March 15, 2024 • 22 mins
We're going to explore the nuances of presenting and negotiating offers. The post COVID market was frenzied and shortcuts were taken by many agents that had to put multiple offers on spreadsheets and evaluate the best price in terms at lightning speed so that their seller could move quickly to go compete with multiple offers on their move up property. The pace was fast and furious. Speaking of furious, that market left many consumers disenchanted with the home buying or selling experience. And if you intend to be a real estate professional for the long haul, You will have to be diligent about increasing your skills, service, and systems to provide an improved customer experience.
This episode will uncover a method for presenting offers, then the "5 Stages of Negotiation" that help us move offers into contracts and navigate the contingency period to arrive at the closing, where everyone achieves their goal.
Did you like this episode? Is there something else you would like to learn about? Let us know here!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Microphone (2- Samson Q (00:05):
Welcome to real estate.
Common sense.
I'm your host.
Lisa Spencer.
I grew up in real estate.
Family was a top producing agentand a managing broker for over a
decade.
Eventually leading an office ofover 400 agents.
What I've discovered is commonsense is not that common,
especially when it comes tolaunching building or expanding
(00:27):
a real estate business, I haveinterviewed thousands of agents
and helped hundreds launchsuccessful careers.
Today.
We're going to explore thenuances of presenting and
negotiating offers.
The post COVID market wasfrenzied and shortcuts were
taken by many agents that had toput multiple offers on
spreadsheets and evaluate thebest price in terms at lightning
(00:49):
speed so that their seller couldmove quickly to go compete with
multiple offers on their move upproperty.
The pace was fast and furious.
Speaking of furious, that marketleft many consumers disenchanted
with the home buying or sellingexperience.
And if you intend to be a realestate professional for the long
haul, You will have to bediligent about increasing your
(01:11):
skills, service, and systems toprovide an improved customer
experience.
We'll start with the easiesttopic.
First, the nuances of presentingan offer.
I was so blessed that myinstructor at my very first
board of realtors, orientationgave the best advice and
employing her offer presentationstyle was spot on for what we're
(01:35):
going to talk about today.
Her advice was to start with thelast page of the offer and work
forward to the first page.
The glaring truth is that once aseller hears the price, it is
difficult for them to hear theother details of the offer.
So let's work through anexample.
Let's begin with.
(01:56):
Thank you so much, Jane andTammy for taking the time to be
on this call or video conferenceso that we can review the offer
that we just received.
Remember when we had our firstconsultation, we talked about
how often the first offer is thebest offer.
And I would say this one haspotential.
In the additional contractualprovisions here on the last
(02:18):
page, they are detailing thatthe pool equipment must be
included with the purchase.
Well, that's an easy, yes.
As we published in the MLS thatwe would include these items.
A very detailed agent will oftenmemorialize in the offer
details.
Any special offers orincentives.
So I also see here that they areasking for the home warranty to
(02:40):
be included.
How do you feel about that?
Notice how I didn't offer myopinion.
The seller may say, well, itdepends on their offer price or
no way, or that soundsreasonable.
Don't get stuck here.
Your response is.
We can decide to eliminate it oradjust that after we've reviewed
more of the offer details.
(03:00):
Then you remind them that theyare in capable hands by saying:
From there, the contract is justlike the blank one I gave you
during our initial meeting, Thenremind them of the timelines
that are pre-written into thecontract form and where this
offer may differ.
For instance, the timeframe forinspection usually allows 15
(03:21):
days for an inspection period.
In this offer they've reducedthat to seven days.
This is valuable because itlimits your time that the home
is off the market while thebuyer completes their
inspections.
Microphone (2- Samson Q2U (03:34):
Then you may move on with.
Wow.
The closing date is exactly whatyou were looking for.
They have also checked the box.
It says they will take over anyassessments after closing and
you'll cover them up to the timeof closing.
This is typical, but I want topoint it out to you because we
always want to confirm that theydid not check the box, that the
seller had to bring allassessments up to date.
(03:58):
It's important to take a minute to
show the seller that you haveread this offer and that you're
looking for any of those littlenuance pitfalls that could end
up costing them.
Lot of money at closing.
Then you'll move on by saying.
Microphone (2- Samson Q (04:11):
They've said that you can select the
title company.
And that's nice because we canwork with the one that I know
and trust, which will add lessstress to the transaction for
you.
They have provided a preapprovalletter from a lender I'm
familiar with.
And I have great experiencewith, for an on-time hassle-free
closing.
And that is a major plus.
(04:31):
It is extremely frustrating toget to the week before closing
and have a lender ghost you.
