It finally happened. You received an offer on your home! But is it the right offer? Should you accept it or should you tell the potential buyer to go fly a kite? What is your best strategy? To help answer these questions let's take a look at how experienced negotiators handle a negotiation. First, savvy deal makers establish a decision touchstone as a guide to a successful negotiation. In ancient times, a touchstone was a literal stone, such as jasper or basalt that was often used to test the quality of gold or silver. Likewise, today your decision touchstone can test the quality of a buyer's offer.
To build your own decision touchstone, first identify what housing goals you wish to accomplish as a result of your home sale.
So even when you revisit your decision touchstone, what if you're still left scratching your head? What then? Reject the offer? Not yet. The next step is to ask your self - What if? For instance, a wise seller might ask themselves: What if I don't sell my home to this buyer - what is the next best possible outcome? And the reverse: What if I don't sell my home to this buyer - what is the worst possible outcome? In today's market, real estate offers are a rare commodity and assuming that another one is just around the corner is a dangerous mindset to adopt. Because of this savvy sellers resist the urge assume a strong negotiating position when in reality they are in a very weak position. In addition to these fundamentals, wise sellers often look for five essential elements within the offer itself to help make their decision.
- A substantial earnest money deposit - The larger the deposit a buyer makes, the more serious and committed the buyer is and the better you should feel. On the other hand a small deposit, or worse, a promissory note, may indicate a buyer's unwillingness to fully commit. Decide in advance what you feel is an appropriate earnest money deposit relative to the price of your home. In many markets, this may be 1%-2% of the sale price, but it can also be much, much more.