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I recently took a course to become certified to teach continuing education in Hawaii. For the final project, I was given an assignment to make a presentation to the class which was made up of real estate instructors and some of the members of our real estate commission. I selected the title from a short list that was supplied to me. It was "The 3 P's of Negotiation". They gave me the title but did not mention what the 3 P's were. I was left on my own to be creative.
Here is a rough overview of my presentation.
There are three steps to a successful negotiation, known as the 3 P's of Negotiation.
I am sure that many of you have your own idea of what makes for quality preparation and presentation. For this example we will be looking from the eyes of a real estate agent who is representing a buyer for the purchase of a residential property and has already identified a property they wish to make an offer on.
PREPARATION:The agent needs to do research. Check public records, do a comparable market analysis, view the property and interview the seller's agent.
Identify any potential issues like zoning, building permits.
Look for red flags on the property that may affect the value to the buyer.
Try to get a read on the seller's motivation.
Determine market value of the home.
Meet with the buyer to determine their motivation.
PRESENTATION: Prepare an offer to the seller that will give the buyer their best chance at getting the best deal at the best terms for them possible. Present that offer to the sellers via their agent. Here are some of the elements to that offer.
A clean executable purchase contract. A contract with no unusual special requests that a seller may object to. A complete contract that has every signature, correct math and all needed attachments and addendums.
A price that is reasonable, close to what we believe is the lowest the seller is willing to go, possibly a little below that.
A strong loan approval letter from the funding letter, not a broker. A letter from Central pacific Bank who approves and funds the loan is much stronger than a letter from Bob's Mortgage and Hair Cutting Emporium.
A nice cover letter that explains and part of the contract that there may be questions and introduces your clients and yourself to the sellers.
A reasonable period of time to make a decision. (No game playing).
Nothing too creative, nothing that will make them nervous.
Your offer needs to be so clean that if they sign it you are in escrow. An offer that has mistakes and missing elements is a big disservice to your client. If you create an environment that they are forced to counter for housekeeping you open the door for price and terms to be back on the table. You eliminate your shot at getting your first offer accepted. You want that offer so attractive that they are afraid to chance losing the buyer, even if the price is a little less than they really wanted to accept.
PAUSE: This is the most important part. Once you have presented your offer, stop talking. He who speaks first usually loses in a negotiation. Give the seller enough time to stew it over. Let them get used to the idea of maybe accepting a little less money to get a stress free sale. If their agent calls and tries to extract information that may help their clients in the negotiation, keep your cards close to your vest. Give them no hint, leave the doubt as to what would happen if they counter. Leave them having to decide whether they want to risk losing such a solid offer or whether they will just sign it. Remember, he who speaks first usually loses.
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Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.