Selling your property
7. Negotiate with a buyer
Learn how to negotiate with a buyer or with his agent
When a buyer is interested, it’s better to get a verbal agreement before drawing up a formal offer. Here is how to proceed:
- Control your emotions
- Be prepared
- Give the buyer a copy of your seller’s declaration form
- Avoid making counter-offers and negotiating subsequent offersfrom the same buyer
- Reject conditional offers contingent on the sale of a buyer’s current property
- Try to get several offers at the same time
- Accept the best offer you can get
1. Control your emotions
Although it’s normal to get emotional over the sale of one’s home, you still need to be polite and courteous. Getting upset or behaving inappropriately is counter-productive.
Remember the rule golden rule that every seller must always respect: Both parties must be satisfied in order to finalize the sale. Your goal is to find the middle ground where everyone is happy. It should be a win-win situation.
If a buyer cannot accept your conditions, or if you think you can get a better offer from another buyer, end the negotiation. Once again, be polite and courteous.
2. Be prepared
A successful negotiation is one that has been carefully planned.
Before negotiating, make sure you know what you are prepared and not prepared to accept:
- What can and cannot be negotiated?
- What is your desired price?
- What is your bottom line – the lowest price you’re willing to accept?
- How much time do you need before the buyer takes possession?
You don’t need to reveal your game plan to buyers, but you must play your cards well.
Study the market. Print copies of listings similar to yours. Compare the advantages, disadvantages, dimensions, inclusions, exclusions and conditions.
If your home is more expensive, make sure you have reasons that justify the price: new windows, new roof, renovations, location, etc.
Also consult Eureka House’s sample offer to purchase.
3. Give the buyer a copy of your seller’s declaration form
The seller’s declaration formis a document which officially informs potential buyers of any problems with your property, past or present.
To complete this form, use Eureka.House’s sample seller’s declaration form
On this form, you’ll find questions like:
- To your knowledge, has there ever beenwater infiltration in your basement?
- In what year was the heating system installed?
- Have you ever had an ant problem?
It is mandatory to complete the seller’s declaration form, so make sure you provide exact and complete information. Here’s why:
- Some sellers are tempted to “fudge” a detail or two. Don’t do this. Making false declarations is fraud. You could be held liable, taken to court and even have to compensate the buyer.
- Sellers are always responsible for hidden defects, whether they’re selling their property themselves or through a real-estate agent. Otherwise, they may be held accountable for reimbursing the buyer for any necessary repairs. However, if you specify the problem on your seller’s declaration, then the defect is no longer hidden, and you are no longer responsible. For more information, consult our section on hidden defects and selling without legal warranty.
Before negotiating with interested buyers, give them a copy of your seller’s declaration form. You don’t want to go through the entire negotiation process only to have to start over because you didn’t provide the buyer with this form.
4. Avoid making counter-offers and negotiating subsequent offers from the same buyer
Most real-estate agents ask their clients to make a formal offer even before negotiating. If this offer is accepted, the sale is concluded. If it’s refused, the seller can make a counter-offer.
Counter-offers can be a headache: Going back and forth between seller’s agent and buyer’s agent, then seller’s agent and seller and the other way around for an answer. There’s a much simpler way to negotiate.
Negotiate directly with buyers or their agents, either in person, by phone or by email. Discuss the details the buyer wants to include in the offer. If either party disagrees on something, it’s much easier to resolve the issue verbally before drafting an offer.
Your goal is to get an offer you are comfortable with from the outset.
Here are some points to discuss in the negotiation:
- The price
- Inclusions and exclusions
- Date and time of sale and occupancy
- Absence of warranty against hidden defects
- Deadlines for each condition
Here are some standard conditions to be met:
- Obtaining a mortgage
- Inspector’s report
- Undivided co-property documents
- Feasibility of modifications
You should never accept a verbal offerwhile negotiating. You can say, “That sounds good, but I will confirm it during the formal written offerto purchase”. The reason for this is to avoid misunderstandings. You might only notice something that doesn’t sit well with you at the last minute. You might also get a better offer after giving your word. Don’t get stuck in a situation where you can’t change your mind.
5. Reject conditional offers contingent on the sale of a buyer’s current property
Some buyers will make a conditional offer contingent on the sale of their current property. In this situation, if a buyer is unable to sell his/her property within 30 days, or by deadline, the buyer can cancel the offer on your home.
Eureka.House strongly recommends that you don’t accept this condition. Here’s why:
- You have to wait for the buyer, and you’ll have wasted your time if the buyer doesn’t sell.
- While you wait for the buyer to sell, other buyers might want to buy your home for a better price and conditions.
What should you tell buyers who want to make a conditional offer on the sale of their home? Tell them to come back when they’ve sold their property. In the meantime, continue to look for buyers.
6. Try to get several offers at the same time
If you are satisfied with the buyer’s conditions, request a formal offer. This offer is usually valid for a short period, normally within 48 hours. If you don’t give an answer by the deadline, the offer is cancelled.
If several buyers are interested, this puts you in a bargaining position. Make them compete with each other. Tell each buyer, “I want to sell my home to you because I prefer your occupancy date, but another buyer offered me $5,000 more…so how can we reachan agreement?”
Two tips to get more than one offer at the same time:
However, you must act fast! You don’t want your first offer to expire while negotiating the second. If needed, request a deadline extension. You can explain by saying “I cannot look at your offer before Monday, so I need until Wednesday to give you an answer.”
7. Accept the best offer you can get
The offer to purchase (or Promise to purchase in Quebec) is a legal contract. If you accept it, the buyer is obliged to buy your home as soon as all conditions have been met (ex.: satisfactory inspection), and then you are obliged to sell it to said buyer.
When you receive a formal offer, you have three choices:
- Accept the offer
Once you’ve accepted an offer, it becomes a contract that legally binds you to the buyer. If conditions of the offer are met, you are obliged to sell your home and the buyer is obliged to buy it.
- Refuse the offer
When an offer is reasonable, but not all the conditions have been met, you could walk away from the offer. However, Eureka.House coaches suggest you contact the buyer directly andverbally sort out the remaining details. Ideally, you’ll write up a second offer for purchase together, and both of you will sign it on the spot.
- Do not respond and let the deadline pass
This is the same as refusing an offer.
Remember: Always be on your best behaviour during negotiations, no matter the outcome.
Don’t forget to consult the page What should be negotiated .
Also see Eureka.House’s sample offer to purchase
Your next step : Participate in the inspection and meet the conditions of sale.