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The Art of Successful Negotiation  Attention FSBO Buyers:


You've just found the FSBO home of your dreams and you are ready to make an offer.  Don't panic.  Remember, the seller wants to sell and you want to buy.  This is a "win-win" situation because you are both avoiding paying hefty real estate commissions.  If you don't think you're good at negotiating, think again.  We all negotiate every day - with our co-workers, our boss, even our kids.  Here are some helpful tips to keep in mind:

  • Avoid confrontation with the seller - cutting the property down in order to defend a "low ball" offer will often irritate the seller
  • Present the offer in person and accompany it with a letter of "pre-approval" for your financing
  • Agree verbally on 2 items: 1) Price and 2) Closing date... then the FSBO seller will prepare the paperwork. Before you sign the paperwork, have an attorney review it first, to make certain it says what you want it to say. If you are buying a property from an agent-listed home, ABSOLUTELY have an attorney review it BEFORE you sign. Agents are not attorneys, their concern is their commission and protecting their liability, not you, theri customer!   If you are making an offer that is lower than the seller expects, help to make it attractive in other ways.  Ex. Be flexible on the closing date if it helps the seller.
  • Stay positive  - if the seller turns down your initial offer it's not the end of the world.  It opens the door for negotiation through a counter-offer.  Try again, increasing your price slightly and ask that the seller leave behind the pool table that you are secretly coveting.
  • Be realistic - if your home must sell in order to purchase, offer to include a "kick out clause" to allow the seller to continue to market the property while waiting for your home to sell.
  • Be flexible - Anticipate and deal with issues that may arise during negotiations and consider a strategy beforehand.
  • Don't bring in a BUYER'S AGENT at the last minute to help you negotiate the sale.  This is very expensive for you and often disastrous and could derail your entire purchase. (Buyer's pay the buyer's agent, NOT sellers!).
  • If you are working with a BUYER'S AGENT, tell the seller UP FRONT and YOU, the buyer, must be prepared to pay your agent's commission.  Let the seller know that as well.

 

 

It's easy to purchase a FSBO

STEP 1: Establish your price range. Know what you can afford and stay within that range. If you aren't sure what that is, ask a mortgage loan lender to pre-qualify you. Also, there are several types of loan options available to you such as special first time buyers programs and others. Mortgage rates and options vary from one lending institution to another.

STEP 2: Where do you want to locate? Select the area and begin to call on homes for sale within that area that are within your price range. Set appointments to see the property. If for some reason you are unable to keep your appointment, ALWAYS call to cancel the showing.

STEP 3: When you find the perfect home, (within your price range) the first step will be to tell the seller that you would like to make a written offer on the home. Be sure you include everything in your offer that you expect to remain with the property, i.e. drapes, appliances, etc. The closing date is another important consideration along with the terms of the contract. If the seller is not in total agreement with everything you have offered, he will make a "counter offer", which allows the negotiations to continue. If this is truly the perfect home for you and the seller wants to sell the property, you should be able to come to an agreement that works for both parties.

STEP 4: Some things you will want to make sure you have covered in your agreement are; a) any requirements such as passing an inspection to be sure that all aspects of the house are functioning and in working order, b) that your deposit will be returned within a specific time frame if you do not qualify for the loan necessary to purchase the property. You might feel more comfortable if you have a lawyer review the Purchase and Sale Agreement before you sign.

STEP 5: When an acceptable agreement is reached on the price, as well as the terms, you will need to give the seller a deposit. This is called an "earnest" deposit or "binder" and lets the seller know that you are serious and negotiating in good faith. The amount of the deposit is determined by the price of the property and how much the seller is willing to accept. This deposit will go into an escrow account until the final settlement is made at closing.

STEP 6: Begin the loan process. If you are still shopping for a mortgage lender, check the local banks and mortgage companies for current rates, as well as any special programs available to you.

STEP 7: When the loan is approved, notify the seller at once. Make any necessary adjustments to closing and possession dates.

STEP 8: An appointment will be set for your closing, where you will sign all documents and finalize the purchase. The keys to your new property will be turned over to you at this time.

SAVE $$$$$$$$$ IN COMMISSIONS