The ABCs of Negotiation
Don’t fear negotiation — welcome it! This means that you’ve gotten a buyer interested enough that they have decided to come to the table and make a purchase offer. This may be a task, but it’s also an opportunity. See it in a positive light by getting as prepared as possible.
Set Your Strategy
When you’re selling your home on your own, it’s your responsibility to negotiate deals on your own as well. That’s why you need to start setting your negotiation strategy even before the offers start rolling in — preparation beats perspiring when you’re rushing to do everything right.
Here are a few ideas to get you started:
- As an FSBO, you’re in the unique position of negotiating directly with a potential buyer. Handled correctly, this can give you the upper hand. Handled poorly, you’ve still got a home for sale on your hands.
- If the buyer is also without an agent, offer to help write the contract. However, before you even do that, make sure the buyer is pre-qualified to purchase your home. Why waste time?
- Know the meaning of contingencies. You can ask for a contingency contract — for example, a sale that depends on your purchasing a new home — but also know that buyers may ask for a similar contingency. Know what you want and how much you’re willing to give.
Don’t be scared at the prospect of negotiation — be excited! With a little forethought and a good bit of research and preparation, you’re bound to do just fine.
Understand the Hand You’re Playing
You’re a free agent who will likely be up against a professional. Does that mean the odds don’t favor you? Not necessarily, but it does mean that you’re going to have to do your homework and be prepared to come in with a strong hand.
Things to think about:
- How do I want to appear during negotiations? (Hint: calm, cool, and collected. Confidence is helpful too.)
- How can I plan ahead to make things go more smoothly — and go my way? (Hint: know what’s negotiable and what is not.)
- How can I keep my cool if asked to reduce the price? (Hint: think about how much you’re saving by not hiring an agent.)
There’s a world of difference between coming in prepared and unprepared. Prepared can be profitable. Unprepared can be deadly.
Countering and Concessions
You may find yourself going through several rounds of negotiations before both parties sign on the dotted line. Along the way, you’ll likely face some counteroffers as well as requests for concessions on your part and/or on the buyer’s part.
A few things to remember as you go along:
- You are not legally obligated to entertain any counteroffer.
- Unless an offer specifically states otherwise, a counteroffer completely voids and replaces the original offer.
- Should a counteroffer fall through, you are not legally obligated to entertain the original offer as a replacement.
Here is one of those areas that you’ll want to tread carefully since you’re doing your own negotiation. Read up as much as you can before going into this situation.
Get it in Writing
Writing a contract as an FSBO seller can be challenging given the learning curve that may be involved. However, it doesn’t need to be so difficult. Here are a few major steps to getting down an FSBO contract:
- The basics: make sure to include the names of both parties, title the contract, and date the document. It’s easy to forget these small but critical steps.
- Detail the included property, making sure to put in any personal property that is also changing hands as part of the deal.
- Set forth all payment terms and buyer disclosures.
- Make sure to detail closing procedures, terms, and timeline.
Here’s where the phrase “get it in writing” really comes home to roost. In order for you to enforce any and all parts of the contract, it needs to be clearly written there.