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What to do when the offers come in

You're ready to plant a sign in the front yard, host an open house, and save that real estate commission.

But what happens when a prospect makes an offer? Do you have what it takes to negotiate a good deal?

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"The single most important thing when you're selling a house is what your asking price is," says G. Richard Shell, author of "Bargaining for Advantage: Negotiation Strategies for Reasonable People."

"That's essentially your opening offer," he explains.

One secret of effective negotiating is being confident of your price. Scope out the market. Call a few real estate agents. Be honest. Tell them you're selling it yourself but want their opinions. Most will be happy to talk because they know there's a fair chance you could eventually decide to list your house. Ask about prices and sales trends in the area.

If an agent quotes a price that's much higher or lower than others, have him explain why. Someone could give you a higher price in an attempt to get the listing, or there could be something about the market you've overlooked.

William Poorvu, author of "The Real Estate Game," was set to sell his own home, thinking he knew the market. "One broker came in and said, 'You don't realize the market has changed very quickly. You can get 20 percent more for your house,'" he says. "And she was right."

Most communities have a newspaper that lists recent closing prices. Limit your data to the past six months.

Visit open houses in your area to get an idea of the competition. But bear in mind that asking prices and sales prices can vary widely.

Now that you have a good idea of what your house could bring, you have to set an asking price. There are several ways to go:

  • Ask for almost exactly what you want. This will allow you to attract all the interested buyers in your price range. Some experts advise adding a few percent for bargaining room or to allow for concessions on repairs.
  • Pad the price. This gives you more room to make a deal. But the inflated price may scare off buyers in your "real" price range, making it more difficult to sell.
  • You can also set the price a little on the low side. In a hot market, this could create interest in your "bargain," says Shell, also a professor of legal studies and management at Wharton. Your goal: a bidding war with a top price above your asking price. You have to know the market, know what you want, and never accept less. "There is no law that says you have to sell the house just because someone bids on it," he says. "It's an invitation to deal."

How to haggle
A lot of people love the idea of selling their own house but hate the idea of haggling over the price.

"Most people do a poor job of negotiating on their own behalf when they are sitting face-to-face with a buyer or a seller," says Al Mansell, president of the National Association of Realtors.

One solution: don't. If you "feel uncomfortable negotiating, I recommend you bring in one of those real estate pros and pay to have them negotiate the transaction," says Bill Carey, co-author of "How to Sell Your Home Without a Broker." What you can expect to pay: $500 to $2,000, depending on the value of the property, he says.

-- Posted: May 16, 2005
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'05 Real Estate Guide
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