The 4 C’s of Home Pricing that All Buyers and Sellers Should Know

by Keri Shull

Whether you’re buying or selling a house, pricing is always the top consideration for both sides throughout the negotiation process. After all, if you’re buying you want to know you paid a fair price, and if you’re selling you want to get the best possible return on your investment. 

But both sides can sometimes forget that pricing is a much more complex negotiation beyond the listing price. We always advise our clients, buyers and sellers alike, to keep four key components in mind when deciding on whether or not an offer is fair. These “4 C’s” of pricing can help you evaluate an offer overall, not just the list price.

Contingencies

Contingencies refer to anything in a contract that makes the closing dependant on something else. They also usually create risk for the seller. Contingencies can include things like:

  • Home Sale
  • Appraisal
  • Financing
  • Home Inspection
  • HOA/Condo Review

For buyers: It’s important to do everything you can to minimize contingencies. You also want to be as up-front as possible early in the negotiation about any contingencies to build trust with the sellers.

For Sellers: It’s important to identify which contingencies you’re comfortable with, and which are deal-breakers. Discussing all options as early in the process as possible will help you identify which potential offer you want to move forward with.

Cash

Cash refers to the amount of money the buyer is providing for the deposit and the down payment. The more cash a buyer is offering, the more certainty for the seller. Why? Because buyers with more cash down demonstrate that they’re committed to buying. 

For Buyers: Your cash down is important - more cash down often can mean more money off of the overall list price. BUT it’s not the end of the world if you have a smaller pile of cash to offer. You’ll just need to have other ways of demonstrating your commitment to the seller.

For Sellers: Cash is king! If you have an offer with more cash down and a lower bid overall, it might be worth taking. 

Closing Time

Closing time refers to two key dates: the date you close on the house and the date buyers take possession. 

Depending on the buyers and sellers situations, the closing time can be a great place for negotiation. For example, sometimes the seller will want time after closing to rent the home back from the buyer while they are preparing to move. As a result, buyers can get thousands of dollars off the cost of their home purchase, just for making the timing convenient for the seller. 

For Buyers: If you have the ability to be flexible, you might as well set a closing date and short rent-back period that work well for the seller. This can get you the best financial terms. Remember: being flexible on closing time costs you nothing, yet it can win you a better deal!

For Sellers: When you’re moving, bargaining for a little more flexibility can make your process much easier and make the buyers happy by saving them on closing costs. 

Competition

The final C refers to competition. This can give either party an edge, depending on things like the market and how long a property has been listed. Competition is entirely tied to supply and demand. 

In low-competition markets, prices tend to be lower. In high-competition markets, prices tend to be higher. This also varies depending on  the exact home type and location.

For Buyers: Our team uses an off-market home program to help our clients make winning offers. By helping you find homes before they go on the market, the competition is greatly reduced and the chances of winning a home increase.

For Sellers: Competition is they key to getting the most value from your property - whether you sell before it’s listed or not. If you’re located in a great neighborhood, selling off-market can result in a quick, easy sale at a great price because the buyers will be motivated to avoid the on-market bidding war. 

Ultimately, the best way to get the best deal as a buyer or seller is to work with an agent that understands the ins and outs of your market to negotiate the best deal possible for all parties. So why not work with the #1 team in the DC Metro area? Give us a call today to find out more!

Leave a Reply