Recently, we covered the top mistakes buyer’s make when negotiating a home purchase. Now let’s take a lot at it from the seller’s perspective. Some things apply just as much to sellers such as allowing emotions get in the way, talking too much in front of the buyer’s agent and seeing it as a zero-sum deal. But sellers are also prone to mistakes of their own. It’s all a matter of perspective so here are some of the worst negotiating mistakes when selling an NYC home.
1. Not having a plan B
Never go into negotiations with a buyer without a plan B. Without a safety net you’ll be under more pressure and may give concessions you could otherwise have avoided or reduced. Consider the possibility that the right offer might not come around so be ready with a backup plan. For instance, holding onto the property and remodeling it before putting it back on the market at a later date. Your broker will go through everything with you and will feel more confident themselves if they know you have a plan B. It gives them more leverage in negotiations.
2. Being insulted by low-ball offers or not responding to them
By far this is the most repeated lament of seller’s agents. Sellers who view a low-ball offer as nothing but an insult fail to see that it’s quite possible they can get it up to a more acceptable level. You have nothing to lose by coming back with a counter-offer and going through a bit of back and forth until you arrive at a deal that pleases everyone. Countering the offer, even with the original asking price shows that you’re serious and have confidence in the property’s value.
3. Making a counteroffer that is too low
Countering a low-ball offer with your original asking price can be a strategic response if you have a plan B and plenty of offers. However, it can backfire if you don’t make a reasonable reduction. A reduction of 1% will only insult most buyers and could make them walk away without a further word. Reducing the price by 3-5% is seen as a more serious response and a willingness to negotiate.
4. Focusing too much on the price
Every seller wants a good price, but when selling a home, there is always far more to the deal than just the price. When dealing with multiple offers, this is important as the highest bidder may not be the best deal. You need to closely examine the financial qualifications of each buyer and see who is a more sure bet. If deadlocked on a price, try to get creative and look for other areas that can give you some wiggle room. Perhaps adding or dropping a few contingencies, adjusting the timeline or looking at closing costs to name just a few.
5. Using the wrong numbers
There’s a good reason why you see store items priced at $19.95 rather than $20. The opening bid seems to influence how our brains think about value and shape our bidding behavior. A study at the University of Florida confirmed this with multiple tests on different products. Studies of real estate sales over five years in Alachua County, Florida found that when homeowners asked for a specific, non-rounded price – say, $694,500 instead of $700,000 – they sold their properties at a faster rate and for a price closer to their initial offer. This tactic has been seen to work to stay away from round numbers when setting a price.