What to expect when Negotiating a Home Sale
Octotber 7, 2016
There are three negotiation periods in some home sales. The primary negotiation takes place when the contract is agreed upon that includes the price, closing and possession. Buyers and sellers alike feel relieved once this first round has resulted in an agreement but there may be more negotiations to come if there are contingencies for financing, inspections or other things.
When purchasing a new home from a builder, it is expected for everything to be in working order; after all, it is new. However, it is reasonable to expect that existing homes, that are not new, have a different standard. While it’s understandable that buyers would want to be aware about major items that are not in “working order”, normal wear and tear of components based on its age should be expected.
The third round comes in potentially when the appraisal comes in. If the buyer is getting a mortgage, the appraisal is one step in that approval process. If the appraisal value is lower than the agreed upon sale price, buyers and sellers can be right back at the negotiating table. For this to be a WIN-WIN negotiation, both seller and buyer must feel good about the transaction. Neither party should feel that they have been taken advantage of. It is important for all parties to understand the process and know what to expect.
The purpose of an inspection is for the buyer to receive an objective evaluation about the condition of the home and its components to identify existing defects and potential problems. The expense for inspections can be several hundred dollars and it’s reasonable for buyers to not want to spend the money before they find out if they can come to terms with the seller. From a different perspective, sellers want to know quickly if the buyer is going to reject the home due to the inspections.
Sometimes, buyers will expect sellers to make all repairs listed on the report and this is where the second round of negotiations begins. If the seller refuses, the negotiations can go back and forth until one of the parties accepts the offer on the table or the contract falls apart.