We are now at a point where theymay be feeling like you're
holding back on the price.
So then I start with theirtypical loan type.
Is it FHA VA or conventional,then we moved to their down
payment and the earnest money.
And finally the offer price.
(04:52):
Then just stop talking.
Yeah, like that pause.
Let them have a minute toprocess before you jump in with
advice.
If the offer is over the askingprice.
Or where they anticipated itcoming in, simply ask.
Do you want to accept the offeras it's written?
(05:13):
This will put your home undercontract right now, the minute
we counter this offer, it is nolonger in play.
We are opening negotiations thatmay succeed or fail.
I'm here to be your advocate andas your agent, I will only
respond as you wish.
They may say, okay.
Or they may say, no, we reallydon't want to pay for a home
(05:35):
warranty for them.
Let them get their own.
You did your job by letting themknow that the buyer is now free
to make an offer on anotherhouse.
But hopefully they're reasonablebuyers and they'll understand
that most offers requirenegotiation.
Now what if the offer is underwhat the seller was
anticipating, but within a rangethat you, as the agent feel is
(05:56):
reasonable.
The seller may say no, our homeis worth more than that.
You might respond with wheneverwe get an offer, we have three
choices.
We can accept that offer.
We can reject that offer, or wecan make a counter offer.
We should never be offended byan offer.
These people, unlike the otherswho came through your home and
(06:18):
rejected it.
Appreciated it enough to make aformal offer.
Would you consider formulating acounter offer?
Microphone (2- Samson Q2U (06:27):
Help them appreciate the other
details in the offer before justjumping into increasing the
price.
Microphone (2- Samson Q2U M (06:35):
You may say something like the
closing date is exactly what youwere hoping for.
There are a lot of things aboutthis offer that work for you.
Is it only the price thatbothers you?
Let them offer the counter offerprice.
Assure them that you will workswiftly to get a response from
the buyer's agent and that youare sure they made what they
(06:56):
felt was a fair offer.
But our counter offer is alsofair And I'm optimistic that we
will be able to get this towork.
Remember you think that theoffer was reasonable and you
tried to get them to accept theoffer because a counter to a
very fair offer can sometimesresult in the buyer considering
(07:16):
other properties before theyincrease their offer.
That brings us to the last typeof offer the low ball offer.
Even worse, the sight unseeninvestor offer that our market
has been flooded with right now.
Remember, these negotiations arenot yours.
They are between the buyer andseller.
And facilitated by agents.
(07:37):
The seller may be infuriated bya low offer and take personal
offense.
Remember your position as thecalm and knowledgeable guide.
You might say.
I agree with you that this offeris too low and there is no
reason for us to counter thisoffer.
Unfortunately, we don't knowwhat influenced the buyer in
making this offer.
(07:58):
What I'd like to do isrespectfully ask them to
resubmit their offer.
I have seen buyers jump upsignificantly.
Once they've satisfied theircuriosity as to whether they
could get a deal.
I'm using air quotes here.
Regardless, which of the threepossible responses the seller
(08:18):
chooses.
The offer presentation shouldfeel like a partnered
conversation where you areproviding information and asking
questions that will help theseller make the best decision
for them.
I never let your ego speak.
Always consider how to easetensions and provide reassurance
that they are doing the rightthing.
(08:41):
There are thousands of possibleoffer scenarios.
So I hope this at least givesyou a framework for developing
your presentation style.
After presenting an offer, wemay head into the realm of
negotiations.
Hmm.
Microphone (2- Sa (09:05):
Negotiations.
Most realtors think they're goodnegotiators.
Sadly negotiating is likedriving.
It depends on conditions.
And whether someone is yieldingto you or cutting you off.
Even the mildest cautious drivercan suffer road rage if pushed
too far.
The same is true of negotiating.
(09:26):
So repeat after me, I am thecalm and knowledgeable guide.
It is not your house.
That is being sold or yourequity that is being lost.
If you are negotiating for abuyer, it is not you who will be
paying the mortgage or who willbe homeless.
If negotiations break down.
Do all you can to keep everyonetalking to each other.
(09:49):
Check out our live workshopschedule for the five stages of
negotiation for a morecomprehensive coverage of the
following guidelines on realestate.
Common sense.com.
But for today.
We'll give you an outline of thefive stages of negotiation.
The first stage of negotiationbegins.
The minute we meet our buyer orseller.
In this stage, we are focused onbuilding trust and setting
(10:12):
expectations around the homepurchase or sale process.
Often we have to combat thenational real estate news.
With local market statistics andinformation.
For instance, their favoritenewscaster or podcaster, or in
some instances, social mediainfluencer has been highlighting
national real estate statistics.
