How Good are You at Negotiating?

By
Real Estate Agent with RE/MAX Professionals, CT 203-206-0754 REB.0759001
http://actvra.in/4NXQ

How Good are You at Negotiating?

That was a question that came from left field from my buyer client and caused me to ponder the purpose of that question before I responded. This client was getting upset at not being able to find a home to purchase.

Part of the frustration was the size of the house needed and the amount of money she was able to spend. The additional frustration was borne of the lower than normal inventory for being in winter.

How Good are You at Negotiating?

Her thought was to go well beyond her upper financial cap and attempt to get the sellers to negotiate down to her comfort level. There are many factors that need to be considered when evaluating the house one wants to buy and how the process of getting a good deal is worked, or negotiated.

First, assuming the idea house has been found, the real estate agent for the buyer has several ways to determine how much leverage they might have when negotiating the contract. Has the house been priced competitively for the market and for the current condition of the home? And over priced hone may have a lot of movement potential, but if the sellers are trying to hit that big slam themselves, they might be less likely to give up much.  Stands to reason if they had the house listed too high.

What Types of obligations are there against the house? A trip to town hall will allow the agent to see what types of encumbrances, or liens, there may be on the property, all of which would need to be resolved, before the home could pass title to a new owner.

HELOCs, or lines of credit in the form of equity loans could be there and have money owed against them. Tax liens or mechanics liens for work done but not paid, or even judgments against a title holder of the home.

 

How Can An Agent Get Us a Good Negotiating Position?

Negotiating strength comes first from having a sound offer. This starts with a pre-qualification letter from a lender that may not only show the value for which the buyer is approved, but also a property specific letter. This lets the sellers know that their agent has talked to the lender in depth about the property.  The agent may ask that the letter show a value less than the total amount the buyer can pay.

If the property is high for the market, then the offer can be sent forward with recent comparable sales. These may serve to reinforce the agent's claim to their sellers that the home is over-priced and that it is apparent to anyone that takes the time to do some research.  This may allow the agent to get some concessions on price for the buyer.

A low-ball bid strictly to get a strong negotiation should be looked at by the sellers as just the start of the process. A counter offer of reasonable value will let the buyers know they will negotiate but are not willing to come down to that low-ball price. If the buyers and sellers use their common sense, they may reach a common ground and get the contract initiated.

With all the information available to a consumer online, it is possible for a buyer to have a good feel for a home price and respect and understand that the sellers want to sell it at a reasonable price, just as much as the buyers want to buy it for same.

How Good are You at Negotiating?

 

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Will Nesbitt 02/25/2016 12:00 AM
  2. Debbie Reynolds 02/26/2016 05:00 AM
  3. Gabe Sanders 03/04/2016 03:00 PM
  4. Winston Heverly 04/29/2016 01:32 PM
Topic:
Real Estate Best Practices
Location:
Connecticut New Haven County
Groups:
The Art Of Marketing You
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Connecticut Professionals
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Tags:
negotiating a home sale
home sales in central ct

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Rainmaker
249,153
John Wiley
Jones & Co. Realty - Cape Coral, FL
Lee County, FL Real Estate GRI, SRES,SFR,PSA

Ed, thanks for putting your thoughts on Negotiation in such clear perspective.

Our job seems to always be to educate the consumer. Real Estate prices are not based on what I hope them to be but on what the market determines.

I agree that to negotiate from a strong position we need to be knowledgeable of the current market for that property and to be able to present that knowledge in a way that impacts the direction of the negotiations.

Feb 22, 2016 08:44 AM #45
Rainmaker
359,097
Jeanne Dufort
Coldwell Banker Lake Country - Madison, GA
Madison and Lake Oconee GA

In my market, a low ball offer WILL NOT make for a strong negotiation. IF the seller decides to responds, its often with a "dug-in" position. To get the best deal in my market, you've got to do your homework and be prepared to come in with a strong offer. 

Feb 22, 2016 09:05 AM #46
Rainmaker
382,792
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Specializing in Brookside, Waldo, Prairie Village

Well I bet you had to think quickly when asked that question! There are so many aspects to negotiating--and making that initial offer is the first step in the process.  I hope your buyer understands that she will be restricted by her budget and available inventory, no matter how good you are as a negotiater

Feb 22, 2016 09:26 AM #47
Rainmaker
256,401
Dana Basiliere
Rossi & Riina Real Estate - Williston, VT
Making deals "Happen"

I try to discourage buyer clients from shopping too far above their comfort level. They might fall in love with a property only to find the seller is fairly firm on the price.

Feb 22, 2016 10:03 AM #48
Rainmaker
158,211
Wendy Remley
Utah Prestige Real Estate - Syracuse, UT

The negotiation process starts well before we write an offer. We have to negotiate with our buyers to help them write a competitive offer. If we haven't been realistic, they're going to be shocked when the offer isn't accepted.

We need to negotiate with our buyers on what sort of properties we should be viewing and offering on, depending on market conditions and their purchase ability.

What the buyer WANTS to pay has little bearing on the property's actual value.

Feb 22, 2016 10:44 AM #49
Rainmaker
232,509
MaryBeth Mills Muldowney
TradeWinds Realty Group LLC - Braintree, MA
Massachusetts Broker Owner

The first offer the buyer is negotiating against themselves really, I stress this with my Sellers and tell them the next ask to the dance may be just what they are waiting for...don't be insulted, dont be rude back - no matter how badly you want to tell them to take their offer and oh well we dont have to go there....

