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Multiple buyers have finally made that offer on your house. What do you do now? One of the first things we need to know when negotiating is the big picture. What is the market environment? Is it a buyer’s, seller’s or a neutral market? This starts with what perspective each person has before negotiating. Read on to find out 3 Tactics to negotiate offers when selling your house in San Francisco.
Seller’s Market, Reject the Offer
In a seller’s market, with a property that is staged, remodeled, and priced appropriately getting 10 or more offers is normal. The reason is because the market environment promotes home ownership, like what happened in 2021. In 2021 the interest rates were below 3% for a 30 year mortgage, which lowered monthly mortgage payment and increased home prices.
This makes rejecting an offer outright, a tactic. This might seem extreme but in a seller’s market it is not. The seller is getting 10 or more offers and their focus will be on the highest and best offer. Even if an offer is rejected outright make sure that the door is still left open so reject the offer and ask the buyer to submit a new offer.
In this case if the buyer is serious and really interested, the buyer will usually stay in the game and make a higher offer. “This strategy sends a stronger signal that you know what your property is worth. If the buyer resubmits, they’ll have to make a higher and or better offer unless they take risk getting rejected once more.”
And therein lies the danger: the buyer may not submit a higher offer or may just bow out if their offer is rejected. A benefit of rejecting an offer is that neither party is locked into a negotiation so that negotiations are still open with all offers.
Buyer’s Market, Counter at Your List Price
Offers and counteroffers are common in real estate, and buyers expect to engage in some back-and-forth negotiations. A good tactic to negotiate offers when selling your house in a buyer’s market in San Francisco is to counter at your list price especially when the offer is lower than the list price.
It’s not often that a home seller will accept a buyer’s initial bid because first offers are typically below asking price especially in a buyer’s market. This is typically a number to start off the negotiation and is lower than what buyers are willing to pay. Most sellers, though, “will make a counteroffer with a price that’s higher but still below their list price, because they’re afraid of losing the potential sale.
Buyers want to seem flexible and would be willing to negotiate to close the deal. This strategy does indeed work in terms of getting the property sold, as thousands of sellers can attest, but it’s not necessarily the best way to get top dollar.”
“Someone who really wants to buy will remain engaged and come back to you with a higher offer. Assuming that you’ve priced your property fairly to begin with, countering at your list price says that you know what your property is worth and you intend to get the money you deserve. ”Just be aware, though, some buyers will be turned off by this strategy, seeing it as an unwillingness to negotiate, and may walk away.
Any Market – Set an Expiration Date for the Counteroffer
Another effective strategy used to negotiate offers involves putting an expiration date on the counteroffer.
Putting an expiration date on your counteroffer can help you sell your home faster. “This strategy compels the buyer to make a decision, so you can either get your home under contract or move on. The counter offer expiration is a balance game of not turning off the buyer and enough time for consideration.”
When setting the expiration date consider making it shorter than the default time frame in San Francisco, which is typically 24 hours. This might seem like a short time but in a seller’s market it wouldn’t be surprising to have a counter offer expire in a few hours. It all depends on the situation and it is always best to know the market environment.
Imagine the other way where there isn’t an expiration date on the counteroffer. The offer could be open ended and you would be locked into negotiating with that one buyer. There could even be a chance that other buyers could walk away because another house was listed on the market. So it is best to set an expiration date so that you can keep your advantage and you can control your timing.
Ask for the Highest and Best Offer
A final tactic that can be done in any market to negotiate offers is to invite buyers to make their highest and best offer at the outset. By doing this, you can get higher offers right out of the gate and avoid the headache of the offer-counteroffer cycle.
“As a seller, employing this tactic means you’re not going to negotiate with every potential buyer who makes an offer. Instead, you want them to submit the highest price they’re willing to pay, along with the best sale terms. For example one of the best sales terms is a buyer who has cash in the bank that doesn’t need financing and will pay for the house outright.
A highest and best offer approach also typically includes a deadline by which the seller must provide a response. Making this request indicates to buyers that you’ve received multiple offers, and it generally results in more competitive bids.”
Lean on Your San Francisco Agent’s Expertise
These are some effective negotiating strategies, but there are more, and not every strategy will work in every local market. That’s why most sellers need to lean on their local agent’s expertise to negotiate offers to get the best price. And I can help you do just that. If you want to successfully negotiate offers, contact me at 415-830-1423.
