Showing and Negotiations

Here are helpful hints on Showing your home and Negotiating an offer.



SHOWING YOUR HOME

Once the phone starts ringing, you should be fully prepared.  As a side note, make sure your phone is always answered when you are trying to sell your home.  Answering services and machines are inexpensive and are necessary. The message on a machine can be as simple as, “ You have reached 555-5555.  I’m sorry we’re not available to take your call.  If you are calling about the house for sale, please leave your name and number and we will call you back. Thank you.”

When buyers ask to see the home, make sure you get their name and phone number.  If some emergency should arise that would prohibit you from keeping the appointment, be courteous and call them.  This also allows you to keep a list of people who have toured the home and a way to contact them.  While you have them on the phone, find out how they knew your house was available and ask them a few questions.  Practice asking these questions beforehand.  Find out if they are local or from out of town, do they have a home to sell before they can buy a new one and have they pre-qualified with a lender.   Finally, be prepared for the ultimate question from a buyer, “Why are you moving?”  Chances are you are moving for the same reasons they are moving.  You have outgrown the house, the house is too big since the children grew up, the drive to work is too far, etc.  Your response to the question should simply be, that your needs have changed.

Assuming your home is in a “state of readiness,” you can begin to set appointments and show your home.  Make sure you set the right atmosphere for the showing; calm and relaxed.  Some home sellers will bake bread or cookies while buyers are viewing the home because the aroma is warm and comforting.  Fresh flowers, if possible, are a nice touch.  The house should be well-lit, no dark halls or rooms.  Children, when possible should go to a friend's house, or visit a neighbor.  If children are in their room watching television, your buyer may feel intrusive and that is not what you want.   Pets should be confined and for the most part, out of sight because they can be distracting.

Many sellers will let buyers simply roam the house, but most prefer a guided tour.  This provides the seller an opportunity to point out the many qualities of the home.  Try to remember what first attracted you to this house and convey this to your prospects.  Talk about what has been updated or recently replaced and emphasize how well you have maintained the home.  Discuss the advantages of the location, the neighborhood, close proximity to schools, churches, parks and shopping.  You want your prospect to envision living in the home so be positive in all your comments.

Hopefully, you will hear back from buyers who have toured your home but don’t be discouraged if you do not hear from them.  You may want to wait a couple of days and give them a call.  Simply ask if they have decided on a home yet and if not, is yours one they are considering.  This gives the buyer the opportunity to tell you why your home will or will not work for them.

More information can be found at:

http://homebuying.about.com/od/sellingahouse/qt/ShowingHome.htm




NEGOTIATING AN OFFER

A deal is successful when both the seller and the buyer are happy with the terms.  The negotiation process should be friendly and non-confrontational.  After all, you are both winners... the buyer is getting a new home and you, the seller, are able to move on.

The presentation of an offer (contract) can be handled several ways.  It is preferable that you contact a real estate attorney to help you review, prepare and negotiate the offer.  Many real estate attorneys will assist you with this task at no additional cost if they are the attorney used for the closing. You, and the buyer, can meet and discuss the offer face-to-face before it is in writing.  Simply discuss each of your needs and come to an understanding.  Then, contact a real estate attorney to prepare the contract based on what you and the buyer have discussed.  If an offer has been prepared and presented to you, you can either review it alone and make the decision, or contact a real estate attorney to assist.  If your prospective buyer is working with a real estate agent and you have agreed in advance to pay a commission, the agent will present the offer and you will negotiate with the buyer’s agent.  If your prospective purchaser is working with a buyer’s agent or an attorney, keep in mind they are working for the buyer, not you.  Best advice; hire a real estate attorney to handle the negotiations on your behalf.

Once an offer is presented, you can:

1.  Accept the offer as is, sign it and it becomes a binding contract.

2.  Counter-offer back to the buyer by making changes in the offer and initialing the changes.  The buyer has the option of walking away if the changes are unacceptable but negotiations have been re-opened.

3.  Decline the offer – this should not be an option.  You should at least make a counter-offer.

Many issues can arise during the negotiation process.   Here are a few that you should understand and be prepared to handle.  It is best to consult with a real estate attorney but ultimately, the decision is yours.

Buyer offers a low price
If the offer is low or not within the range at all, counter offer a little below your asking price.  Be prepared to go through several counter offers.  You may ask the buyer how they arrived at their offer.  It is possible that the buyer may have done more research than you and has good evidence that your price is too high.  If this happens, you will eventually have to drop your price, no matter who buys the property.  If the buyer tells you this is all they can afford, then very likely they are not qualified to buy your home and don't spend a lot of your time negotiating.

Buyer has a house to sell before they can buy yours
Accepting this contingency has many pitfalls and if possible you should try to avoid accepting an offer with this contingency.  The buyer could take out a bridge loan which will allow them to carry both houses at the same time.  If this is done, you might want to extend the closing date on your house to give them additional time to sell their house. If it seems reasonable to you that their house will sell and these buyers seem like good prospects, you might consider accepting the offer, but include a kick out clause.  This means that you will continue to market your house, and if you get another offer, the first buyers will have a specific amount of time to prove they can perform on their contract.  If the buyer cannot fulfill the terms of the contract, the seller can return the earnest money and back out of the original contract. The seller is now free to negotiate with a new buyer. We recommend that you hire a real estate attorney to assist you in these types of situations.

Buyer wants to do a lease-purchase, also known as a lease-option
This means the buyer wants to rent the property for a period of time and then purchase it during or at the end of the rental period, which is when you get your money.  A lease purchase is often used to sell less desirable properties or to sell properties in a slow market. If a buyer has a house to sell and can not qualify for a bridge loan, a lease-purchase can be a good solution.  Do not attempt this transaction on your own, hire a real estate contract attorney to prepare the forms and manage the closing.

The offer is contingent upon the buyer obtaining financing
This is very standard, most people do not pay for a house with cash.  But there are certain elements that sellers should avoid.  Generally, you should not enter into a contract that is contingent on the buyer receiving a certain interest rate and points.  Let the buyer know that it is fine for them to shop around to get the best mortgage terms, but the contract must say they will take "market" terms.  This means the buyer can not get out of your contract just because interest rates go up, unless they no longer qualify for the loan.

Buyer has too many personal property items in the contract
If it is not nailed, fastened or attached to the house, it is not included in the sale unless the buyer has made special provisions for it in the contract.  Buyers and sellers must be careful because if there are too many valuable personal items in the contract, the mortgage lender may deduct the value of these items for the purpose of the mortgage.

Sale is contingent on the house passing inspection
A home inspection is not an appraisal and it is common practice to see this contingency in contracts.  The purpose of the home inspection is to disclose the condition of the property to the buyer.  In many states, disclosure by the seller, is required by law.  Sellers may opt to have an inspection before the home goes on the market.  This conveys to the buyer that you are selling a structurally and mechanically sound house.  Regardless, a prudent buyer will require an inspection and you should expect it.

More information can be found at:

http://homebuying.about.com/od/sellingahouse/qt/0307FSBONegot.htm