Simply put, this is the sales price that the buyer and seller agree on. Keeping in mind that a buyer’s agent’s job is to get the best price, terms and conditions for their buyer, and the listing agent’s job is to get the best price, terms and conditions for their seller, this can be a daunting proposition. After all, the seller wants to get as much as possible, and the buyer wants to pay as little as possible. Obviously this can be a tense negotiation. But a “meeting of the minds” should ease some of the intensity. It helps when a buyer’s agent can show justification for their offer (usually something along the lines of their Comparative Market Analysis (CMA)), and a seller can show THEIR justification for their selling price (often their own Comparative Market Analysis). When each party see’s the other’s CMA, it takes the transaction from an emotional one to more of a business deal. Of course, a listing agent is going to look for flaws in the buyer’s CMA, and the buyer’s agent is going to look for flaws in the seller’s CMA. Again, this turns it into a business deal and a negotiation based on fact, not emotion. Somewhere there should be an agreement on what the house should sell for. This is ultimately the Contract Price.
Referring back to my blog “Pricing a Home – Part 1”, when I discussed the list price of the house, a savvy seller and a good listing agent will realize that, what I’ve just discussed in the paragraph above is what it will all come down to. So price the house right to start with!
(As an aside, in North Carolina there is another negotiation that comes later in the process – that of repairing deficiencies in the house. An “ugly” negotiation when determing the sales price may set the stage for a very difficult negotiation for repairs.)