Showing and Negotiations

SHOWING

When the phone starts ringing, you should be fully prepared.  As a side note, make sure that your phone is always answered when you’re trying to sell your home.  Answering services and machines are inexpensive and are necessary. The message on a machine should go something like this “ 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”. 

Be prepared for the ultimate question from a buyer “why are you moving?”  Chances are you’re moving for the same reasons they’re moving.  You’ve 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 not be negative.  It should be simply that the house is great but for whatever reason, your needs have changed.

Assuming your home is in a “state of readiness”, you can begin to set appointments and show your home. 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 friends house, or visit a neighbor.  If the children are in their room watching television, then your buyer may feel intrusive and that’s not what you want.  Also if your prospect has children with them, they will feel that they’re invading on another child’s territory.  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 and convey that to your prospects.  Talk about what has been updated or recently replaced, emphasize how well you’ve maintained the home.  Discuss the advantages of the location, the neighborhood, close proximity to schools, churches, parks and shopping, etc.  You want your prospect to envision living in the home and whatever you can say or do to make this happen, you should.

NEGOTIATION

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

The offer

A huge benefit of selling FSBO is that the buyer and seller can negotiate directly. Forget the agent sales where paperwork is flying back and forth nonstop. When two principles are working together, you can negotiate a your deal verbally. Essentially, once you've agreed to a price and closing date, and all parties are happy, you are 95% done. Once you've agreed, then it will be up to the seller to provide the buyer with the necessary and proper sales documents.

A few notes about offers. Should you get a written one from a buyer (or even agent), you have 3 options:

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

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.

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

 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.  Your first response should be to suggest to the buyers that they get a bridge loan or swing loan.  They will need to qualify to carry both houses at the same time.  If they can qualify, you can extend the closing date on your house to give them the time to sell their house.

You might consider taking the offer, but including a "kick-out clause".  A “kick-out clause” means that you continue to market your house, and if you get another offer, the first buyers will have 24-48 hours to prove that they can perform on their contract without selling their current home, or they get "kicked out".  They will get a return of their earnest money deposit.  You are then free to negotiate with the new purchasers. Anytime you accept a contract with a contingency, it should include a time frame for the satisfaction of the contingency, even if you have a “kick-out clause”. 

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.  It is also used in lieu of other contingencies.  If a buyer has a house to sell and can’t qualify for a bridge or swing 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 that the contract must say that that they will take "market" terms.  This means that the buyer can’t 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’s 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 becoming common practice to see this contingency in contracts.  The purpose of the home inspection is to inform a buyer on the condition of the property. As a seller, your seller's disclosure statement is your best friend. The law is very clear, as a seller, you must report all you know is wrong with the property, even if you fixed it!  Smart sellers may opt to have an inspection before the home goes on the market and use this inspection as a part of your disclosure statement. This conveys to the buyer that you are selling a structurally and mechanically sound house.