(10:33):
Like the real estate market isdown 10%.
This is a dramatic headline orscroll stopping statement.
The issue is many consumers.
Don't wait for the in-depthreview of that statement and
simply move on with their owninterpretation of the real
estate market is down 10%.
They didn't stay interested longenough to know that that was a
(10:54):
statistic referring to realestate number of sales and not
the price.
They also didn't wait for thedata sourcing, which showed that
one state, for instance,Portland, Oregon has seen 10%
fewer sales.
But Atlanta, Georgia is seeing amodest increase in sales.
Sadly, the human condition ispeople collect information that
(11:17):
supports the story they want tosupport.
So the first stage of the fivestages of negotiation is
building trust and settingexpectations.
Microphone (2- Samson Q2U M (11:29):
You may need to take time with a
buyer before You even startshowing properties to bring them
up to date with marketconditions showing them
statistics that are relevant tothe area they're shopping and
not the national news.
The second stage.
Is conflict.
Regardless of how well we setthe stage conflict will happen
(11:50):
in most transactions.
The time we invest in settingexpectations around the process
and the current marketconditions will impact how well
we navigate around conflict.
The conflict could begin.
At the initial offer or after ahome inspection or an appraisal,
it can happen when they showtheir parents the house or at
(12:11):
the closing table.
When the buyers experience adisappointing walkthrough.
One way to help prepare forthese hurdles is to always end
each communication with a buyeror seller with: this is what
will happen next.
When they get their offeraccepted, you will end their
celebration with this is whatwill happen.
(12:32):
Next.
You will need to submit yourmortgage application within X
days as specified in thecontract and schedule your
inspection sooner.
If possible, to avoidunnecessary expenses.
If the inspection isunsatisfactory.
This is an example.
The key is to walk them throughtheir obligations and to settle
(12:53):
their emotions.
Despite our best efforts,conflict still happens.
The first thing to remember.
And this will be repeated.
Keep your emotions out of it.
The real estate transaction isalready emotionally charged for
most buyers and sellers.
And the last thing they need isfor you to bring your feelings
(13:14):
into the drama.
Refer to their contractualobligations, remind them of
their motivation for buying orselling so that everyone can
focus on the goal and worktoward creative solutions.
And this is important.
Trust that the other agent isdoing their job.
There is no place for the middleschool technique of creating a
(13:34):
common enemy to create anAlliance and then go into
battle.
This is not a battle.
This is a negotiation and thereare many possible solutions to
any conflict.
Do all you can to focus on theproblem.
And not the people.
Did the buyer's home inspectionreveal, a termite issue.
Don't blame the inspector, havean adult conversation with the
(13:56):
seller to explain that if wechoose not to address the
termites, the buyer will not beable to obtain a mortgage.
Getting a new contract for thesame price with a new buyer is
highly unlikely because you'llhave to return your home to the
market with a disclosure thatthe house has termites.
And that this infestation ordamage will cause people to take
(14:19):
pause before making a fantasticoffer.
Remember, regardless of yourrepresentation status with a
client material defects mustalways be disclosed if they are
known.
Any reasonable seller willaccept this unexpected challenge
in their home sale process andmove through it with your help.
(14:39):
But sometimes the conflict isnot so cut and dry.
Perhaps the home inspection wentwell.
And an unexpected hurdle of alower than contract price.
Appraisal is now causingconflict.
This is where the next phasenegotiation may need to be
employed.
Understandably all parties areworking from an emotion of
disappointment.
(14:59):
And perhaps for the seller, theymay even be feeling insulted.
So you are not emotional aswell, even though you were
counting on this transaction topay your mortgage this month,
you will not add one ounce ofprofessional service by adding
your feelings.
So check them before you beginto help others negotiate.
(15:20):
There are many solutions to anappraisal deficit.
Including requesting a newappraisal.
If you feel the appraiser wasway off.
This unfortunately is usuallynot the case.
Often we knew when we priced thehome optimistically that we were
stretching the parameters of themarket.
Because of a lack of inventory,a special buyer came along and
(15:40):
was willing to go to the top ofthe market and their price range
to make an offer on this home.
Unfortunately, they are notpaying cash and the bank is not
willing to stretch the home'svalue.
If we did a good job with phaseone expectation setting with the
seller.
Then they should not be shockedby the appraisal.
A great way to set expectationwith the seller on the listing
(16:03):
appointment is to explain thatwhen they choose to go a bit
over that market analysis, youoffered.
You should say, our market isunpredictable right now.
And I can support you in beingoptimistic.
Please remember that most buyersget a mortgage when they
purchase a home.