Feb 22, 2016 10:49 AM #50
Rainmaker
196,039
Susan McCall
Compass Realty Solutions, Portland, OR - Vancouver, WA - Portland, OR

Sometimes the best way to negotiate is to get the listing agent to talk to you.  This can be extremely beneficial if the listing agent is willing to take a few minutes and talk to you.  Since one is talking first to the listing agent, it makes sense to trying to establish a working relationship up front, if this is possible.

Feb 22, 2016 02:38 PM #51
Rainmaker
34,386
Craig Cooper
Chase International Real Estate - Tahoe City, CA
Creating-Preserving-Growing Wealth in Real Estate

Thanks for the points on negotiation Ed. I know I'm in trouble when my buyer client says " This is how much we will pay for the home, now go out and work your magic and get it for us Craig!" I think they may have watched too much 'Million Dollar' LA or NY. I find it most important to set very realisitc client expectations and then in an attempt to get the best price possible for a buyer, the buyer must make that first offer very reasonable. They are so much better served with an offer based on quality and comps than on what they can only afford to pay. Often, when the seller receives a severe low ball offer they will assume the buyer is shopping, can't afford it, or may even be insulted and believe the buyer isn't serious.

Feb 22, 2016 03:27 PM #52
Rainer
135,218
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

When I have a buyer getting ready to make a low ball offer, I pull up the most current of the "day" comps and other information. Also if my buyer is asking nothing in contributions from the seller and with all that in mind we proceed with the buyer's offer which may seem low ball but possibly is not after all.

Feb 22, 2016 09:29 PM #53
Anonymous
Morris Austin

In the end it's really about the respective clients being willing to compromise and come to agreement. Yes, we can set the table but we can't make them eat. That said, I will submit any offer on any house that my client wants.
Pre Qualification, yes. Market research, yes. Discuss with the other agent, yes.

Morris "Bill" Austin ~ REALTOR® ~ Austin Board of REALTORS®
512-709-6343 ~ bill@teamprice.com
Team Price Inc.

Feb 22, 2016 10:59 PM #54
Rainmaker
1,244,319
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Area Real Estate

There's nothing wrong with your skills it's with her strategy. "I want the house for x" is not negotiating.

Feb 22, 2016 11:50 PM #55
Rainmaker
1,427,346
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

We are in a tight sellers market here.  There are some properties that are over priced, but not many.  My rule of thumb is if you come in at less than 90% of asking it is dead in the water.  If they are that much over priced they are just dumb and will probably not move.  If they are only slightly over priced they will lower the price before taking that big of cut.  Anyway, does not mean you should not look at each case individually.  

Feb 23, 2016 12:44 AM #56
Rainmaker
1,028,124
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Ed, this is good information for buyers and sellers.  Gathering and analyzing information and data provide a negotiator with an edge in negotiation.  You've identified good resources.  Understanding the interests of all parties and thinking outside the box goes a long way in satisfying the needs of the buyer and seller. There are an infinite number of factors that impact the positions of buyers and sellers. 

Feb 23, 2016 01:06 AM #57
Rainmaker
1,281,489
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
your real estate writer

You can be an accomplished negotiator when working on your own behalf - but when working for a client you can only do what they authorize. Not an easy task.

Feb 23, 2016 06:09 AM #58
Rainer
4,330
Floyd Hodgins
Pearson, GA

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Feb 23, 2016 10:32 AM #59
Rainer
4,330
Floyd Hodgins
Pearson, GA

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Feb 23, 2016 10:32 AM #60
Rainmaker
20,443
Michael Kaim
Berkshire Hathaway HomeServices Professional Realty - Mentor, OH
Real Estate team serving the Cleveland Area

Thanks for sharing and posting Ed Silva

Feb 23, 2016 07:17 PM #61
Rainer
162,871
Greg Mona
RE/MAX Platinum Living - Scottsdale, AZ
YOUR Local Real Estate and Design Resource in AZ!

You've summed it up nicely here, Ed Silva.  To drag out an old nugget I've said many times before, home sales are like snowflakes; no two are exactly alike.  That said, all we can do is our best due diligence, educating of our respective clients, and utilizing our skills at the negotiating table.  Hopefully after all of that we have a closed sale and happy clients!

Feb 29, 2016 10:10 PM #62
Rainmaker
37,683
Eren Millam
Realty World Cosser & Associates, Inc. - Chehalis, WA
Certified Negotiation Expert

Technically, I'm a Certified Negotiation Expert. But, you can't negotiate 50k off a home that's priced well. It's all about positioning, especially if yours is not the highest offer. I've had some clients give me bad reviews on my negotiation skills, but as I recall, they did not accept my negotiation advice and wanted to do it their way. Those who do take my advice save an extra 2% or more and give me great reviews on my negotiation. Funny how that works!

Mar 04, 2016 09:11 AM #63
Rainmaker
1,251,167
Donna Foerster
HomeSmart Realty Group - Parker, CO
Metro Denver Real Estate Agent

Thankfully negotiating falls under Rich's responsibility and he has his CNE designation. He can make the deal come together!

Sep 08, 2016 10:00 AM #64
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