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What to Expect in the Negotiation Process

You’ve got the perfect home, and now it’s the moment to create an offer. Before that, the seller will most likely expect you to bargain the listing price.

But what exactly does the negotiating involve? It is a series of continuous steps, and each step necessitates collecting information. One way to get started is to prepare your finances and hire an agent to help you.

Negotiating can be challenging, but understanding what to expect can help make the situation less frightening. Here’s what you should expect.

Making an Offer to Purchase the House

Property buying transactions require a written contractual agreement that starts from an offer. Home purchase contracts vary in length and terms across different states and localities.

The offer should specify the price and terms of negotiating the purchase. The easiest way is to get a copy of the current contract applicable to your area. You can obtain this from a real estate lawyer or agent near you.

Property contracts undergo frequent revisions to match disclosure requirements and property laws. Thus, your agent should help you understand the terms and conditions.

In addition, be sure to check the contract’s revision date at the bottom corner of every page.

Elements of an Offer

A flimsy or poorly drafted offer can turn a productive negotiation into an endless tussle with your seller. So, to avoid unforeseen setbacks in your negotiation, ensure your offer includes facts.

Reasonable offers include the following:

Realistic Offer Prices

A good offer has quantifiable and factual sales prices for the property.

When setting a price, you should base it on comparable and recently sold homes. Consider the age, condition, location, and size of similar mansions sold within the past six months.

Realistic Financial Terms

Offers should have feasible financial terms based on the current lending conditions. These include payment duration of a mortgage, interest rate, and origination costs, among others.

If you are already pre-qualified for a mortgage, it will help to include it in the offer to prove that you are creditworthy and willing to fund your home purchase.

Property Inspection Clauses

When presenting an offer, neither you nor the seller can quickly tell the cost of any corrective work, if any.

Thus, you should include a clause that opens room for negotiations once you receive an inspection report. You can then reenter negotiations later, having facts about the corrective work required.

Offer Acceptance

An offer becomes active only when the seller agrees with your price and terms and signs it.

The seller’s agent will then give you a ratified copy immediately. However, a ratified offer doesn’t mean you already own the property.


Even after acceptance and ratification, an offer should contain an escape clause under ‘contingencies’.

A contingency clause captures an escape event through which you may decline the purchase at your discretion. As a rule, no seller can refuse a contingency that forms part of the contract.

However, when making contingencies, do not go overboard, especially when competing against other buyers for the property. Most sellers will shun off offers with stringent contingencies.

Below are two major contingencies:


You can confidently walk out of the negotiation if you don’t receive the loan amount you specified in the contract.

Similarly, your contract may have an appraisal contingency allowing you to decline the purchase if an approved appraiser undervalues the property under negotiation.

Property Inspection

An inspection contingency allows you to cancel a deal if you have objections about the inspection report. Similarly, if you can’t agree with your seller on conducting corrective works, the clause can free you.

People negotiating for home

Receiving a Counteroffer

If sellers like your offer, they may send a written counteroffer with the alteration they want to make. You have the choice of acknowledging, refusing or making a counterclaim to their new offer.

Here’s an example

If you offered $275,000 for a home listed as $289,500 and 30 days to close escrow, sellers might render your offer too low.

Subsequently, they’ll give you a counteroffer stating acceptance of the terms and conditions. Moreover, they’ll suggest a price of $285,000 and six weeks close escrow after offer acceptance.

The offer will revert to you again. This time, you may be okay with the six-week closing duration but stuck at a counteroffer worth $280,000.

The sellers will come back with a firm $284,000, which you’d grudgingly reply with a firm $281,000. In this situation, you are both closer to an agreement and have a $3,000 difference on both offers.

An easy way out of this deadlock is to split the margin on a fifty-fifty share. Eventually, you’ll likely pay $282,500 for the property and close the deal.

Negotiation Process - In Summary

Purchasing real estate is one of the most significant purchases you can make, and how you negotiate will determine your success.

Before you begin your search, make sure you have a pre-approval letter in hand. You should also hire an agent to assist you in comparing properties, interacting with sellers, and sending offers.

If you decide to withdraw your bid after it has been accepted, you should consult with an experienced attorney.

You will avoid wasting your deposit or being fined heavily for costs that sellers incurred as a result of your decisions.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

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