forth over email.
But if you run into an agent or buyer who wants to engage in some old school negotiations then you are now ready to hold your own and get what you want!
Do you want to get started negotiating the sale of your house?
Purchase a professional flat fee MLS listing package right now on my purchase page and we will get started right away!
If you still need more information, contact me directly, through my website and we will answer any questions you have.
Go Ahead, Ask Me Anything!
Additional Articles To Read After Reading “How To Negotiate When Selling a House By Owner”
- List Your House in the MLS to Sell For More Money
- How Much Does It Cost To Sell a House?
- The Magic Formula to Sell Your House On Your Own
- Amazon – Getting to Yes Book
About the Author: This article was written by Kris Lippi, the Broker and Owner of Get LISTED Realty. He enjoys writing about real estate related topics such as buying and selling homes, how-to guides for around the house and home product recommendations. He has been featured in Inman, Readers Digest, American Express, Fit Small Business, Policy Genius, Lending Tree, GoDaddy, Manta as well as others. Want to know more? Read more here.