Hi folks. Let’s talk a little bit about negotiating. Negotiating is one of the things I enjoy most about my job. I would be perfectly happy to never do anything but sit at my desk and negotiate deals over the phone.
Negotiating is an acquired skill that anyone can learn. It’s one of those things that the more you do it the better you get. I also think everyone has their own way of doing it so I’m just going to try to explain what works for me and then you can tweak it or add to your current way of doing things so that it works for you and your market. And hopefully, you will be able to add some suggestions or techniques, in the comments, that will help me to improve. So here goes:
One of the first things I’ve learned about negotiations is that unless the offer is acceptable I always suggest to my Sellers that they counter offer. We rarely out right reject an offer. I’ve had offers that started out extremely low where the Buyers eventually came up. There are some Buyers who just have to get the low ball offer out of their system. It could be a cultural thing. It could be they have watched too much late night TV. Whatever the reason…..it’s just an offer. Don’t let the Sellers take it too personal and get upset over it. Counter it.
When I receive an offer on one of my listings, the first thing I do is call the agent and go over the offer with them. I do this for two reasons. One, I want to make sure I have the entire offer and I’m not missing an addendum that may have additional terms on it and secondly, I want to open up communications and get friendly with them. Why? Well, it’s simple, they may tell me something that my Sellers and I can use while negotiating. You would be surprised at the things I’ve learned during the course of a conversation.
Next I call the loan officer or mortgage broker. Same strategy, ask questions and listen. You can find out quite a bit of information. But most importantly, I want to make sure the Buyers truly are qualified. You can usually tell if the LO is being truthful with you or not.
Now folks, I’m not working for the Buyer. I work for the Seller and my goal is to get as much money as I can for my Seller’s property. There is nothing wrong with me asking questions. If the Buyer’s side chooses to answer something they shouldn’t, well that’s their problem not mine.
Once I have taken these two steps, and I’m satisfied with the answers, I prepare a Net sheet and transaction outline for my Sellers. Now I’m ready to get with my Sellers and go over the offer. Initially I prefer to present the offer via Email or by phone. At this point in the negotiations I’ve just found it easier on the Sellers if I’m not burying them in paperwork right up front. I present the offer by using the Net sheet and transaction outline that I have prepared. I want the Sellers to concentrate on the things that are important to them not 10 pages of useless disclosures and addendums. We can go over that stuff later.
I suggest to my Sellers that they make a strong counter offer. We want the Buyer to be tempted to accept our counter. I also suggest they agree to as many minor things as they can i.e warranties, closing costs contributions, closing dates and the such. If the costs/terms are within reason, accept them. Give the Buyer the small stuff. It’s easier to get a counter accepted if you are not changing or denying every little thing the Buyer is asking for. If the Buyer wants closing costs and warranties, these items are just reflecting in the counter offer price anyway……so why not leave them in?
Once the Seller has decided on a counter offer we make the changes on the contract and mark where the Buyer needs to initial. Now this step, may be a little controversial and some may not agree but here goes, my Sellers do NOT sign or initial the counter offer. I Email it to the Buyer’s agent with no signatures or initials. “But Broker Bryant, why do you do that?” Well, let me tell you, I want the Buyer to commit before my Seller signs off on it. My Seller ALWAYS signs last.
We keep the property on the market and take showings and offers until the Buyer has agreed and signed and initialed everything AND put up his escrow deposit. I want my Sellers to be in a position to negotiate and accept another offer if one should come in that’s better. I don’t want the Buyer to sit on my Seller’s counter for two days while they decide whether or not to accept it or counter it.
Also, NEVER give an ultimatum in negotiations. Don’t say, “This is my Seller/Buyers final offer, take it or leave it.” It slams the door shut on any further negotiations and it’s not true. I can assure you, if my Seller comes back within $500, your Buyer will probably accept it. So just don’t give ultimatums. Negotiate until the deal is accepted or dead and buried.
That’s how I do it. Any questions or suggestions?
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