Real Estate Negotiation - The Art of Negotiation

Alright, now after successfully tracking a prospective home buyer! You’ve identified a prospective home buyer that is interested in talking further about buying your FSBO house. They want to come back and look at the home more thoroughly and possibly discuss purchase options. In a For Sale by Owner (FSBO) situation it is not uncommon for both parties to negotiate verbally. That said, the formal “offer” will likely come in the form of a written contract. There are several steps that lead up this.

First, invite these buyers back at their convenience. Make sure the house is in perfect condition and immaculate from top to bottom, inside and out. This visit will ultimately influence the prospective home buyer’s decision weather or not to make an offer on your home.

When the buyers arrive, greet them warmly, take their coats and let them go. Prospective home buyers have their own agenda. They may want to take a closer look at closet space or the master ensuite bath. You cannot assume you know what is providing that spark for them. The idea is to answer any questions they may have about the house, but stay out of their way. Offer a pad and paper for them to write down questions as they go through your home. Hopefully, when they are finished looking they will have several. Remember that questions are buying signs. If they aren’t interested enough to ask questions, they likely aren’t interested enough to buy. Answer the questions truthfully. If you don’t have an answer, write it down and promise to get back to them within a reasonable timeframe with an accurate answer. Remember you are always setting the stage for future negotiations. Always be calm, friendly and above all - professional.

At this point it is conceivable that the potential home buyer will indicate that they are interested in the house and ask what you would consider as a reasonable offer. You have to be prepared for this question. The next step is to always ensure that the potential home buyers present their offer in writing. If you have hired a contract lawyer to generate and administrate the contract for you, the attorney should provide you with contract forms to provide to the buyer. If you have not hired a lawyer you will have to at some point. The prospective home buyer could potentially have retained a lawyer or a buyer agent to handle their part of the sale. If that is the case they should assume the responsibility of generating the “Offer to Purchase” agreement. At this point you will have to retain a lawyer to review the “terms and conditions” that form the “Offer to Purchase” agreement. The buyer may want to discuss particulars about the sale prior to putting it to paper. Be sure you are on the same page, again, ensure you are straight-forward and honest. It is advise to come to terms with the buyer and there is nothing wrong with friendly discussion, it can save time and money, as opposed to negotiating through a realtor or lawyer (remember that is normally the end goal with FSBO home sales) but nothing is binding until it is in writing, and signed and accepted by both parties. The best advice is to not negotiate price verbally. If the buyer asks you how low you will go, indicate that you need to see their entire offer before you can consider negotiating a price. Make it very clear that you have priced your home based on fair market value and while everything is negotiable, that price is only one part of the equation, and you will have to see their offer in writing.

Remember always remain calm, friendly and professional. Don’t take negative comments about the house or your price personally. This is critical to negotiating and to ultimately selling your home by owner. Even if the potential home buyer seems to be difficult REMAIN CALM, FRIENDLY AND PROFESSIONAL. For Sale by Owner home sale transactions require a lot of give and take. Do not allow the negotiations to become confrontational.

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