You’ve put your home up for sale, advertised it and shown it to potential buyers. And now your hard work has paid off—a buyer has put an offer on your house! If you’re operating in a seller’s market, your first instinct may be to hold out for a better offer. If it’s a buyer’s market, you might be tempted to accept the first offer that comes your way. But in both cases, acting on pure instinct is dangerous and could cost you hundreds of thousands of dollars. Any offer you get must be evaluated carefully before you enter into home sale negotiations.

House Negotiations and Price

Price is usually the first thing a seller considers when evaluating an offer. Was your asking price met? If not, what was the reason? If the buyer points out needed repairs as a reason for driving the price down, consider making those repairs yourself rather than lose out on thousands of dollars.

At this point, you should also know if the buyer is pre-approved for a mortgage and how large a down payment they have. If the buyer is putting less than 10 percent down or the loan amount is unusually large, he or she might have a hard time securing financing. Be prepared to reject the offer if this is the case.

Keep the market in mind during home price negotiations. In a slow market, the chances of finding a buyer with a better offer are much lower than in a hot market.

House Negotiations and Contingencies

Almost every home offer includes at least a few reasonable contingencies. For example, most offers are contingent upon a home inspection. However, be wary of contingencies that favor the buyer, such as one that holds the home in escrow until the buyer’s home is sold. In some cases, you may wish to negotiate a lower price in exchange for fewer contingencies.

How House Negotiations Work

Real-estate transactions are a two-way street. When buyers put an offer on your house, they expect you to give them a counteroffer. The purpose of home sale negotiations is so that buyer and seller both walk away happy. Remember that you’re working toward a common goal—handing over the keys to your old house after closing a transaction that benefits both of you.

With that in mind, be sure to avoid these common negotiation pitfalls:

• Allowing your emotions to factor into your decisions
• Failing to clarify the terms of the offer
• Missing deadlines
• Negotiating with no real intent of selling the house (this is known as bad-faith bargaining)
• Refusing to propose a counteroffer.