Get An In-Home Evaluation

How To Negotiate A Real Estate Contract

Wednesday September 7, 2022

Market Updates

Rectangle Created with Sketch.

“Negotiation” is a word that can put many people on edge. It implies that there is a lot at stake. Say and do all the right things, and you come out ahead. However, make one little mistake, and you stand to lose a lot. Nowhere is this connotation more true than in real estate. Buying or selling a home involves significant amounts of money, and it’s enough to make anyone feel tense. But, a successful negotiation isn’t at all like what you see in movies or on T.V. 

They don’t necessarily involve talking smoothly or driving a hard bargain. Instead, the key to winning is education and research. Below, you’ll find a review of how a real estate contract works and what you can and can’t negotiate.

Components of a Real Estate Contract

Simply put, a real estate contract is legally binding. You should never sign it unless you understand every clause and condition. Your best bet is to talk to an experienced real estate professional who will help protect your interests. There are three types of real estate contracts you might come across: 

  • Purchase agreement
  • Assignment contract
  • Lease agreement

The contract you’re most likely to see is a purchase agreement containing the offer to purchase a property and the terms. The elements of this contract include:

  • Mutual agreement – all parties are willingly entering into the contract
  • Consideration – the object of value being traded, in this case, the house
  • Capacity – each party must be of legal age and sound mind
  • Lawful purpose – the contract cannot contain any illegal clauses

Real estate contracts are often subject to intense negotiation. The buyer, of course, wants to purchase the property at the lowest possible price. In contrast, the seller wants to earn the highest amount possible. Once the paperwork is signed, the deal is done. There’s no backing out without consequence after all conditions have been met. 

Want to see what other clauses and contingencies you might see on your contract? Read our article right here.

Elements of Negotiation

What aspects of a real estate sale can be negotiated? The price is the most obvious. However, you can also negotiate certain conditions into the agreement that must be met before it becomes legally binding. While you can include any contingency you want to purchase a home, these are the ones you’ll see most often:

  • Condition of home inspection
  • Condition of sale of current property
  • Condition of financing

Before signing off on your offer, you want to ensure that it includes everything you want. For example, buyers often believe that the house comes with the drapes and appliances. However, if you want to be sure, get it in writing.


That old saying “hope for the best, prepare for the worst” was never more true than when it comes to negotiating real estate. But here are some informative articles to help you get the best results:


How the Current Market Affects Your Negotiating Power

In fierce sellers’ markets, the buyer cannot always get the price or conditions they want. Sometimes, you have to place a firm offer to stand out against other potential buyers who love the property. Whenever the market allows it, we recommend at least adding the condition of a home inspection. This protects you from ending up with something beautiful on the outside but riddled with non-stop problems after you take possession. 

Conditions may cost you the house if another buyer comes along with a firm offer. However, sometimes it’s worth it to keep looking because you may avoid a costly and stressful mistake.

During buyer’s or balanced markets, a buyer has more negotiating power. You may be able to get a break on the price or add in additional conditions to protect yourself and ensure you’re getting the right house.

As a seller, the ability to negotiate depends primarily on market conditions and the value of similar homes in your neighbourhood. It may be tempting to overprice your home in the hopes someone will pay, but this strategy often backfires, and you may not find a buyer at all. 

The Offer Process

When a buyer finds a home they like that’s in their price range, they’ll work with their Realtor to craft an offer. The offer to purchase includes the price they’re willing to pay, any conditions they may have, and expiry date when the offer becomes null and void.

The seller can now contemplate the offer and decide whether to accept or reject it. If the conditions are almost, but not quite, agreeable, they can also come back with a counteroffer.

Sometimes, they’ll ask the buyer to increase the dollar amount. Other times, they’ll ask for the removal of conditions or more flexible closing date. 

The process of offering and countering can go back and forth several times. At some point, an agreement will be made, or one party will decide to end the negotiations and move on. That’s why it’s so important to understand the market and the strength of your position. Otherwise, you may lose a contract for the sake of a few thousand dollars or over a fridge or stove.


Should you work with a real estate agent, and how do you pick the right one? Here are some ideas to help you make the best choice:


The Importance of Working With A Realtor

Real estate contracts can be complex, but they are legally binding. A professional, local real estate can protect you from overpaying or selling your house for less than it’s worth. But how do you choose the right agent? For the best results, you should look for someone who is:

  • Knowledgable about the area
  • Has experience with different types of markets (not just the boom that we came out of)
  • Is part of a team of experts that can handle every detail for you
  • Has experience in negotiating with both sellers and buyers
  • Will be available to support you and answer all of your questions

Do you have questions about negotiating the best possible terms for your real estate transaction? Reach out to us here, and we’ll get back to you with the answers you need and more.

Leave a Reply

Your email address will not be published. Required fields are marked *