Here’s the dream:
Your offer is perfect, you don’t need to negotiate, and you can spend the next few weeks addressing more pressing home-ownership questions, like “Why is it called wainscoting?” and “Do I want a new couch in blush or emerald green?”
And it could happen. Many sellers accept the best offer they receive, and for a variety of reasons.
But sellers are also known to reject offers for a variety of reasons. Or make counteroffers. This is especially likely if you bid low, or when you’re up against multiple competing offers. This is where negotiating skills on the part of you and your agent come into play
Here are eight rules every buyer should know before they — and their agent — start negotiating:
1. Act Fast — Like, Now
When you receive a counteroffer, you should respond quickly — ideally within 24 hours. The longer you wait, the more space you leave for another buyer to swoop in and nab the property. Also, if a seller senses hesitation, they may decide to withdraw their counteroffer before you even have a chance to respond.
2. Raise Your Price (Within Reason)
While you obviously don’t want to overpay for a house, you may have to up the ante — especially if you initially made a lowball offer. Lean on your agent’s expertise to determine how much money you should add to the sales price to make it more enticing to the seller.
Then, through their powers of persuasion, your agent can make the counteroffer look even more attractive by pointing out similarly priced “comps” — recently sold homes in your area that are comparable in terms of square footage and features.
3. Increase Your Earnest Money Deposit
Increasing your earnest money deposit (EMD) — the sum of money you put down to prove to the seller you’re serious (i.e., “earnest”) about buying the house — is another way to show the seller you have more skin in the game. A standard EMD is typically 1% to 3% of the sales price of the home. Making a counteroffer with a 3% to 4% deposit could be what you need to persuade the seller to side with you.
4. Demonstrate Patience About Taking Possession
Depending on the seller’s timetable, changing your proposed possession date — the date you take over the property — could butter them up, too. If the seller wants to stay in the home for a few days after closing, try offering a later possession date. You could also draw up a “rent-back” agreement, meaning the seller pays you rent for staying in the home for a set period of time after the closing date.
5. Let Go of a Few Contingencies — With Care
Want to give your counteroffer an even bigger boost? Reduce the number of contingencies you’re asking for. It’s your way of saying, “Hey, look, I have fewer ways to back out,” which gives the seller more reassurance that the deal will close.
6. Ask for Fewer Concessions
At a mortgage settlement, home buyers have to pay closing costs for taxes, lender’s fees, and title company fees. Closing costs vary by location, but you can expect to shell out between 3% and 4% of the home’s sales price. The seller pays an additional 1% to 3%.
When making an initial offer, you have the option to ask the seller for concessions — a settlement paid in cash to help you offset your share of the closing costs.
Concessions effectively lower the seller’s net proceeds from the sale. Making a counteroffer that removes the concessions you would have otherwise received at settlement puts cash back in the seller’s pocket — and can improve your bid.
7. Pick Up the Cost of the Home Warranty
Sometimes sellers offer prospective buyers a home warranty. This is a plan that covers the cost of repairing major home appliances and systems, like the air conditioner or hot water heater, if they break down within a certain period (typically a year after closing).
A basic home warranty costs about $300 to $600 a year, according to Angie’s List. If it seems like waiving the home warranty can sweeten negotiations, but you still want the peace of mind of having one, tell the seller they don’t need to cover it — then buy it yourself.
8. Know When to Walk
When negotiating with a seller, trust your gut — and your agent. If he or she says a deal is bad for you: Listen.
And if you don’t want to make any more trade-offs — and the seller won’t budge — it’s smart to walk. That can be a tough decision to make, and rightfully so. Negotiating is tough. It’s draining.
And losing something you’ve worked hard to get can be disappointing. But don’t worry. There’s a better deal for you out there.