Negotiation to Close
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The beginning the discussion:
When you find a buyer willing to make an offer on the property you are selling,
you get the only feedback that any seller is looking for, an offer. I know that often in our industry, professionals use the words “contract” and “offer” interchangeably. In reality, that is a dangerous thing to do. An offer really isn’t a contract at all. An offer is, in fact, the beginning of a conversation.
When a buyer brings you a written “offer”, the document has little if any power, other than to make you aware of the buyer’s starting point. It isn’t until both you, as the seller(s), and the buyer, have signed an initialled your agreement of all terms and all parties are in receipt of the final document that the offer should really be called a contract. This process is referred to as “ratification”. Now, I’m not trying to give a legal opinion on what is ratified and what is not. I am neither licensed, nor qualified, to do so. What I am trying to point out is that the offer is not binding on anyone.
Negotiating the contract:
Any changes made to an offer is a complete rejection of the initial offer and a completely new offer is then made to the other party by the editing party. The reason that is important is, often when you talk to an agent or broker, they will tell you there are three possible responses to any offer: acceptance, rejection, or counter. In fact, there are only two: acceptance or rejection. The idea that a “counter-offer” is a legitimate third response is based on the presupposition that an interested party will remain engaged in the conversation. Most of the time that is true, but this shouldn’t be taken for granted. The question that any seller considering a counter-offer should ask themselves in a negotiation is,
“Am I willing to let the buyer walk away unless they agree to what I am asking for here?” If the answer is, “Yes”, make the counter. If its is, “No”, then don’t.
Things to be considered in the process would be:
- How long did it take to get this offer?
- Are there anymore likely buyers that have recently seen the property?
- Is it likely that another buyer would ask for the things that I am countering?
Pick your battles. Most of the time, “net proceeds to you” is the only thing that would justify taking a hard stand. While you may love chandelier over the dinning room table, or your custom window treatments, unless its a priceless family heirloom, they are probably not worth causing the contract to fall-through over.
The key here is that the one who is least emotionally attached to the property, usually wins in the financial transaction.
Deed and Keys for the cash:
The period following the negotiation is called the “executory period”, and is the portion of the transaction where, as one might suspect, the contract contingencies are “executed”. Those contingencies, or conditions of sale, must be systematically removed to the satisfaction of the benefiting party, in most cases.
A seasoned professional usually earns her/his salt during the contract negotiation and executory period. This is where experience and education can quite literally save your thousands of dollars. By comparison, that friend or family member, who just got their real estate license but, used them because, “you just wanted to do a favor for”, and so you let them represent you, can cost you just as much!
Everyone was new once. New agents are full of energy and that can give you a real advantage. Just make sure they are partnering with a seasoned professional who is truly engaged in the transaction and is being compensated for success, before you work with a person that has less than 50 deals under their belt. With the national average agent completing less than nine transaction sides each year, even a 3-5 year veteran may not really be ready to face the fire alone. Don’t get me wrong, I love confident people, I just have some concerns about those who are overly confident with other people’s money.
In short, if you follow the advice outlined in the processes in our drop-down menu, “Getting Started As A Seller”, above, you will be much better off as you identify the right agent, with the right plan, and the right level of experience to navigate you home selling experience. If for any reason you run into a problem that is not adequately answered here, please call and ask for me personally at the number listed above. I will be happy to help you in anyway that I can.