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After receiving your offer, the seller has three options:
- Accept it. If the seller is satisfied with the purchase price and conditions of your offer, you've got a deal. Your offer becomes the basis for a purchase-and-sale agreement between you and the seller, setting the wheels in motion for you to buy the house.
- Make a counteroffer. More likely, the seller will make a counteroffer. In a counteroffer, the seller changes anything in your offer she dislikes or doesn't agree to, including the purchase price, contingencies, concessions you've asked for, conveyances, or the closing date - everything is fair game. But a counteroffer also signals that the seller is open to negotiating (and now the ball's back in your court).
- Reject it. Sometimes, a seller will flat-out say no. This often happens when the seller feels your offer is unrealistically low. A rejection indicates that the seller doesn't want to negotiate.
It's rare for a seller to accept a buyer's initial offer, so be prepared for counteroffers, refusals, demands, and compromises. When you get a counteroffer, it's your turn to look over the suggested price and conditions and decide whether to accept them, reject them, or counter with adjustments of your own. It's very common to go back and forth for several rounds, crossing out numbers and clauses and writing in new ones before you and the seller reach an agreement.
Although you and the seller have plenty to say to each other during negotiations, you probably won't sit down and discuss matters face to face. Negotiations almost always take place through your agents - and that's as it should be. Your agent is an expert negotiator who can explain terms and offer advice, so you have time to mull things over before you respond.
Negotiations can be stressful and frustrating, each side thinking that the other is being unreasonable and pig-headed. To make negotiations go smoothly, stay calm and professional. These tips help:
- Know the kind of market you're in. Different market temperatures call for different strategies. If you're in a hot seller's market, you won't have a lot of wiggle room for concessions and contingencies. But if the market is a cooler buyer's market, the seller's eagerness to close may work to your advantage.
- Put a human face on the negotiations. In most transactions, the buyer's and the seller's agents handle negotiations for you: Your agent presents your offer to the seller's agent, who gives it to the seller. The seller and her agent confer, and then the seller's agent presents the counteroffer to your agent, who discusses it with you. And on it goes. Usually, that's how you want things to work, leaving negotiations to the professionals. In some situations, though, being one step removed from the negotiations may feel too impersonal - the parties trying to agree can see each other as obstacles, not people. If you're comfortable with the idea (and your agent agrees it would help negotiations), meet the seller face to face, sitting down with your respective agents and talking about the purchase. Or write a friendly letter, explaining how much you love the house and the reasoning behind your offer, and ask your agent to deliver it to the seller. You and the seller will see each other as living, breathing human beings, and you may be able to finalize your agreement faster.
- Understand where the seller is coming from. The seller has goals and pressures related to the sale. If you know what these are, you're in a better position to negotiate. For example, a seller who's in a hurry to close might be willing to compromise on price or conveyances if this speeds up the sale. Ask your agent if she knows anything about the seller's situation that might aid you in negotiations.
- Play your cards close to your chest. Knowledge is power, so don't give too much away. For example, if you've been preapproved for a loan that's higher than your offer, you don't want the seller to know that; she might hold out for a higher price. Don't give away any information that the seller can use to her advantage.
- Know your priorities. Identify your must-haves and your deal-breakers. When you know what's important to you, it's easier to compromise on issues that aren't so high on your priority list.
- Ask for something you could live without. You might add a few terms to your initial purchase offer with the intention of using them as bargaining chips. For example, you might request the washer and dryer as conveyances or ask for more money than you're willing to accept toward repairs. If the seller balks, you can agree to drop that request - and insist on something you really want in its place.
- Don't get too emotionally involved. If you care too much about buying this particular house, you put yourself at a disadvantage in negotiations. Seasoned negotiators say the one who wins is the one who has the least to lose, the one who's ready to walk away from the table. So keep a cool head. Ask yourself, "What's the worst that would happen if this purchase falls through?" And keep looking at other houses as you negotiate, as a reminder that you have other options. That way, if things don't work out, you can move forward more easily.
- Don't get too competitive. The goal of negotiation is to arrive at an agreement that's satisfactory to both parties. Don't develop the mindset that you're out to "beat" the seller, or you might find that the seller stops negotiating. You're aiming for a win-win situation, not one where you win and the seller loses.
