Real Estate Negotiation: 11 Items You Can Negotiate In Your Contract
So, you’ve offered on a piece of real estate. What happens next, however, is somewhat out of your control. Enter: Real Estate Negotiations.
You wait for a response. A seller could respond to your offer in three different ways:
1. Accept it
2. Reject (or ignore!) it
3. Make a counteroffer
If they accept it, great! If they reject it, that’s OK; there is always another deal, or you could re-offer again. However, when a seller submits a counteroffer, that’s when the real fun begins.
A counteroffer (often just called a “counter”) is a response to another, earlier offer. In other words, if you offered $100,000 on a property, and the seller says, “No, I want $110,000,” that response from the seller is the counteroffer.
A counteroffer can be a good thing. It means the seller wants to sell to you and is willing to find common ground where both parties can get what they want. The negotiation process is where the two sides try to make that happen. Remember, both parties want the exact same thing: a sale.
11 Items You Can Negotiate in a Real Estate Deal
Many people see the word “negotiation” and envision one party winning and the other losing. However, in a good negotiation, both parties walk away feeling like they achieved pretty much, if not exactly, what they wanted. When there is no negotiation, that’s when one of the parties tends to feel they got shafted! So remember: a little back-and-forth is a good thing.
Keep in mind, this is not about negotiating just on the price. In fact, there are multiple parts of the contract that can be negotiated. For example, you could negotiate for any or all of the following:
1. Price How much are you actually going to pay for the property?
2. Closing Date When will you close? Next week? Next month?
3. Closing Location Where is the closing going to take place? Your title company? Theirs? An attorney’s office?
4. Contingencies What contingencies could be removed from the P&S agreement?
5. Financing Will the seller agree to carry a second mortgage on the property?
6. Closing Costs Who will pay for what during the closing process?
7. Home Warranty A home warranty is sometimes included in the sale of a home and covers certain repair items after the sale happens. This can help smooth any concerns on the part of the buyer. Will your deal include one? If so, who will pay for it?
8. Repairs What do you need the seller to fix before you purchase the property? Will you hold them to it? Will you buy the property “as is”?
9. Credits What about getting credits at closing toward certain repairs that are needed? If a new roof is needed, and the seller doesn’t want to put one on before closing, could you negotiate the cost of a new roof given to you at closing?
10. Possession Date When will you actually take control of the property? While it’s most common to transfer possession immediately after the title has been transferred, this is negotiable. Maybe the seller needs a few more weeks. Maybe you want to get in early. It’s all negotiable.
11. Items Left at The Property What is the seller required to leave at the property? Appliances? Tools? Furniture? This is all negotiable.
Again, these are all elements you can negotiate, either offering or asking for a concession. Perhaps the seller is firm on the price, but you can get more repairs done on the property before closing. Or perhaps they don’t want to do anything with the condition or the price, but the seller is willing to carry a contract on the property (seller financing) for a short period while you fix it up. The possibilities are nearly endless as to what your negotiation can produce, so look at negotiation as a huge opportunity for you to creatively achieve your goals.
FREE DOWNLOAD: The Ultimate Guide to Home Buying
You’re likely working with an Agent (or at least you should be), so you may never sit down across from the seller to engage in some television-worthy negotiation. Instead, the negotiation will take place through a back-and-forth exchange of documents signed by you, given to your agent, sent to their agent, and finally given to the seller. The seller will then either accept, reject, or reply with a counteroffer. Your job, at that point, will be to either accept the counter, reject it, or reply with yet another counteroffer.
RELATED: About Real Estate Negotiations
If you are offering on a property outside the MLS, through a private seller, your negotiations will likely be much more direct. In fact, you might negotiate every point on the hood of your car or sitting at the seller’s kitchen table. The back-and-forth will likely be much less formal, though we absolutely recommend putting as much of the negotiation on paper as possible, even if that just means pulling out a sheet of blank paper and writing down the terms.
What items have you negotiated in a real estate deal? Sound off on the Patrick Parker Realty Facebook Page, on our Twitter or Instagram feeds or on LinkedIn. And don’t forget to subscribe to the monthly Patrick Parker Realty HOME ADVICE eNewsletter for articles, tips and guides like this delivered straight to your inbox.