Practice what you learned

Imagine a friend of yours, Mary, has found a home she really likes and would like to begin the process of making an offer. She has done market research, both with her real estate agent and on her own, and she feels she is in a good position to begin negotiations. She has some ideas on how to go about negotiating with the seller, and would like to get your input on her ideas.

Decide what you think of her ideas and select your response from the options provided – “Good Idea” or “Bad Idea.”

“This is the house of my dreams. I need to tell the seller how I feel—I can’t let this house get away from me.”

Correct! There is a time for trying to convince the seller that you will be broken-hearted if you don’t get his or her property—when there are multiple competing offers for a home. In today’s market, however, you won’t have as many competitive buyers. Do not show enthusiasm; this gives the seller an upper hand in the negotiation process.
Incorrect. There is a time for trying to convince the seller that you will be broken-hearted if you don’t get his or her property—when there are multiple competing offers for a home. In today’s market, however, you won’t have as many competitive buyers. Do not show enthusiasm; this gives the seller an upper hand in the negotiation process.

“My agent doesn’t agree, but I don’t feel like including contingencies in my offer; we can deal with all of those details later. The only important thing is how much I’m offering.”

Correct! Because your written offer forms the basis of a legal contract with the seller, be thorough. There are some important details you should be sure to talk through with your agent, include on your offer, such as:
  • the amount you are offering
  • contingencies
  • conveyances
  • an expiration date
  • concessions
  • the amount of earnest money you are offering
  • the size of your down payment

Contingencies are one of the most critical aspects of your offer. You need to protect yourself if your financing falls through, or if the inspection unearths major problems with the home.

Incorrect. Because your written offer forms the basis of a legal contract with the seller, be thorough. There are some important details you should be sure to talk through with your agent, include on your offer, such as:
  • the amount you are offering
  • contingencies
  • conveyances
  • an expiration date
  • concessions
  • the amount of earnest money you are offering
  • the size of your down payment

Contingencies are one of the most critical aspects of your offer. You need to protect yourself if your financing falls through, or if the inspection unearths major problems with the home.

“I’m going to give the seller a few weeks to get back to me. I don’t want to seem too pushy by giving a short turn-around time.”

Correct! When you make your offer, you will put an expiration date on it. Make this a very short period, for example, within 24 hours. If you are making an offer in the evening, make the expiration early the next afternoon. Why?  Having a longer period just invites a competing offer, exactly what you do not want.  Don’t give the seller’s agent a chance to round up someone else.
Incorrect. When you make your offer, you will put an expiration date on it. Make this a very short period, for example, within 24 hours. If you are making an offer in the evening, make the expiration early the next afternoon. Why?  Having a longer period just invites a competing offer, exactly what you do not want.  Don’t give the seller’s agent a chance to round up someone else.

“I’m going to lowball my offer. From my research, I think the home is probably worth about 5% less than what the owner is asking, but I think I’m going to ask the owner to take 20% off of the asking price.”

Correct! If a home doesn’t seem significantly overpriced, it’s best not to go in too low; you risk insulting the seller. Sellers love their homes, and offering a lot less than what a property is worth won’t win you any points.  If your research shows that the property is fairly priced, offer slightly less than you think the home is worth. On the other hand, if you think a home is very overpriced, and you’re willing to walk away, you can try to lowball, but be ready to be turned down. 
Incorrect. If a home doesn’t seem significantly overpriced, it’s best not to go in too low; you risk insulting the seller. Sellers love their homes, and offering a lot less than what a property is worth won’t win you any points.  If your research shows that the property is fairly priced, offer slightly less than you think the home is worth. On the other hand, if you think a home is very overpriced, and you’re willing to walk away, you can try to lowball, but be ready to be turned down. 

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