So if we find the perfectoptimistic buyer that falls in
(16:27):
love with your house and paystop dollar, or we have a
multiple offer situation thatpushes our contract price.
Higher than what we're offering.
We will still usually have toface an appraisal.
The appraiser will not be inlove with your house or have any
emotions around winning the bid.
So we may face a low appraisalsituation.
(16:49):
The great thing about this isthat you will know you didn't
leave one penny of equity on thetable.
There's rarely a real estatetransaction that.
Does not involve some type ofconflict.
I've given you a few examples,but there are many, many types
of conflict that come up in atransaction.
So we're going to move on fromconflict and it's time to go to
(17:12):
the next phase of negotiation.
Which is understanding.
Become the asker of questionsand not the maker of statements.
Before you even take an offer tothe seller that has potential
for conflict.
Ask the buyer's agent a lot ofquestions.
Do all you can to understand ifthis potential roadblock can be
(17:32):
broken down.
Once you have a clearunderstanding of the buyer's
position.
Take the offer to the seller.
Review all of the aspects of theoffer, not just the pain point.
Ask the seller.
If we can work on this onepoint.
Would you move forward with thisoffer?
Remind them of their motivationfor selling is the home.
(17:53):
They found the one that inspiredthem to list their home in the
first place.
Is that still on the market?
Ask them, if they want to risktaking more time to wait for
another offer.
Remind them of the winscontained in this offer.
Take the time to fullyunderstand the seller's position
if they refuse to budge onsomething.
Hopefully there are no hardlines and you can move through
(18:16):
to the next phase which iscompromise Let's use the example
we gave earlier There is adeficient appraisal You have
helped the seller understandthat they have options they can
cancel the contract but in thecase of fha and va this
appraisal will still be attachedto the home even with a new
buyer for for a certain amountof time.
(18:37):
We can challenge this appraisalor request a new appraisal But
appraisers rarely adjust theirwork and new appraisals often
work with the same comps There'seven a practice of combining
appraisals into an averageresult sometimes so new
appraisals aren't an instantsolution Uh, Hopefully the
seller remembers that you setthe expectation that they were
(18:59):
pushing the limits of thismarket and they're willing to
seek a compromise.
If there were multiple offers onthe house sellers sometimes have
a tendency to look backward andentertain hopes of reviving a
previous offer.
We need to help them understandthat those buyers may have moved
on to be under contract on otherhomes Or, cooled off their
(19:20):
desire in that purchase.
We have a ready willing and ablebuyer that is likely already
invested in a home inspectionand other expenses that prove
their commitment to this house.
Can we find a way to compromiseto get them through this issue.
Hopefully you've moved them pastthe options to cancel or
(19:42):
challenge the appraisal And canoffer them the options of
reducing the price to meet theappraisal or asking the buyer to
bring additional funds to coverthe gap.
If they choose the latter setthe expectation that the buyer
may want to bring the differencebut may not be able to due to
lack of funds.
The key during The compromisephase is that everyone keeps
(20:05):
talking to each other, throughtheir agents.
The buyer's agent should notassume that the low appraisal
automatically results in a pricereduction, and the seller's
agent should do all they can tokeep the seller open to all
possible solutions.
Keep the conversation goingUntil you come up with an
acceptable resolution.
(20:25):
Now move on to the last phase ofa negotiation, Agreement If
things got hairy.
I highly recommend an in-personmeeting with your buyer or
seller to walk them through thefinal resolution even if they
are eSigning.
That e-signature does not meanThat you can read their emotions
(20:47):
Reading body language andoffering sincere reassurance
that they are doing the rightthing, means so much more when
it is done in person.
You're likely going to work withthis agent again too, So
remember try to meet them inperson as well if things got a
little tense during yourcompromised talks.
There is no agreement, that'sthe phase we're in, agreement
(21:11):
...there is no agreement untilit is memorialized in writing
and we don't want anyone'semotions to rule Including your
own.
Only after all appropriatesignatures are gathered on an
addendum or other agreement, arenegotiations complete.
There's an important side notehere.
Always check with the buyer'sloan officer to ensure that any
(21:33):
addendum is worded in a way thatwill not interfere with the loan
approval process.
Once an addendum to a contractexists The lender must have
access to it It's imperative tocheck with the lender before
getting the buyer and seller tosign an addendum.
There you have it presentingoffers and the five stages of
(21:53):
negotiation.
Our next episode will wrap upseason one of real estate common
sense we are already preparingseason two where we will
interview the people who supportus in providing the best
customer experience to buyersand sellers.
