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Effective Communication is Key When Negotiating

I am convinced one of the most difficult things we do when negotiating is to communicate effectively.  More transactions are lost because we misunderstand, don't listen, assume we know, don't call back, don't clearly articulate, don't write it down or don't work to build consensus. 

 To communicate effectively we need to:

1. Listen
2. Try to understand what the other party wants and why they are requesting it?
3. Know if a request is a casual want or an absolute need?
4. Know how to identify an alternative option that will satisfy their request?
5. Return calls promptly, especially difficult ones, they don't age well.
6. Make sure all written communication is clear and expresses the exact terms of the agreement.
7. Be professional and unemotional in our communications, our clients don't need an emotional agent.
8. Listen, we will never hear if wwe are thinking about what we're going to say next and not listening to the answer of the question we already asked.
9. Ask good questions to get all the facts and never assume we already know the answer.
10. Try to build on areas of agreement to build consensus.
11. Appreciate that the person we're speaking with may be under a lot of stress or having a bad day and not take it personally.
12. Leave our ego out of it, when everyone feels like they won it will be easier to get agreement.

Unconditional Offer of Compensation

 Unconditional Offer of Compensation offered in MRIS

The selling coop broker, as a result of anti-trust laws, is not allowed to know the terms of the listing broker's commission arrangement with the seller.  That's why MLS only displays the portion being offered cooperative compensation. The selling agent doesn't know what the listing agent is collecting or retaining for their portion of the compensation, they only know what is being offered to the selling agency.

Short sales and bank owned properties have put a lot of stress in the real estate marketplace.  Trying to negotiate an acceptable sale price on a short sale is very frustrating and that is an understatement. I visualize a room with no windows, a desk piled high with files and some poor soul with a visor on trying to understand contract offers written from every state in the union.  A short sale listing can languish on the market; finally get an offer and then the buyer, seller and their agents may wait weeks for the third party lender to respond to the offer. 

 Both agents spend an inordinate amount of time negotiating, price, terms and property condition and are then rewarded with the third party demanding a reduction in the real estate fee as a condition of offer acceptance in an attempt to reduce their loss.

The selling agent when they show the property accepts the offer of compensation offered.  They show the property and then present an offer from the buyer.  Once an offer is tendered the NAR Code of Ethics the offer of compensation cannot be modified as a condition of offer acceptance.  The offer of compensation is unconditional.  The agencies can mutually decide to change the compensation but not as a mandate as a condition of contract acceptance. 

 The listing broker when confronted by the third party often expects the selling broker to share in any reduction in compensation.  This request can be made but not demanded. I find the easiest way to explain it is to reduce it to the ridiculous. 

If the third party demanded that the real estate fee be reduced to zero would that be acceptable? No. If the expenses of sale can't be met with that offer's net then it should not be accepted. The individual with the visor isn't throwing in their weeks pay to make it work.  Taking a hard line can be difficult. The most motivated person in the transaction will usually make the necessary concession.  The market sets the price and terms.  What some one needs, does not set market value.  I have never had either a buyer or seller ask "please, please tell me what does the other party need so I can be sure I will make them happy."

 A renegotiation of the employment contract (listing) is between the seller, the third party and the listing agency.  The selling broker has been given an offer of cooperation and if offered an unconditional offer of compensation that has been offered and that is not in the negotiation unless they decide to participate.

 

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6 Tips to Negotiating a Successful Offer

Multiple contracts are happening more as the Anne Arundel County spring market heats up.  Here are some tips to have your offer viewed favorably.

 

1. An offer is more than just sales price, try to consider all the terms of your offer from the seller's vantage point. Settlement date, financing, inclusions, inspections, home warranties, repairs, seller concessions and the earnest money deposit are all part of an offer.
2. When competing I ask the buyer to consider making an offer at terms where they will have no regrets if their offer is unsuccessful. Nothing is worse than the frustration of loosing the house at terms that you would have offered given a second chance.
3. When each party, buyer and seller, feel that it's a fair negotiation a deal is usually struck. Most folks don't accept an offer where they feel totally beat up.  Everyone needs a win even if it is a small won.
4. Consider including a deadline for the seller's response. This creates some urgency and does not allow your offer to be used as a negotiation tool to generate offers from others.
5. Be sure to be pre-qualified by a mortgage officer and if possible pre-approved, it will put your offer in a more favorable light.
6. If you have a home to sell put it on the market contingent on you finding your home of choice.  When you are a non-contingent buyer it improves your negotiating position.

 

With housing affordability up and lots of well priced inventory it's great time to buy. Good luck!

Seller Appeasement Newspaper Ads Don't Work

Seller Appeasement advertising is a disservice to everyone. That’s an ad that is placed in the newspaper to make the seller feel good but really doesn’t get results.

In my last Blog I focused on the challenge that the newspaper industry has in identifying a new delivery system for the daily news. Their revenue is down because advertisers are not getting the results they need from newspaper advertising.

The ability to search for products and services on the Internet has made newspaper ads literally yesterday’s news.

In today’s economy you cannot spend money on ads that don’t produce results. You also need the information to be current, compelling, available on demand everywhere a potential prospect is looking.

In 2002 the consumer placed newspapers as their number 2 source with the Internet being number 3. In 2008 newspaper didn’t make the top 5 and the Internet was number 1.

Top 5 sources for the consumer in 2008 according to NAR-

1. The Internet

2. Real Estate Agents

3. Yards Signs

4. Open Houses

5. Real Estate magazines

When making marketing decisions the Internet is the obvious choice.