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How to Create Negotiation Leverage Before Listing Your Home

 

Creating negotiating leverage is a key part of selling your home for top dollar. Contrary to popular belief, this process starts well before you list your home for sale or accept an offer. Many sellers and their realtors mistakenly believe that negotiations start when an offer is received or when the buyer sends a request for repairs. However, if you're waiting for an offer or a request for repairs to start negotiating, you've already lost the game.


Creating an advantage is a product of the demand for your home and starts as early as when you select your realtor. Demand is driven by setting a strategic list price, the location of your home, selecting the right time of year to sell, the condition of your home, and the terms of the sale. This article highlights two key strategies to create leverage in negotiations.


Set One Date to Receive Offers


Setting a specific date to receive offers is crucial. This strategy encourages multiple offers, fostering competition among buyers and driving up the sale price. Here’s why this works:


- Compare Offers Side-by-Side: By having all offers on the table at once, you can compare them side-by-side and choose the best one.

- Maximized Exposure: Giving buyers enough time to see the house and prepare their offers ensures maximum exposure and competition.

- Timeline Control: This approach helps manage the timeline of your sale, avoiding rushed decisions.


Many sellers make the mistake of accepting preemptive offers, but these often fall short of the best possible deal. I always advise my clients to wait until the set offer date to respond to all offers, ensuring they receive the most competitive bids.


Hearing someone brag about selling their home in just a couple of days frustrates me. It tells me that the home was not fully exposed to the market and they, despite their satisfaction, may not have gotten the best offer. I typically recommend that my clients keep their homes on the market for two weekends of open houses or about 11 days. This ensures that their home is fully exposed to the market and gives everyone enough time to get their preapproval together and structure their offer.


Controlling the Terms and Timeline of the Transaction


Detailing your desired terms in the offer instructions is another powerful tool. Here are key elements to include:


- Offer Acceptance Date: Specify the exact date you will respond to offers.

- Expiration Dates: Ensure offers do not expire before you review them.

- Seller Needs: Outline any rent-back agreements or credits.

- Verification Documents: Require preapproval letters and proof of funds.

- Special Instructions: Include any unique requirements for the sale, such as probate documentation.

- Length of Escrow: Specify the desired length of escrow or a specific close date.

- Contingency Length: Clearly define the length of each contingency.

- By conducting inspections before listing, you can address any repair negotiations upfront. Inform buyers that no credits or price reductions will be made for disclosed issues, streamlining the process and reducing post-contract negotiations.


Creating leverage in real estate negotiations starts well before listing your home. By strategically setting an offer date and controlling the terms of offers, you can maximize demand and secure the best possible sale price.




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