We have interviews with superiorlenders, inspectors, title
companies all lined up for ournext season which is designed to
(22:15):
help you interview your partnersand understand the vital role
they play in the success oftransactions.
Subscribe to our podcast so youdon't miss anything as we share
real estate common sense supportFor agents launching building or
expanding their real estatebusiness.
I'm your host, Lisa Spencer,sending love and wishing you
(22:35):
success! The transcript for thispodcast was transcribed using
Descript Ai.
Welcome to real estate.
Common sense.
I'm your host.
Lisa Spencer.
I grew up in real estate.
Family was a top producing agentand a managing broker for over a
decade.
Eventually leading an office ofover 400 agents.
What I've discovered is commonsense is not that common,
especially when it comes tolaunching building or expanding
(00:27):
a real estate business, I haveinterviewed thousands of agents
and helped hundreds launchsuccessful careers.
Today.
We're going to explore thenuances of presenting and
negotiating offers.
The post COVID market wasfrenzied and shortcuts were
taken by many agents that had toput multiple offers on
spreadsheets and evaluate thebest price in terms at lightning
(00:49):
speed so that their seller couldmove quickly to go compete with
multiple offers on their move upproperty.
The pace was fast and furious.
Speaking of furious, that marketleft many consumers disenchanted
with the home buying or sellingexperience.
And if you intend to be a realestate professional for the long
haul, You will have to bediligent about increasing your
(01:11):
skills, service, and systems toprovide an improved customer
experience.
We'll start with the easiesttopic.
First, the nuances of presentingan offer.
I was so blessed that myinstructor at my very first
board of realtors, orientationgave the best advice and
employing her offer presentationstyle was spot on for what we're
(01:35):
going to talk about today.
Her advice was to start with thelast page of the offer and work
forward to the first page.
The glaring truth is that once aseller hears the price, it is
difficult for them to hear theother details of the offer.
So let's work through anexample.
Let's begin with.
(01:56):
Thank you so much, Jane andTammy for taking the time to be
on this call or video conferenceso that we can review the offer
that we just received.
Remember when we had our firstconsultation, we talked about
how often the first offer is thebest offer.
And I would say this one haspotential.
In the additional contractualprovisions here on the last
(02:18):
page, they are detailing thatthe pool equipment must be
included with the purchase.
Well, that's an easy, yes.
As we published in the MLS thatwe would include these items.
A very detailed agent will oftenmemorialize in the offer
details.
Any special offers orincentives.
So I also see here that they areasking for the home warranty to
(02:40):
be included.
How do you feel about that?
Notice how I didn't offer myopinion.
The seller may say, well, itdepends on their offer price or
no way, or that soundsreasonable.
Don't get stuck here.
Your response is.
We can decide to eliminate it oradjust that after we've reviewed
more of the offer details.
(03:00):
Then you remind them that theyare in capable hands by saying:
From there, the contract is justlike the blank one I gave you
during our initial meeting, Thenremind them of the timelines
that are pre-written into thecontract form and where this
offer may differ.
For instance, the timeframe forinspection usually allows 15
(03:21):
days for an inspection period.
In this offer they've reducedthat to seven days.
This is valuable because itlimits your time that the home
is off the market while thebuyer completes their
inspections.
Microphone (2- Samson Q2U (03:34):
Then you may move on with.
Wow.
The closing date is exactly whatyou were looking for.
They have also checked the box.
It says they will take over anyassessments after closing and
you'll cover them up to the timeof closing.
This is typical, but I want topoint it out to you because we
always want to confirm that theydid not check the box, that the
seller had to bring allassessments up to date.
(03:58):
It's important to take a minute to
show the seller that you haveread this offer and that you're
looking for any of those littlenuance pitfalls that could end
up costing them.
Lot of money at closing.
Then you'll move on by saying.
Microphone (2- Samson Q (04:11):
They've said that you can select the
title company.
And that's nice because we canwork with the one that I know
and trust, which will add lessstress to the transaction for
you.
They have provided a preapprovalletter from a lender I'm
familiar with.
And I have great experiencewith, for an on-time hassle-free
closing.
And that is a major plus.
(04:31):
It is extremely frustrating toget to the week before closing
and have a lender ghost you.
We are now at a point where theymay be feeling like you're
holding back on the price.
So then I start with theirtypical loan type.
Is it FHA VA or conventional,then we moved to their down
payment and the earnest money.
And finally the offer price.
(04:52):
Then just stop talking.
Yeah, like that pause.
Let them have a minute toprocess before you jump in with
advice.
If the offer is over the askingprice.
Or where they anticipated itcoming in, simply ask.
Do you want to accept the offeras it's written?
