I had to finally sit down and address one of my pet peeves in the real estate industry, but a little background first. I spent 5+ years in a mid-sized law firm litigating cases and negotiating various settlements in lawsuits. I quickly learned that negotiation is an art form and not a science, but also that many different styles of negotiation can be effective. That said, I am constantly amazed when I read the listings of some real estate agents. They are stealing their client's money, and they don't even seem to realize it.
Some agents believe that their job is to sell their clients' home, but that is only half true. Their job is to sell their clients' home, protect them from mistakes in the sale AND GET THEM THE MOST MONEY FOR THEIR HOME THAT THEY CAN. So why do so many agents use phrases like the following in a listing that has been sitting too long:
"Bring All Offers", "Motivated Seller", "All Offers Considered", and my personal favorite "All Reasonable Offers Will Be Considered."
To me these lines all say the same thing, and they could have just written in the listing, "My seller is distressed, please ignore the list price and bring me a low offer!" Think about it, why even use a list price if you are going to undercut your seller's bargaining position in such a manner. As for the "All Reasonable Offers" statement, is that not the most redundant phrase ever invented. Of course only reasonable offers will be considered, but by putting that in the listing you have just told me that your seller is getting distressed (or you are).
Case in point, I got a call from a couple asking me for help selling their home because their current agent was not working hard for them. I talked to them briefly, explaining that I would review their listing and provide a few pieces of legal advice until their current listing expired or was cancelled. The first thing I told them when I saw a copy of their agent's marketing and listing materials was that the only offer they would get would be a low-ball offer because of their agent's use of one of the above phrases, and I explained why this would occur.
Two days later they called back and told me that they got an offer, and it was remarkably close to what I told them I would offer if I had clients looking to buy the house. And my offer was low, very low. They were quite shocked to hear that such phrases were used by a lot of agents when marketing a home.
In my opinion, when you have a distressed seller or a home that is not moving there is only one proper way to communicate to potential buyers...BY REDUCING THE PRICE. Pricing itself is a form of negotiation, but does not give away vital information that can be used once an offer is made. If you have a seller that needs to move a poperty fast, then structure an arranged price reduction of a certain percentage every week or two. Eventually you will find the price point where the property will sell quickly, and it will almost always be a higher figure than if you tell agents to submit a low offer using one of the phrases above. At the very least you will have more control of the negotiation and will not have given away your most important negotiating points. Thus instead of undercutting your own list price and in effect telling buyers to ignore it, you use the list price to communicate that a sale will be advantageous to a buyer because the price has been reduced compared to the typical market value of the home.
Here is an example of price communication in negotiations. I currently have a listing for 18 acres of land priced at $990,000. When I received an offer of $700,000 on the land I talked to the owner and determined that if we countered at $850,000 we would likely arrive at a figure of $800,000 for the contract price. Sure enough, when we countered at $850,000 we received a second counter at the $800,000 figure. My client asked ho
w I knew that we would end up at $800,000. I admitted that not all negotiations are that predictable, but explained how pricing and price negotiations are a form of communication and that experienced agents or attorneys learn to pick up a feel for where a negotiation will end up.
Hopefully many of the agents that use these types of phrases in a listing are simply inexperienced or poorly trained. Just keep in mind that unless your client is a charity, giving away money will be severely frowned upon. Further, some people just should not give a buyer the shirt off the seller's back. It just isn't pretty.
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