So you’ve decided to sell your home? Congratulations! The sale of real estate is often the largest transaction(s) people make throughout their lives. Considering this fact, below are some quick steps to make sure you negotiate your sale correctly and come out on top!
4 Negotiation Tips For FSBO’s
1. Stand Firm, low ball offers are coming:
To sell your home yourself you must understand the mindset of your potential buyer. Almost every real estate transaction nowadays is completed on some sort of local state MLS system. Most buyers who are looking for property OFF MLS (FSBO) are often looking for a “deal.” These buyers are under the impression that homes on the MLS are sold at market value (or above) and they attempt to search FSBO listings looking for an opportunity to score a home under market. While selling your home, you will probably receive many aggressive offers from investors and buyers trying to undercut you. Stand your ground and accept only what you know the home is worth.
2. Talk to your buyer’s mortgage lender:
So you’ve received an offer and the price is exactly what you’re looking for! Congrats, but before you accept that offer make sure you contact the buyer’s lender and ask a few questions. How well qualified is the buyer? Do they need to sell another home before they can buy mine? How much money are they putting down and who holds the earnest money deposit? How long will it take to close on their loan? As a seller you should definitely educate yourself on some common mortgage products. Why is that important? Here in the Boston area, we have a large stock of older homes. FHA, Mass Housing and a few other mortgage products can be denied if your home is found to have asbestos, lead paint, peeling paint, or a variety of other common problems found in the Boston area.
3. Be ready to renegotiate after home inspection:
You’ve found the perfect buyer, her lending checks out at the bank, and you’ve accepted her offer. Now your buyer is going to schedule a home inspector to come out and inspect the property. Remember that the inspector is being paid by the buyer and isn’t looking out for your best interest. The inspectors job is to come into your home and inform their client of everything thats wrong or could become a problem on the future. Everything on the inspectors list are items the buyer will then used to renegotiate the price you’ve already agreed to. This is where it gets emotional for most home sellers. You’ve put a ton of work into your home over the years and now these people are tearing into every little thing you think is perfectly fine. You have to keep your cool and consider which are legit repair items and which items are BS. The buyer could walk away (forcing you to put the home back on the market) if you don’t come to an agreement after the inspection.
4. Make sure you understand the home buying/ selling time line:
This is very important! In Massachusetts (Boston area) the typical home sale takes about 45-60 days from the time you and the buyer have an accepted offer. Why does this matter so much? I’ll give you a hypothetical. It’s February 1st and you’ve just accepted a new job out of state which starts on May 1st. You’ve given yourself 3 months to sell your home and move to your new location. You put your home up FSBO immediately and start trying to find a buyer. In the excitement of this life changing event, you’ve failed to execute 3 critical steps. A: You didn’t have your home reviewed by a professional and will probably have a few surprises when the home inspector comes. B: You didn’t consider the time of year and the state of the real estate market in your decision to sell. C: You’ve priced your home without consulting a professional and learning what similar homes are selling for in the area.
Considering these oversights, you put your home on the market and don’t get any serious calls for the 1st 2 weeks. You’ve only had a ton of window shoppers and a couple low ball (verbal) offers. Finally on week 6 you receive a reasonable offer and you accept. 10 days later the buyer is coming back to you with a laundry list of complains and things they want fixed. With only 6 weeks until you start your new job you have some tough decisions to make. You finally accept $20-30k less than what you wanted because you’re running of time. 3 weeks later the buyers are denied by their mortgage lender and inform you they cannot move forward with the transaction. Now what?
This scenario isn’t to scare you, but to make you aware of some of the things that can go wrong during a real estate transaction. Fully understanding the home selling timeline can help you avoid scenarios like the one above. I’ve attached a PDF cheat sheet of the home selling process below. Feel free to take it with you as you go through the home selling journey. Good luck!