Q & A: Negotiating

Click a question to jump right to the answer:

  1. Are low-ball offers advisable?
  2. Do I have to accept offer contingencies when selling my home?
  3. How do I know what price to offer for a home?
  4. How is the listing price of a home decided on?
  5. Is there a secret to good negotiating?
  6. What is a contingency?
  7. What is the best time to sell your house?
  8. What is the difference between market value and appraised value?

Are low-ball offers advisable?

A low-ball offer is an offer on a house for far less than the listing price. There are numerous reasons one may put a low-offer on a home, such as: the buyer feels the home is overpriced, the home has been on the market for a long time, the buyer thinks the sellers may be motivated, or the buyer simply wants to see if they could get it for that low of a price. It is advisable to first speak with your real estate agent to gain their recommendations prior to presenting a low-ball offer on a home. Though a low-ball offer could be accepted, presenting a low-ball offer may offend the seller to the point that they refuse to negotiate any further.

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Do I have to accept offer contingencies when selling my home?

As the seller, you do not have to accept any of the contingencies buyers ask for in their offers. But, common contingencies such as financing and inspection are often expected by buyers and therefore you may experience difficulty selling your home without accepting these contingencies.

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How do I know what price to offer for a home?

There are many factors to consider when placing an offer on a home, such as the current real estate market (is it a buyer’s or a seller’s market), comparable home sales in the neighborhood, and the condition of the home (move in-ready or fixer-upper). Other items that can impact the offer price are the contingencies of the offer – will you be asking for closing cost assistance, the inclusion of appliances, extended finance contingencies, or the sale of your home as a contingency? A seller may be more likely to accept an offer that is low in price and has no extra contingencies over a higher price offer that includes a contingency on the sale of the buyer’s home. For this reason, it is best to use an experienced real estate agent who can formulate an offer that not only includes all of your needs and wishes, but is also appealing to the seller.

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How is the listing price of a home decided on?

A new listing should be priced according to the current housing market. A real estate agent will perform a comparative market analysis (CMA) on your home, which estimates the value of your home based on recent sales of similar home your area. Using the CMA and their market experience, the real estate agent will price your home accordingly. Don’t hesitate to ask your real estate agent how they came to the listing price of your home and for examples of the homes they used as comparison in the area.

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Is there a secret to good negotiating?

One of the best assets to have during the negotiation of a home is a real estate agent. There are many factors to consider when negotiating the price of a home – the listing price, added contingencies, the proposed closing date, asking for seller assists, as well as the motivation of the seller and buyers, are just a few examples. A real estate agent uses their education and experience to formulate not only the best offer for their client, but also an offer that will attract the other party.

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What is a contingency?

A contingency is a stipulation added to a real estate contract that would make the contract null or void if the condition were or were not to occur. The addition of contingencies to an offer ensures that the buyer (or seller) is protected during the purchase process. A buyer or seller is able to add any contingency to their offer, but it must be agreed upon by the other party. Examples of common contingencies added to contracts are: financing, inspection, appraisal, and the sale of the buyer’s current home or property.

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What is the best time to sell your house?

Unfortunately, there is not a set “best time to sell”. The market does go through points of high demand (known as a seller’s market) as well as low demand (buyer’s market) which can affect the pricing of one’s home. In addition, the spring months are often thought of as the busiest time for the real estate market. But, in most cases, the decision to sell your home (or buy a home) is usually the result of outside factors such as a job transfer, marriage, birth of children, divorce, job loss, etc…and cannot be timed according to the real estate market.

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What is the difference between market value and appraised value?

The market value of a home is the estimated price at which the home would currently sell. To obtain the market value of a home, agents will perform a Comparative Market Analysis (CMA) which will estimate the value of the home based on recent sales of similar homes in the area. The appraised value of a home is the worth a professional appraiser estimated for the home. Lenders often require an appraisal prior to closing to ensure the home’s value is not less than the loan amount.

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