Negotiate a Good Price on Your First Home
Selling your first home in a buyers' market? You can get the best possible price if you know how to negotiate.
From truly understanding the market to figuring out what moves prospective buyers, it pays to be part detective, part psychologist and completely realistic.
Here are six tips to help you negotiate the best price when you sell your first home.
Understand Your Market
Your home is worth the most someone is willing to pay for it. Or the least.
The best indicators of the price your home could fetch are actual sale prices (not listing prices) of similar homes in the immediate area during the past few months, says Ron Phipps, principal broker with Phipps Realty in Warwick, R.I., and past president of the National Association of Realtors. Nearby sale prices are called comparables, or comps for short.
Comparable homes are roughly the same age and square footage with the same number of bedrooms.
Using an Agent? Choose Carefully, then Listen
"The first time I sold a property, the first broker I spoke with gave me a ridiculously inflated selling price," says Steven Cohen, president of The Negotiation Skills Company. "Consequently, I didn't talk to any other broker."
Later, a more realistic broker sold the home for two-thirds of that initial asking price, he recalls. He learned a lesson: The best agents are worth the money, but choose carefully.
Don't automatically select the agent who promises the highest listing price, Cohen advises. Instead, reach out to professionals who have a reason to know who's good --bankers and lawyers -- for referrals. Talk to at least three agents, and be wary if one proposes an asking price that's "superlow or superhigh," he says.
Once you find someone you trust, listen to the advice you get. Your agent will explain how to maximize home value -- and that's why you hired that person, Cohen says.
Employ Subtle Staging
"Don't overlook staging," says Katie Severance, co-author of "The Complete Idiot's Guide to Selling Your Home." "It's not a new concept, but some people think they don't need it. But staging can get you thousands more."
Staging needn't be obvious or expensive, she says. Ask your agent what you could do to make your home look bigger and better.
There are tricks (think new, spa-quality white towels and accessories) to give that bubble gum-pink bathroom a more neutral appeal without having to renovate.
Staging advice probably will center on clearing out and getting rid of pieces that make rooms appear crowded, Severance says.
Delete the Drama
A potential buyer makes a lowball offer for your home. You respond with a cold refusal, followed by indignant silence. Or maybe a few heated words.
That's not the way to negotiate effectively. This is a business transaction. That means you meet a bid -- any bid -- with a counteroffer.
"Never ignore a lowball offer," Severance says. It's just an invitation to haggle, she says. "Always make a counteroffer. Never end the negotiation." She adds: "Sometimes the buyer will raise the offer significantly if the seller counters."
A volley of offers and counteroffers can go back and forth five or six times, she says.
Give Buyers a Choice
Want to negotiate without seeming to negotiate? Give buyers several options, and let them decide, Phipps says.
For example, say the buyer wants to move in next month, while you desire a leisurely move in a few months. Figure how much your time, inconvenience, storage costs and last-minute moving expenses will cost you, and build that into the price. Then present the buyer with a set of options. Something along the lines of, "We can afford to let the house go for $250,000 if we close in 60 to 75 days, as planned. But if you need it in 30 days, the price will be $257,000."
By giving a buyer options, "You do a better job of making the negotiation reasonable," says Phipps. "It becomes more of a conversation than an arms-length negotiation."
Put a Human Face on It
"Remember, this is not a company merger or acquisition; it's the sale of a family home to another family," Phipps says. "You'll get a better outcome if you negotiate with that in mind."
One example of this style of negotiation: "Send a personal letter with your counteroffer," Phipps recommends. Say something along the lines of, "This is a great house, we've really enjoyed it, and here's why we've really enjoyed it."
Understand your buyers, and remember that money is not the only motivator as you negotiate the best price on your first home.
One seller discovered that a potential buyer was a golf fanatic. So instead of discounting the price of the home, he sweetened the deal by offering to pay the buyer's initiation fee to the country club.
The result: sold. The seller benefited because the initiation fee was less than the price reduction he was contemplating. The buyer loved the idea of buying both a home and membership to the club.
"Figure out what the motivator is," says Phipps. "And remember that price isn't the only thing that matters."