Negotiating Tips When Representing a Seller

(Including multiple offer & Coming Soon)

Questions to ask the buyer’s agent

1. Is the buyer a first time home buyer? Repeat buyers are more familiar with the process of buying a home and home ownership and are less likely to get cold feet or back out because of inspection issues.

2. How long have you been working with this client? Here you are trying to establish strength of buyer/agent relationship.  Ie Is this a well known client or an internet lead the agent picked up yesterday?

3. Can you explain to me the buyer's motivation to purchase?  Ie they got transferred out here for a job and need to buy in 30 days or they already sold and closed their house and are living with the in-laws.  Knowing the buyer’s motivation level is very important.

4. Has your client backed out of a deal due to inspections in the past 12 months? Again looking to weed out that nervous buyer who thinks they will find a house with no repairs necessary.

5. Does anyone else need to see the property before the buyer can move forward (spouse, parents, contractor)?  If it hasn’t happened to you yet it will.  The buyer brings another party back to the property to look at it and that party talks them out of buying the property.

6. What kind of job does the buyer have...straight W2, self employed or variable pay? The ability to underwrite is much easier on straight W-2 employees and therefore that buyer is more likely to get financing.

7. Will the buyers be asking for closing costs?  This should have been indicated on the offer, but many agents will forget to put it in there.

8. Do the buyers need closing costs or is it a nice to have?  You want to know this information in case the house doesn't appraise and you need to lower the purchase price and will no longer be able to pay their closing costs. 

9. Have you closed a loan with this lender before?  This would be used when you get an offer with a lender that you are not familiar with.  In this scenario you could also ask that the buyer get preapproved with a local lender that we are familiar with (they wouldn't need to move forward with your lender, but you just want the confidence that you lender would approve them as well.)

10. Which home inspector will you be using and have you used that inspector before?  Some home inspectors can put unnecessary fear into the buyers eyes.  Dealing with a home inspector that will point out the issues, but also explain the severity of the issues is helpful. 

11. Is the buyer depending on any grant money to buy the property?  Occasionally buyers are seeking grant money from local towns, governments or non-profits.  If the buyers are unable to obtain the grants the loan could fall through.  It is important to know if the buyer can close on the property without the grant in case the grant falls through as they are typically difficult to obtain.

12. Is there anything else that needs to happen for this buyer to purchase this property? Ie They need to sell another property, they need to confirm their job transfer, they need to secure a grant from the city etc.

**Please note that these are all suggestions.  If you only have 1 offer on the table, with no other interested parties, you may decide to move forward with that offer even if the answers to these questions are less than favorable.  This is why pricing aggressively and having multiple offers can be so beneficial to your seller. 

Questions to ask the Mortgage officer

1. Have you already obtained copies of their last 2 years of tax returns?

2. Have you already obtained pay stubs?

3. Have you already pulled their credit (not asking for credit score just if they have pulled yet)

4. How long will you need for mortgage commitment. Ideally looking for 3 weeks on someone solid and like 4-5 on someone getting gifts, maxing out ratios, crazy job history, etc.  However some places are just longer than others in general, so it might not give an indication of strength.  But I guess if they say 4 weeks, then you could probably say "okay what is your normal underwriting turn time for someone who is like super solid right now?  And if that number varies from the one I gave you then you might be able to tell.  

Example: 

"We will need 4 weeks for commitment on them."  

"ok cool, just so I know where your company is at, what is your average turntime for a buyer who is super solid, like 800 fico 20% down?"  And if they say shorter than 4 weeks, then you might see there's some hair on the deal.

When negotiating multiple offers consider the following to help protect your seller:

1. Tell all Buyers that you are giving all parties 5 or 7 days to do their inspections and then write a stronger offer.  Buyers can back out for any reason with the inspection clause, so when possible we would like our sellers to be accepting offers with the inspection contingency removed.

2. Ask buyers to waive inspections

3. Ask the buyers for non refundable deposits.

4. Ask for increased deposits

5. Add a Per Diem charge for everyday past the expected closing date negotiated into the purchase and sale. Ie $50.00-$100.00

6. Inspection contingency should be a set date, not 10 days from Purchase and Sale as the purchase and sale gets held up too often. 

7. If the buyers are getting FHA or VA financing see if you can get the Buyers to agree to make the repairs themselves since it is their financing that is requiring the fix.   In order to do so you would have to get a Hold Harmless Agreement signed before allowing them on the property to make any repairs. 

8. PLEASE REFER TO THIS ARTICLE (NEGOTIATING TIPS WHEN REPRESENTING BUYER) AND REVIEW THE WAYS TO STRENGTHEN YOUR OFFER SECTION AS IT MAY GIVE YOU MORE IDEAS ON WHAT TO ASK FOR FROM THE BUYER

** When the highest and best period is over, discuss the offers with your seller and don't be afraid to go back to one (or more) of the offers and ask for adjustments. For example if you like most of their offer, but you want them to raise their price to match your highest one or shorten their closing date to match your quickest one etc. 

 When Negotiating a Coming Soon Listing:

 If you are considering acceptin an offer on a coming soon the price should be higher than what you were going to bring it to market for or else you should bring it to market!

Be careful with Offer Acceptance

 Never tell the buyers agent their offer is accepted (even if the seller has verbally accepted) until the seller signs the offer.  The reason being is to avoid a tough situation if another offer comes in between when you tell the buyers agent you have a deal and the time the seller signs.  If an offer comes in during that period you must present it.  If the seller wants to accept this second offer (even though they verbally accepted the first offer) now you have to call agent 1 and tell them your word is no good no deal. This puts you in a very tough position with another agent in our industry as they may not believe you when you explain what happened. 

 So what should you say?  Just tell the first agent that you think your seller will sign this so please send over a clean offer, but explain not to tell their buyer we have a deal until it’s signed.