When selling a house, negotiating effectively with buyers is essential to ensure you get the best price and terms.
Fortunately, when you have a listing agent, you don’t have to do the negotiating yourself. Realtors already know how to negotiate a home sale, and they’ll be the ones communicating directly with buyers and their agents.
Instead of worrying about negotiations, you just need to communicate with your realtor about your goals. These may include selling for a certain price or moving out by a specific date. The more your realtor knows about your goals, the more effectively they can negotiate on your behalf.
We’ll look at what’s up for negotiation when you sell a house and some effective strategies you and your agent can use to negotiate a better deal.
🤔 What's negotiable in a home sale?
Pretty much everything in the contract is up for negotiation, including but not limited to:
- Sale price
- Closing date
- Seller concessions (i.e., whether the seller will cover certain costs):
- Buyer's agent fee
- Buyer's closing costs (e.g., appraisal fees, loan origination fees, title insurance)
- Home warranty
- Repair costs
- Home inspection contingency
- Home appraisal contingency
- Amount of earnest money
- Interest rate buydown
- What items will be left on the property (e.g., appliances, a hot tub)
- Home cleaning
Strategies to negotiate a home sale
1. Work with an experienced real estate agent
An experienced listing agent knows how to effectively negotiate with buyers. Realtors who have knowledge of the local market and what buyers are looking for can suggest specific strategies, such as offering concessions, that can entice buyers to close quickly and for a higher price.
Realtors also have the advantage of not being as emotionally invested in the outcome of the deal as you may be. Since selling a home can be emotionally fraught at times, it’s important to have someone who’s able to negotiate with buyers without letting emotions cloud their judgment.
When looking for a real estate agent, be sure to ask agents about their experience, including how many deals they’ve closed in the past year and how familiar they are with the local market. We suggest comparing multiple agents so you can find the best fit for your transaction.
2. List the home at the right price
It’s important to set the right listing price from the start. If you overprice your home, it could sit on the market for months. But if you underprice it, you’ll have a harder time negotiating up to the sale price you want.
Getting the price right is another skill that an experienced real estate agent brings to the table. When you meet with your realtor, they’ll conduct a comparative market analysis (CMA) of how much similar homes are selling for in your area. With a CMA and your realtor’s local market expertise, you’ll land on a listing price that can put you in a strong negotiating position.
3. Stand by what your home is worth
A CMA not only helps you price your home accurately, but it can also be a powerful tool when negotiating with buyer's agents. If you know what a home is worth, you’ll be less likely to give in to lowball offers.
If you do get an offer that is well below what you believe your home is worth, then you can share the CMA with the prospective buyer to back up your position. A CMA will show the buyer and buyer’s agent that your listing price is based on data rather than your opinion.
4. Be upfront about interest from other buyers
You should let buyers know if your house has been generating lots of interest among other buyers. If buyers know that they may be in a race to make an offer against others, it creates a sense of urgency.
That sense of urgency not only encourages buyers to submit offers faster, it can also reinforce your negotiating position. When you’re fielding multiple offers, you have fewer reasons to lower your asking price or acquiesce to buyer demands. Similarly, when buyers know there is competition for your property, they’re less likely to make demands for fear of losing out on the deal.
5. Wait before responding to offers
In some markets, it can be advantageous to wait before responding to an offer. Waiting to respond sends a signal to the buyer that their offer may not be enticing enough or that there are other, potentially better, offers. If buyers feel their initial offer wasn’t strong, they often won't push as hard in negotiations.
That said, this strategy won’t work in every market or for every property. If you live in an area with plenty of homes for sale and not enough buyers, then waiting to respond to an offer could backfire. Similarly, if you're selling a home as is, waiting before responding to offers can be risky. Buyers may simply withdraw their offer or find a property they like better while they’re waiting for your response.
6. Know your local market
Knowing your local market will give you a lot of leverage when negotiating with potential buyers. Local market knowledge goes beyond simply knowing what similar homes are selling for. It also includes details like what contingencies were included, how much money was paid toward closing costs, and how long homes took to sell.
For example, if you know that homes are taking seven days to sell on average and no money is being contributed to concessions, you can tell the buyer this information to hopefully get them to agree to a faster deal with few concessions.
Again, a real estate agent is your best source of information about the local market. Your agent will know what contingencies buyers typically request and how long homes stay on the market. That information can be used to more effectively negotiate a favorable deal for you.
7. Offer to pay closing costs
In some situations, you may be better off financially by agreeing to cover the closing costs for the buyer. These closing costs are about 1–3% of the final sale price — not a huge percentage of the total cost of buying a home, but an amount that may be too high for buyers to cover upfront.
When buyers struggle to cover closing costs, they may still be able to qualify for a slightly larger mortgage. So by offering to cover buyer closing costs yourself, buyers may be willing to offer you a better sale price overall as long as their mortgage lender approves it. In that case, you could come out ahead in terms of how much you’ll make on your sale overall.
Many sellers also offer to cover the buyer's agent commission. The average real estate commission for buyer's agents is 2–3%, which can be a significant expense. If you cover the buyer’s agent commission as part of the closing costs, be sure to underscore this point during negotiations with buyers.
Logistics of negotiating a home sale
When you and the buyer each have an agent, here's how negotiations generally unfold:
- The buyer submits an offer through their buyer's agent. The buyer's agent contacts the listing agent to let them know the offer is coming and sends it via email. Usually the offer has an expiration date.
- The listing agent reads through the offer and talks through it with you, typically over the phone.
- You can accept, reject, or counter the offer, or you can choose not to respond.
- If you decide to counter, you and your agent talk through all the terms you want to counter. Then your agent writes the desired changes (e.g., higher sale price, different closing date) into the buyer's offer and sends it back to the buyer's agent as a counteroffer. The counteroffer can also have an expiration date.
- This process goes back and forth until you accept or reject the offer or the buyer backs out.
- If you accept the offer, you and the buyer will sign the purchase agreement. Your agent will help you open an escrow account and run a title report. The buyer or their lender will likely schedule a home inspection and appraisal. Finally, your realtor will assist you with completing the paperwork.
- If you reject the offer, your realtor will let the buyer know. You can reject an offer for a wide variety of reasons, including because the offer is too low, you're concerned about the buyer’s ability to get a mortgage, or you no longer wish to sell. However, be aware that the Fair Housing Act (FHA) prohibits rejecting an offer based on the buyer’s race, sex, color, national origin, or familial status.[1]
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FAQ
How do you negotiate the house price when selling?
You can negotiate the house price by countering any offer you receive with a higher price. You can offer certain items, such as seller concessions, to entice buyers to agree to a higher sale price. Make sure to choose a realtor with a track record of negotiating successfully to help you get the sale price you’re after.
How do you negotiate a contingency on the sale of a home?
There are several real estate contingencies you can offer when negotiating the sale of your home, such as home inspection and home appraisal contingencies. Your realtor can suggest ways to use contingencies to encourage buyers to agree to an offer that is in your best interests.
Can you accept a higher offer on a home after you've already accepted another offer?
You usually can't cancel an offer if you’ve already signed a contract with the buyer. However, check your contract for contingencies that may give you room to back out, such as if the buyer can’t secure financing within a certain time limit. To avoid agreeing to a lowball offer, you should know the fair market value of your home prior to listing.
