The Real Estate Negotiating Process
You've found a home that's right for you and it's time to make an offer. What steps are involved in negotiating a real estate purchase?
Step 1. Research and Planning
Depending on market conditions, you may have to act quickly, before another buyer steps ahead of you. That said, the best way to approach a home purchase is to arm yourself with facts and to plan a negotiating strategy. Your buyer’s rep can assist you on both these points.
When deciding what to offer for a property, current market prices are the most important factor. An Accredited Buyer’s Representative (ABR®) can provide valuable assistance in this regard—counseling you on market conditions, price ranges, comparable properties, and appropriate negotiating strategies.
Step 2. Submit an Offer
Real estate transactions require a written contract, which conveys an initial written offer. A check for earnest money usually accompanies an offer.
Your offer will specify price; plus, all the terms and conditions of the purchase you want to negotiate. Your buyer’s rep provides a valuable service by helping you use standard forms that are kept up-to-date with changing real estate laws, which vary from one state to another, and by explaining the negotiating impact of including various terms and conditions.
Step 3. The Seller's Response
When your offer is presented, the seller’s options are to:
- Accept. If, after reviewing your written offer, the sellers sign their unconditional acceptance, then you will have a binding contract as soon as you are notified of the offer’s acceptance.
- Reject. If the sellers reject your offer, you are released of any obligation. The sellers cannot later change their minds and expect to bind you to a contract based on that offer.
- Counteroffer. If the sellers like most aspects of your offer, they may present a written counteroffer that includes the changes the sellers want to make. You are then free to accept their counteroffer, reject it, or make your own counteroffer to their counteroffer. This process can repeat itself as many times as it takes for you and the sellers to agree on the sales contract. At this point, negotiations are over and the terms of the sale are final.
It is important to note that the negotiating process always moves forward; buyers cannot decide later to accept a counteroffer that they previously rejected. If the property is still available, buyers must reinitiate negotiations by submitting a new offer.
Withdrawing an Offer
Can you take back an offer? In most cases the answer is yes, right up until the moment your offer is accepted. In some cases, you can withdraw an offer before you’ve been notified of its acceptance. If you want to withdraw your offer after acceptance, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You want to avoid losing your earnest money deposit or a lawsuit for damages the sellers incurred because of your actions.