(05:13):
This will put your home undercontract right now, the minute
we counter this offer, it is nolonger in play.
We are opening negotiations thatmay succeed or fail.
I'm here to be your advocate andas your agent, I will only
respond as you wish.
They may say, okay.
Or they may say, no, we reallydon't want to pay for a home
(05:35):
warranty for them.
Let them get their own.
You did your job by letting themknow that the buyer is now free
to make an offer on anotherhouse.
But hopefully they're reasonablebuyers and they'll understand
that most offers requirenegotiation.
Now what if the offer is underwhat the seller was
anticipating, but within a rangethat you, as the agent feel is
(05:56):
reasonable.
The seller may say no, our homeis worth more than that.
You might respond with wheneverwe get an offer, we have three
choices.
We can accept that offer.
We can reject that offer, or wecan make a counter offer.
We should never be offended byan offer.
These people, unlike the otherswho came through your home and
(06:18):
rejected it.
Appreciated it enough to make aformal offer.
Would you consider formulating acounter offer?
Microphone (2- Samson Q2U (06:27):
Help them appreciate the other
details in the offer before justjumping into increasing the
price.
Microphone (2- Samson Q2U M (06:35):
You may say something like the
closing date is exactly what youwere hoping for.
There are a lot of things aboutthis offer that work for you.
Is it only the price thatbothers you?
Let them offer the counter offerprice.
Assure them that you will workswiftly to get a response from
the buyer's agent and that youare sure they made what they
(06:56):
felt was a fair offer.
But our counter offer is alsofair And I'm optimistic that we
will be able to get this towork.
Remember you think that theoffer was reasonable and you
tried to get them to accept theoffer because a counter to a
very fair offer can sometimesresult in the buyer considering
(07:16):
other properties before theyincrease their offer.
That brings us to the last typeof offer the low ball offer.
Even worse, the sight unseeninvestor offer that our market
has been flooded with right now.
Remember, these negotiations arenot yours.
They are between the buyer andseller.
And facilitated by agents.
(07:37):
The seller may be infuriated bya low offer and take personal
offense.
Remember your position as thecalm and knowledgeable guide.
You might say.
I agree with you that this offeris too low and there is no
reason for us to counter thisoffer.
Unfortunately, we don't knowwhat influenced the buyer in
making this offer.
(07:58):
What I'd like to do isrespectfully ask them to
resubmit their offer.
I have seen buyers jump upsignificantly.
Once they've satisfied theircuriosity as to whether they
could get a deal.
I'm using air quotes here.
Regardless, which of the threepossible responses the seller
(08:18):
chooses.
The offer presentation shouldfeel like a partnered
conversation where you areproviding information and asking
questions that will help theseller make the best decision
for them.
I never let your ego speak.
Always consider how to easetensions and provide reassurance
that they are doing the rightthing.
(08:41):
There are thousands of possibleoffer scenarios.
So I hope this at least givesyou a framework for developing
your presentation style.
After presenting an offer, wemay head into the realm of
negotiations.
Hmm.
Microphone (2- Sa (09:05):
Negotiations.
Most realtors think they're goodnegotiators.
Sadly negotiating is likedriving.
It depends on conditions.
And whether someone is yieldingto you or cutting you off.
Even the mildest cautious drivercan suffer road rage if pushed
too far.
The same is true of negotiating.
(09:26):
So repeat after me, I am thecalm and knowledgeable guide.
It is not your house.
That is being sold or yourequity that is being lost.
If you are negotiating for abuyer, it is not you who will be
paying the mortgage or who willbe homeless.
If negotiations break down.
Do all you can to keep everyonetalking to each other.
(09:49):
Check out our live workshopschedule for the five stages of
negotiation for a morecomprehensive coverage of the
following guidelines on realestate.
Common sense.com.
But for today.
We'll give you an outline of thefive stages of negotiation.
The first stage of negotiationbegins.
The minute we meet our buyer orseller.
In this stage, we are focused onbuilding trust and setting
(10:12):
expectations around the homepurchase or sale process.
Often we have to combat thenational real estate news.
With local market statistics andinformation.
For instance, their favoritenewscaster or podcaster, or in
some instances, social mediainfluencer has been highlighting
national real estate statistics.
(10:33):
Like the real estate market isdown 10%.
This is a dramatic headline orscroll stopping statement.
The issue is many consumers.
Don't wait for the in-depthreview of that statement and
simply move on with their owninterpretation of the real
estate market is down 10%.
They didn't stay interested longenough to know that that was a
(10:54):
statistic referring to realestate number of sales and not
the price.
