Unlike most types of shopping, buying or selling a home involves the fine art of negotiating. While there are some metrics and ways to value a home, there is also some room (up or down) to accommodate for buyer or seller discretion. Much of the home’s value is determined by the market conditions and the sale price of similar homes in the area, but buyers and sellers often deal back and forth to reach a number that they both are happy with.
There are several factors that come into play from both parties involved, but understanding the overall offer/counter-offer process can be a big help for when the time comes for you to negotiate your first purchase or sale.
Putting a home on the market
Before the negotiation can take place, we will examine the initial step of putting a home on the market. There are several factors to consider when determining your listing price of the home that include what the purchase price was, age, market analysis, value-added additions, the timeline of expected sale and so on. Experienced real estate agents will be able to make this process much easier with their in-depth knowledge of the market and home valuation.
Keep in mind that what the seller feels they should get for the house has a strong impact on the initial listing price of the home. As industry standard has it, homeowners will list their home for a price that is often higher than what they would ultimately accept.
This happens because price negotiations are part of the home buying and selling process. So, now that you know the basics of what is involved with the listing price of a home, we can talk about the counter offer process and etiquette.
Knowing that sellers list their homes higher than what they will accept on the low end, you as a buyer should always put in an offer lower without being insulting. It can be tricky to determine what a good offer can be, but your real estate agent should be able to help you come up with a fair and smart number.
Offers that are too low will often insult, or make the seller not even entertain your offer with a response. Old industry standards might suggest making an offer that is somewhere between 10-20% below the listing price, but you still might be offering too much for the home.
It is important to gain an understanding of the comparable houses in the market because an owner would jump on an offer that is significantly higher than the market value of the home. Always work with your real estate agent to determine a fair market value of the home and start from there.
Once you’ve submitted your well-thought-out offer, the ball is now in the seller’s court to decide what to do. It may be obvious that the seller can either accept or reply with a real estate counter offer.
The factors that can influence this decision include:
- Seller’s expectations
- Amount of the offer compared to market value
- How long the home has been on the market
- Competing offers
- Inclusions or exclusions from the deal
As a buyer, when you receive a counteroffer, you have the choice to either accept the terms, counter the counteroffer, or withdraw. There is no set limit to how many times this process can go back and forth between the buyer and the seller, and will continue until a price and terms are agreed upon, or the buyer withdraws from the negotiations.
The art of negotiating and real estate counter offer etiquette is very tricky and it’s important to understand the process and the details of the home. With the help of an experienced real estate agent and the team like ours, you can rest assured that you’re going to get a good deal.
We can help make every step of your home buying or selling process as simple and stress-free as possible. When it comes to the real estate market in Phoenix, Scottsdale and Paradise Valley, no one knows it better than my team and I, Jeff Barchi. Let us help you find the home of your dreams today by starting your search at our website.