What is it?

Offer Negotiation is a critical phase of the closing process that leads to a contract between you (the Seller) and the Buyer for the sale of your property. During this phase, the Buyer makes an offer to purchase your property, and the terms of the transaction are negotiated, including the purchase price.

Why is it important?

Offer Negotiation is essential to forming a contract with the Buyer for the sale of your property. Without successful negotiation, there will be no contract and, therefore, no closing.

This phase allows you to work directly with the Buyer to agree on major contract terms like price, closing date, and contingencies. It's vital that you carefully consider each offer and respond in a way that aligns with your best interests, while also fostering a positive relationship with the Buyer.

How does it work?

STEP 1: Receive the Offer

In New Jersey, the standard way for a Buyer to make an offer on your property includes:

1. The Buyer's agent communicates the offer's specifics, such as the proposed purchase price, down payment amount, mortgage amount, deposit amount, closing date, and deadlines for mortgage and inspection contingencies.
2. The Buyer's agent prepares the New Jersey Realtors Standard Form of Real Estate Sales Contract with the specific features of the offer.
3. The offer is submitted to your agent electronically. You have now officially received an offer!

STEP 2: Review the Offer

This step is crucial for a seller as it sets the foundation for the negotiations that will follow. You and your agent must carefully review the offer to ensure that it aligns with your goals and current market conditions. Here's a detailed breakdown:

1. Evaluate the Buyer's Credentials:
   • Pre-approval Letter: Check if the buyer has included a mortgage pre-approval letter from a reputable lender, indicating they are financially capable of purchasing the property.
   • Proof of Funds: If it's a cash offer, ensure there's evidence of the buyer's ability to pay the amount offered.
2. Examine the Offer Price:
   • Market Value Assessment: Compare the offer price with recent sales of similar properties in the area and your property's appraised value.
   • Consider Your Needs: Determine how the offered price aligns with your expectations and financial goals.
3. Assess the Terms and Contingencies:
   • Closing Date: Consider if the proposed closing date aligns with your plans and timeline.
   • Inspection and Appraisal Contingencies: Understand what inspections the buyer wants and how any appraisal contingency is framed. Discuss with your agent how these might affect the sale process.
   • Financing Terms: Review the details of the buyer's proposed financing to ensure it doesn’t introduce undue risk or delay.
4. Consider Additional Requests and Concessions:
   • Inclusions and Exclusions: Review what personal property, fixtures, and appliances are included or excluded in the sale.
   • Buyer Requests: Consider any requests for concessions, such as assistance with closing costs, home warranty, or specific repairs.
5. Discuss Strategy with Your Agent:
   • Response Options: Explore your options for responding, whether accepting, countering, or rejecting the offer.
   • Negotiation Approach: Develop a negotiation strategy with your agent, considering how the terms align or differ from your ideal sale conditions.
   • Legal Consultation: If there are complex or unusual terms, it may be wise to consult with an attorney to understand potential legal implications.
6. Prepare Your Response:
   • Timeliness: Remember that a prompt response can keep the momentum going in a negotiation. Be prepared to respond within the time frame stipulated in the offer or mutually agreed upon with the buyer's agent.
   • Formalize Your Stance: If countering or accepting, work with your agent to prepare the necessary documents reflecting your response.

Quick Tips for Sellers:

• Stay Objective: Try to keep emotions out of the decision-making process, focusing on the tangible aspects of the offer.
• Keep the Big Picture in Mind: While price is paramount, other terms and conditions can have a significant impact on the sale's success. Consider the offer in its entirety.
• Leverage Your Agent's Expertise: Trust your real estate agent's insights and local market knowledge to guide your decision-making.