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Negotiation - A Guide for Home Sellers and Home Buyers

by The Hat Team


It seems that negotiation has become a lost art in the world of real estate, and that’s unfortunate because the truth of the matter is, if you don’t ask…you don’t get. While sellers want the highest price and buyers want the best deal, they must meet somewhere in the middle for the deal to close. Negotiation is a crucial part of selling or buying a home because it is the largest asset people own and there is a lot of money at stake. Here is a simple guide for what sellers and buyers might ask for in real estate negotiations:

  • Price

Negotiating the best price means different things for sellers and buyers.  The seller wants the highest price and the buyer wants to pay as little as possible.  For a successful transaction, they must compromise and come up with a price that is acceptable to both.

  • Closing Costs

Prepaid closing costs are paid by buyers for their mortgage.  These are funds that the mortgage lender holds in escrow for expenses like taxes and insurance.  A buyer may ask a seller to cover some or all their closing costs either with a flat dollar amount or up to a percentage of what’s an allowable contribution for a lender.  If a buyer asks the seller to do this, they are likely going to pay a higher asking price. What is Escrow and Why is it Needed?

  • Closing Date

Sometimes sellers want to get out of a home quickly because they need the money from that house they are selling to put toward a new real estate purchase.  The closing date will also affect the buyer’s monthly cash-flow because when a buyer closes on a house, they skip the next month’s mortgage payment, therefore they may want to negotiate to close at the beginning of a month.

  • Financing Contingencies

When there is a financing contingency in place for a real estate transaction, it can tie up a seller’s property for a required 30 to 60 days.  For this reason, many sellers prefer buyers coming to the table with cash offers. If you are competing with cash buyers, you can shorten the closing timeline substantially by getting pre-approved for a home loan prior to making an offer.   Mortgage preapproval shows that your finances are in order and you can afford the home.  5 Things You Need to Be Pre-Approved for a Mortgage

  • Home Warranty

As a buyer, you can request a home warranty.  As a seller, you can offer one.      This home protection plan covers things like appliances and systems such as the hot water heater or air conditioning, in the event they need repair or replacement.

  • Leaseback

The moving process is stressful and labor intensive.  Sometimes a seller will need extra time to get into their new home.  When this happens, buyers can offer a zero-cost rent-back for 30 to 90 days to persuade the seller to accept their offer over others. 

  • Home Repairs

With a home that needs a lot of updating there comes ample opportunity for negotiation. Buyers need to consider the cost of bringing the home up to current standards and use the estimate of that cost to request a lower asking price.  The seller, on the other hand, can specify that the house is being sold “as is” and not offer any repairs.

  • Appraisal Contingency

A seller can push for a buyer to waive the appraisal contingency. However, if for some reason the appraisal falls short of the expected amount, buyers need to be prepared for the amount they might have to pay should the bank only be willing to lend them money based on the appraised value. How an Appraisal Contingency Can Protect You

  • Furniture

Personal property such as patio furniture, window treatments and chandeliers is all up for grabs. The buyer can ask for these things to be included in the contract.  Sellers need to determine what they are willing to leave behind.  And any exclusions need to be specifically listed in the contract as well.

  • Appliances

Depending on the market, sellers don’t always leave every appliance for the buyer.  They may include the dishwasher, stove and built in microwave in the contract but not the refrigerator, washer and dryer.  Sometimes they don’t want to give everything away up front so that they can use these as items for negotiation.

  • Inspection

When buyers waive inspection, they often find themselves with "buyer's remorse", but they can try to shorten the time frame for inspection, from ten days to five.

  • Condo/Co-op Assessments

These are fees that are used to maintain common areas in a community. If there is an open assessment, it can become a negotiation between the buyer and seller as to who will pay for it.

If you are in the market to buy or sell a home, let Sandra Nickel and her Hat Team of professionals assist you with all your real estate needs!  Call them today at 334-834-1500!

Ins and Outs Of Negotiating

by The Hat Team

If you’re a seller of a home you need to understand the complexities of negotiating. This is particularly true if you are attempting to sell your home by yourself. This is known as a “for sale by owner” or FSBO.

handshakeMost people understand that selling a home is complicated. But just about the least understood component of being a seller is the need to do a lot of negotiating. Even if you are working with a Realtor it is good to know what is going on, often behind the scenes. Why? So you have an appreciation of what the Realtor is doing for you.

Here are just a few of the types of negotiations you need to be ready to deal with…

  • The buyer’s agent whose sole responsibility it is to protect the best interest of the buyer, not yours.
  • The buyer who wants the best deal possible from you.
  • The home inspection company which is working for the buyer and almost always finds problems with the property for sale.
  • The termite company if there are challenges by the buyer.
  • The buyer’s lender if the structure of the financing requires the seller’s participation.
  • The appraiser if there is a question of value.
  • The title company if there are any challenges with permits, certificates of occupancy, or the survey.
  • The municipal government if there a problems with permits or certificate of occupancy.
  • The survey company if there any discrepancies or challenges.

Every one of the above participants in a real estate transaction has special interests and specialized knowledge about a different component in the sales process. Each one has to be negotiated with on some level to make sure the sale gets to closing smoothly.

It takes a lot of skill to understand everyone’s interests and how those interests fit into the bigger picture. Some of their interests and intertwined, and some are very specific to a given specialty. Some of the interests are very objective and others are very subjective and emotional.

In addition to all of that, your emotions as the seller tend to run high. It is extremely difficult to remain calm and objective when dealing with other people over the sale of your home. That is because you are not just selling a house and a property…you are selling the home you and your family have lived in. It’s personal.

The primary message is to be very careful about making a decision to go the FSBO route and be very selective when deciding on a Realtor to be your agent of negotiation.

Information courtesy of Montgomery AL Realtors Sandra Nickel Hat Team.

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