16 Steps to negotiating your best offer

Negotiating an offer is the most fun one can have in real estate. A Buyer is communicating to a Seller that they would like to take on the risk of Ownership in exchange for something of value.  Usually the something of value is a means of exchange like money.  Sometimes it could be a transfer of responsibilities pertaining to a property.

There are 16 distinct steps you need to understand and communicate with your agent or whomever you are working with to help negotiate the deal and facilitate getting an effective offer.

Here are the 16 steps to an Effective Offer.

1. The price offered. Make it real with a reason. Have your agent backup actual properties that sold that are comparables, and if there are obvious things wrong with the property address it, estimate it and let the Seller be aware of it in the offer.

2. The timeframe for inspections.  Vary the time depending on the risks associated with property condition.

3. The timeframe for due diligence.  Be real if you really want it. Ten to twenty days on residential is common. Don't put “180 days” unless you are building a skyscraper on the lot.

4. The timeframe to close. Get a real timeframe from whoever is holding the money whether getting a loan or cash.

The timeframe to allow the Seller to respond will vary depending on how hard you want to push the Seller and how aggressive you want to be as a Buyer.

Then there is the timeframe to get financing, any concessions or the basis upon which the financing is done, if any.

5. The down payment or earnest money: make it something reasonable that says you are serious. If you go into counteroffers, raise the downpayment.  If you are paying cash, raise it some more.

6. Time to allow for the title search, and time to allow for any issues if they come up for the title search. This is the time to have an attorney check if there are any liens on the property.   Sometimes a Buyer agent will check with the local authorities to see what the title looks like before making an offer just to reduce the risk of troubles later on.

Once the offer is made, if there is a counteroffer, either accept or make a counter to the counter offer.

7. Counter offers – reiterate what is changed and what remains the same from the original contract, referring to the details of date of the original contract and all changes. 

8. Accepted contracts. When an offer is accepted by all parties make sure and distribute this information to all the parties involved, making sure there are no open timeframes or monies associated with the timeframe that are not covered.

9. Make a schedule of when action items need to happen as noted in #11.

10. Financing. If there is financing involved, keep track of whom and when you spoke to the financing people. Have a log that says “When you spoke to whom about what and when did they promise to complete the task at hand”.

11. Consider Third Parties to the contract.  This includes the insurance broker providing the insurance, the inspectors inspecting the property for the Buyer, the termite inspector if required for a termite certificate.  Then there is the appraiser who will appraise the property for the bank.  

12. The closing or escrow attorney is the last party to the contract who pulls everything and everyone together, taking care of the legalities of the exchange of the property from Seller to Buyer and/or mortgage entity.

13. Once all the items are completed, go back and make a copy of / have an electronic folder of every step along the way.  If you were the Buyer Agent, that would be information on the Buyer, what they initially wanted all the way through to the cash sale information when they purchased a property.

If there were tenants associated with the property, file copies of the existing leases at the time of the sale.

If you are a Seller, have all the details required from the listing agreement, any extensions to the listing agreement or changes to the terms and conditions of the actual listing itself such as when the Seller authorized the change of price, change of terms or change of conditions related to the property during the time it was listed.  This should show clear disclosure of information you received and how you communicated the information in a clear and concise manner.

14. Facilitate a balance between maximizing your investment while reducing or eliminating your risks in the transaction. This translates to clearly identifying what works best for you at a specific time along the way.

15. Continually monitor the success or failure of the process down to the exchange of signatures of ownership.  Do this monitoring in your mind or with those you trust to keep your mind focused on getting those keys to the property in your hands.

16. Once an offer is submitted, the buyer or buyers agent should always contact the Listing agent, make sure they got the offer and clearly explain why and how your client made the offer, the price, terms and conditions.  Food with a little seasoning always tastes better.  A little love sent with an offer can go a long way.