As pubished in the Savannah Morning News - 4 November 2012
Negotiating an Offer on the Sale of Your Home
We have an offer, but don’t break out the champagne yet! We are beginning a dance that will last until closing. Negotiating starts now, and includes a series of moves, or posturing by both parties where knowledge, skill and experience are crucial. This is when you are thankful you have chosen a seasoned Realtor® to represent you.
The first thing you have to know is who is representing whom. Do you have a signed agreement with your listing agent so they are representing you and only you? Does the buyer in the transaction have their own representation? Is your agent acting as a Dual Agent and negotiating for both buyer and seller? This is what we call “agency”, and all parties should know the answer.
Agency is often misunderstood by buyers and sellers, and I will dedicate an article solely to this subject. In the Georgia Association of Realtors Purchase and Sale Agreement, there is a section called “Agency and Brokerage” that lets you know if the agent working with the buyer, also known as the Selling Broker, is actually representing the buyer. If the agent has a signed Exclusive Buyer Brokerage Agreement with the buyer, the Purchase and Sale Agreement will let you know they are working for the buyer as a Buyer’s Agent.
When you are presented an offer through a Buyer’s Agent, beware. A Buyer’s Agent is obligated to tell the buyer anything that he or she learns about you, your property, your reason for moving, or anything they can find out in order to formulate an offer to their advantage. If you are divorcing, had a death in the family, an illness or some major crisis, you may need to sell. Needing to sell makes you a motivated seller, which gives the buyer a ray of hope that they can buy your property under the market value. Buyers are always looking for “motivation”, so the less you say, the better. Whenever possible, it’s best to keep your personal information personal.
The first agreement you and the buyer must reach is the sale price of your property under the terms that are acceptable to both parties. Next, most often there are property inspections, the appraisal, and loan approval (if not an all cash offer), all which can be openers for renegotiation. Even cash buyers are paying for appraisals and making their offer “subject to the appraisal”. This is so they do not over-pay for a property in today’s market.
In order to give your agent a strong negotiating position, you as the seller should be removed from the picture. That means let your agent do the talking and all communication should be through your agent. Don’t talk directly to the Buyer’s Agent or the buyer. When Realtors® are posturing, stay in the background and let them do what they know how to do. Sellers can actually un-sell a property, or cause the buyer to ask for more.
Danger zones for sellers: during inspections and the appraisal, say NOTHING. Realtors® know the triggers for red flags, and we are there to guide you through the maze until closing. Don’t feel you have to chat with the inspectors, follow them around and be their friend. They are hired by the buyer, so only if asked, be available to show them where equipment or breaker boxes are located.
Your agent should be present during inspections, so they are made aware of any issues with the property. They can then show the parties what needs to be repaired and begin negotiating who will pay for the cure.
Negotiating is a give and take dance, where if done well, everyone walks away feeling like a winner. It’s a long way to closing, with hills and valleys in between. Be patient, be cautious and keep your eye on the end goal.
Next week I’ll talk about the inspections and what your agent can do and cannot do with respect to the appraisal process. Stay tuned!