They also didn't wait for thedata sourcing, which showed that
one state, for instance,Portland, Oregon has seen 10%
fewer sales.
But Atlanta, Georgia is seeing amodest increase in sales.
Sadly, the human condition ispeople collect information that
(11:17):
supports the story they want tosupport.
So the first stage of the fivestages of negotiation is
building trust and settingexpectations.
Microphone (2- Samson Q2U M (11:29):
You may need to take time with a
buyer before You even startshowing properties to bring them
up to date with marketconditions showing them
statistics that are relevant tothe area they're shopping and
not the national news.
The second stage.
Is conflict.
Regardless of how well we setthe stage conflict will happen
(11:50):
in most transactions.
The time we invest in settingexpectations around the process
and the current marketconditions will impact how well
we navigate around conflict.
The conflict could begin.
At the initial offer or after ahome inspection or an appraisal,
it can happen when they showtheir parents the house or at
(12:11):
the closing table.
When the buyers experience adisappointing walkthrough.
One way to help prepare forthese hurdles is to always end
each communication with a buyeror seller with: this is what
will happen next.
When they get their offeraccepted, you will end their
celebration with this is whatwill happen.
(12:32):
Next.
You will need to submit yourmortgage application within X
days as specified in thecontract and schedule your
inspection sooner.
If possible, to avoidunnecessary expenses.
If the inspection isunsatisfactory.
This is an example.
The key is to walk them throughtheir obligations and to settle
(12:53):
their emotions.
Despite our best efforts,conflict still happens.
The first thing to remember.
And this will be repeated.
Keep your emotions out of it.
The real estate transaction isalready emotionally charged for
most buyers and sellers.
And the last thing they need isfor you to bring your feelings
(13:14):
into the drama.
Refer to their contractualobligations, remind them of
their motivation for buying orselling so that everyone can
focus on the goal and worktoward creative solutions.
And this is important.
Trust that the other agent isdoing their job.
There is no place for the middleschool technique of creating a
(13:34):
common enemy to create anAlliance and then go into
battle.
This is not a battle.
This is a negotiation and thereare many possible solutions to
any conflict.
Do all you can to focus on theproblem.
And not the people.
Did the buyer's home inspectionreveal, a termite issue.
Don't blame the inspector, havean adult conversation with the
(13:56):
seller to explain that if wechoose not to address the
termites, the buyer will not beable to obtain a mortgage.
Getting a new contract for thesame price with a new buyer is
highly unlikely because you'llhave to return your home to the
market with a disclosure thatthe house has termites.
And that this infestation ordamage will cause people to take
(14:19):
pause before making a fantasticoffer.
Remember, regardless of yourrepresentation status with a
client material defects mustalways be disclosed if they are
known.
Any reasonable seller willaccept this unexpected challenge
in their home sale process andmove through it with your help.
(14:39):
But sometimes the conflict isnot so cut and dry.
Perhaps the home inspection wentwell.
And an unexpected hurdle of alower than contract price.
Appraisal is now causingconflict.
This is where the next phasenegotiation may need to be
employed.
Understandably all parties areworking from an emotion of
disappointment.
(14:59):
And perhaps for the seller, theymay even be feeling insulted.
So you are not emotional aswell, even though you were
counting on this transaction topay your mortgage this month,
you will not add one ounce ofprofessional service by adding
your feelings.
So check them before you beginto help others negotiate.
(15:20):
There are many solutions to anappraisal deficit.
Including requesting a newappraisal.
If you feel the appraiser wasway off.
This unfortunately is usuallynot the case.
Often we knew when we priced thehome optimistically that we were
stretching the parameters of themarket.
Because of a lack of inventory,a special buyer came along and
(15:40):
was willing to go to the top ofthe market and their price range
to make an offer on this home.
Unfortunately, they are notpaying cash and the bank is not
willing to stretch the home'svalue.
If we did a good job with phaseone expectation setting with the
seller.
Then they should not be shockedby the appraisal.
A great way to set expectationwith the seller on the listing
(16:03):
appointment is to explain thatwhen they choose to go a bit
over that market analysis, youoffered.
You should say, our market isunpredictable right now.
And I can support you in beingoptimistic.
Please remember that most buyersget a mortgage when they
purchase a home.
So if we find the perfectoptimistic buyer that falls in
(16:27):
love with your house and paystop dollar, or we have a
multiple offer situation thatpushes our contract price.
Higher than what we're offering.
We will still usually have toface an appraisal.
The appraiser will not be inlove with your house or have any
emotions around winning the bid.
So we may face a low appraisalsituation.
(16:49):
The great thing about this isthat you will know you didn't
leave one penny of equity on thetable.
