Real Estate Guide

Selling Your Home - Questions and Answers
'Negotiating The Sale'

• What should I watch for in a contract?
• Is there a secret to good negotiating?
• What contingencies will I see in an offer.
• Do I have to consider contingencies?
• How is the price set?
• What do I do with low-ball offers?
• What is the difference between market value and appraised value?

What should I watch for in a contract?

See ►Home Sellers: Seven Purchase Contract Items To Watch For

Is there a secret to good negotiating?

There are several cardinal rules to negotiating effectively.

• One is do your homework, and learn as much about the buyer as you can.
• Another is to play your cards close to your vest and not reveal too much information to the other party or their agent.
• Don't let yourself get rushed into any decision, no matter how tempting it may be.
• Finally, if you have doubts about your negotiating skill, hire someone to help.

What contingencies should I expect in an offer?

Most purchase offers include at least two standard buyer contingencies:

1. Financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender,
2. Inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction.

Other contingencies, may also be included such as:

3. Satisfactory appraisal,
4. Septic and well inspection,
5. Inclusion of specified non-fixture (chattel) items,
6. Final walk through,
7. 'Sales contingency' clause (also known as a First Right Of Refusal - or FROR).

   A sales contingency specifies that the buyer must sell and close on his/her home before the contract is valid. Make sure that if you accept this contingency it has 2 further provisions:.

   1. A kick out clause that allows you to continue to market your home.

      Should you receive a second acceptable offer, the 'kick out clause' allows you to invalidate the first contract and accept another if the original buyers can't go forward with the contract. The buyers on the original contract have a right of first refusal which gives them the option within a specified amount of time (usually 48 to 72 hours)  to remove their contingency and go forward with the contract or withdraw. If they are unable to perform, the original contract will collapse and you'll be free to accept the new offer.

   2. An expiration date for the contingency, after which the buyer must perform or the contract collapses.

As a seller, make sure the purchase contract includes time limits on satisfying and removing any and all contingencies. Remember that while your home is "pending" and the buyer works through the contingencies, your home is "off the market" (although you may accept back-up offers). Therefore, you want the "contingency period" to be as short as possible.

The buyer will probably ask for the purchase contract to include certain standard seller responsibilities that could also be categorized as contingencies:

8. passing clear title,
9. maintaining the property in its present condition until closing
10. and making any agreed-upon repairs to the property.

Do I have to consider contingencies?

If you are a seller in a seller's market, in which there is more buyers demanding a house than sellers can supply, you probably won't have to entertain too many contingencies other than financing and inspection.. But if you are selling in a buyer's market, when buyers are few, prepare to be very flexible.

Granting contingencies also depends upon what kind of price you want to get and on the condition of your property. Remember, contingencies are written into the contract and are negotiable during the negotiation phase only.

See Also ►

• Real Estate Guide: Buying Your home - Making an Offer  (A discussion of the common contingencies you may see in an offer to purchase your home from the buyer's point of view.)

How is the price set?

See ► Home Sellers: - Pricing Your Home to Sell

What do I do with low-ball offers?

See ► Home Sellers: Pricing Your Home To Sell - Low Ball Offers

What is the difference between market value, appraised value, and assessed value?

See ► Home Sellers: Pricing Your Home to Sell - Value