Counter offers

D- Counteroffer negotiating: What are smart tactics in a home sale?

An incentive could help your buyer:

Some buyers are short on cash for the down payment and closing costs while others will need all the cash they can get for after-closing expenses. During negotiations, consider these counteroffer tactics:

• Paying for some of the buyers’ title insurance, closing costs and/or points if this is not customary in your market.

• Pay homeowner’s association fees for a year.

• Look into buying down the buyers’ mortgage rate for the first year.

• Cover the cost for a lawn-maintenance service for the summer.

• Pay or provide an allowance toward moving expenses.

• Provide the buyers with a home warranty.

• Pay for the lawn and pool services for a year.

• Give the buyers the remaining oil in the home’s fuel tank.

• Offer the buyers a local golf club membership, pool membership, satellite or cable subscription.

• Offer an allowance to repaint, carpet or for window treatments.

Incentives, especially for first time homebuyers, can often do the trick.

Swapping concessions:

When a buyer asks for something, get something in return. This taps into the other person’s state of fairness, an attribute that everyone feels they possess.

This also slows down their future requests for something since they quickly grasp the consequence of their demands.

Countering the price: 

The one issue all sellers zero in on is price. As you counter back and forth, each counter should have a smaller increment in the drop amount than your previous offer. This is a way of conveying to the buyer that you are nearing your bottom line. As an example, you may drop $6,000 on your first counteroffer, $2,500 on the second, and $1,000 on the third.

You don't need to match increases from the buyer.

Suppose you counter the buyers' offer at say, $5,000 less than your asking price and the buyers raise their offer by an equal amount. If you suspect the buyer is going to match each price difference you counter with, it's easy to see where the final price is headed. You now come down $3,000 and they come up three grand. If acceptable, keep going.

If not, when you get to your bottom line, simply say, "This is really where we'd like to be." This is better than the emphatic, "This is as low as we're going to go." You might even convey this message when you have a little room available. Otherwise, the buyer could make their counter and beat you to the punch with a similar message of where they'd like to be.  

The stress factor:

Some buyers give away the fact that they have a low tolerance for stress by submitting an offer (or counteroffer) with, “We really don’t like to go back and forth so here’s our offer.” The implication is that this is their final offer. They’ve revealed a serious weakness. They just can’t deal with the stress and want it to be over. 

If you feel this is a deal that’s fairly close, start your response back with, “We really like you as the buyers and feel good about your offer.” You can almost here them breath easier. “If you’ll just consider a couple of changes to the agreement, I'm sure we have a deal here.”

First, go over your non-price changes. Next, tell them that you really feel that “x” dollars will be fair. Then say nothing. Let them make the first response. They know that their acceptance would be all it takes to get your home and eliminate the anxiety. A counter from them would just add to their stress.

Just don’t get greedy when you make this counter as it could send them over the edge. 

Time to split the difference:

As the parties come closer together, there is the tendency for them to hold back on price concessions. They each sense the desire to win, but above all, not to lose. 

Both have made overtures as to where they’d like to be, (high or low as they want to go). If, after a lengthy pause, things seem to be at a standstill, this is a good time to suggest splitting the difference. 

Usually, this can only work when you’re within a few thousand dollars of the other party. (Of course this works if you’re $10,000-$20,000 apart when you’re in markets like Orange County, California where the average price of homes is above $600,000.)

One method that can be used relies on a cause and effect response. It works best if you have something of value or even perceived value. In a deadlocked situation, you come back with the, “We're willing to split the difference and, we'll throw in the pool table.” 

When the split is offered, the first half of the statement is put forth as “We're willing to...”. The success of this approach relies on the premise that you are meeting them better than halfway, in which case they may feel they "won".  

A second technique is simply to offer to split the difference when the two parties are a few thousands apart. Note though that this works best when the dollar difference ends in $500, like $1,500, $2,500 and $3,500. In these three examples, it’s a done deal if the buyer would accept the split and move up by $750, $1,250 or $1,750 respectively. 

As you can see, if the buyers counter with splitting this again, it will result in awkward numbers, as well as look greedy. Usually, the other party being offered the split just accepts the compromise.

This method is so effective because the negotiation phase moves to a higher level, removing money as the central focus and getting the buyers to concentrate on give and take.  

The buyers preempt your counter offer:

At some point the buyers may jump the gun and offer to split the difference. If this middle ground figure is what you want, well and good. But if you feel you could get a little more, there is a twist you can put on this.  

Suppose you’re at $270,000 and the buyers are at $260,000 and the buyers propose this split. But you’d like a little more. Restate to them that they will go to the $265,000 figure. “OK, you’ll go to $265,000. Let me get right back with you.” You make it plain that they are at $265,000. You don’t even mention the word “split.”  

Let some time pass. Remember, you’re so close here (within 2%) that it’s doubtful they’d walk away from a counter. When you do contact them, say, “We really feel we can get this together. You’re willing to go to $265,000 but we’d really like to get $267,000. Can we make this a done deal?” Put the decision back on them. Even if they split it again (to $266,000), you’re $1,000 ahead.

                                 THE MAGIC NUMBER 

Everyone has a final figure or bottom line. Be smart enough to go below yours if necessary. If it's in your range of selling at top dollar and a done deal is important, there’s a lot to be said for getting it over with. Who knows when or how high the next offer will be? Moving on with your life is one way to maximize your profits. 

When it comes to a home sale, buyers always think they paid a little too much and sellers think they should have gotten a little more.