There's rarely a real estatetransaction that.
Does not involve some type ofconflict.
I've given you a few examples,but there are many, many types
of conflict that come up in atransaction.
So we're going to move on fromconflict and it's time to go to
(17:12):
the next phase of negotiation.
Which is understanding.
Become the asker of questionsand not the maker of statements.
Before you even take an offer tothe seller that has potential
for conflict.
Ask the buyer's agent a lot ofquestions.
Do all you can to understand ifthis potential roadblock can be
(17:32):
broken down.
Once you have a clearunderstanding of the buyer's
position.
Take the offer to the seller.
Review all of the aspects of theoffer, not just the pain point.
Ask the seller.
If we can work on this onepoint.
Would you move forward with thisoffer?
Remind them of their motivationfor selling is the home.
(17:53):
They found the one that inspiredthem to list their home in the
first place.
Is that still on the market?
Ask them, if they want to risktaking more time to wait for
another offer.
Remind them of the winscontained in this offer.
Take the time to fullyunderstand the seller's position
if they refuse to budge onsomething.
Hopefully there are no hardlines and you can move through
(18:16):
to the next phase which iscompromise Let's use the example
we gave earlier There is adeficient appraisal You have
helped the seller understandthat they have options they can
cancel the contract but in thecase of fha and va this
appraisal will still be attachedto the home even with a new
buyer for for a certain amountof time.
(18:37):
We can challenge this appraisalor request a new appraisal But
appraisers rarely adjust theirwork and new appraisals often
work with the same comps There'seven a practice of combining
appraisals into an averageresult sometimes so new
appraisals aren't an instantsolution Uh, Hopefully the
seller remembers that you setthe expectation that they were
(18:59):
pushing the limits of thismarket and they're willing to
seek a compromise.
If there were multiple offers onthe house sellers sometimes have
a tendency to look backward andentertain hopes of reviving a
previous offer.
We need to help them understandthat those buyers may have moved
on to be under contract on otherhomes Or, cooled off their
(19:20):
desire in that purchase.
We have a ready willing and ablebuyer that is likely already
invested in a home inspectionand other expenses that prove
their commitment to this house.
Can we find a way to compromiseto get them through this issue.
Hopefully you've moved them pastthe options to cancel or
(19:42):
challenge the appraisal And canoffer them the options of
reducing the price to meet theappraisal or asking the buyer to
bring additional funds to coverthe gap.
If they choose the latter setthe expectation that the buyer
may want to bring the differencebut may not be able to due to
lack of funds.
The key during The compromisephase is that everyone keeps
(20:05):
talking to each other, throughtheir agents.
The buyer's agent should notassume that the low appraisal
automatically results in a pricereduction, and the seller's
agent should do all they can tokeep the seller open to all
possible solutions.
Keep the conversation goingUntil you come up with an
acceptable resolution.
(20:25):
Now move on to the last phase ofa negotiation, Agreement If
things got hairy.
I highly recommend an in-personmeeting with your buyer or
seller to walk them through thefinal resolution even if they
are eSigning.
That e-signature does not meanThat you can read their emotions
(20:47):
Reading body language andoffering sincere reassurance
that they are doing the rightthing, means so much more when
it is done in person.
You're likely going to work withthis agent again too, So
remember try to meet them inperson as well if things got a
little tense during yourcompromised talks.
There is no agreement, that'sthe phase we're in, agreement
(21:11):
...there is no agreement untilit is memorialized in writing
and we don't want anyone'semotions to rule Including your
own.
Only after all appropriatesignatures are gathered on an
addendum or other agreement, arenegotiations complete.
There's an important side notehere.
Always check with the buyer'sloan officer to ensure that any
(21:33):
addendum is worded in a way thatwill not interfere with the loan
approval process.
Once an addendum to a contractexists The lender must have
access to it It's imperative tocheck with the lender before
getting the buyer and seller tosign an addendum.
There you have it presentingoffers and the five stages of
(21:53):
negotiation.
Our next episode will wrap upseason one of real estate common
sense we are already preparingseason two where we will
interview the people who supportus in providing the best
customer experience to buyersand sellers.
We have interviews with superiorlenders, inspectors, title
companies all lined up for ournext season which is designed to
(22:15):
help you interview your partnersand understand the vital role
they play in the success oftransactions.
Subscribe to our podcast so youdon't miss anything as we share
real estate common sense supportFor agents launching building or
expanding their real estatebusiness.
I'm your host, Lisa Spencer,sending love and wishing you
(22:35):
success! The transcript for thispodcast was transcribed using
Descript Ai.
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