While all contracts must have certain required elements, mutual assent, consideration, capacity and legality, there are some things that increase its chance of being accepted.
The seller generally wants the highest possible price with the fewest inconveniences in the shortest period of time. In the same way, the buyer generally wants the lowest possible price with the fewest inconveniences in the shortest period of time.
The perspectives of the principal parties to the contract can change depending on how these different parts of an agreement are structured.
- Offer Price – While the price of the home seems to be the major point of contention in a home negotiation, the seller’s net proceeds and the buyer’s mortgage payment may actually be more critical.
- Financing – Nationally, 86% of recent home buyers financed their recent home purchase as opposed to the 14% who paid cash. Different types of financing can have differing ramifications for the process of taking a contract from agreement to closing, different minimum down payment requirements for the buyer, and some financing types have higher fees than other types.
- Seller-paid closing costs – Paying all or part of a buyer’s closing cost requires less cash outlay for the purchaser and makes it easier or more appealing for them to buy the home.
- Seller-paid buy-down – Prepaying interest to the lender on behalf of the buyer gives them lower payments for the first one, two or three years even though they must qualify at the note rate of the fixed-rate mortgage.
- Personal property – Seller may agree to include existing or new personal property like washer, dryer or refrigerator.
- Improvements – Seller may agree to make modifications to the existing condition of the home like floor covering, countertops, appliances, painting or other things.
- Earnest Money – More money gives the seller a sense that the transaction is more likely to close, while putting the least amount at risk is generally more appealing to the buyer.
- Timing – Depending on which party is more flexible, an earlier or later closing date or a more accommodating position on occupancy can be an offsetting consideration to help balance the relative importance of other terms.
- Contingencies or lack thereof – Requirements that must be satisfied before a contract can be closed can loom large in the vision of a seller who will effectively take their home off the market to other prospective buyers once a contract is signed.
The training and experience of a skilled negotiator can benefit both buyers and sellers to save time, avoid difficulties and bring all parties to an agreement. Your real estate professional should be able to help you structure a good offer or counter-offer and negotiate the way to a contract with a win-win outcome.