[quote_box_center]“So, when you are listening to somebody, completely, attentively, then you are listening not only to the words, but also to the feeling of what is being conveyed, to the whole of it, not part of it.” – Jiddu Krishnamurti[/quote_box_center]
In this fifth column of the offer presentation series, let’s continue with negotiation strategy and seller options.
You’ve fully summarized and explained all the significant terms of the offer during your private consultation with your seller client. And your client has said the offer is unacceptable. Now, while the buyer’s agent relaxes in the other room, it’s time to strategize.
For simplification, explain the three options: counter-offer, acceptance or rejection. It would be great if all offers were accepted without contest, but alas, that’s not how it usually goes in the real world. The order of the letters in the acronym “CAR” is typically the order in reality. Since opening bids are usually negotiable, unless the offer is ridiculous and totally unacceptable, your seller should not immediately reject them. The buyer may just be greedy, misinformed or simply testing your client’s mettle (or their agent was an order-taker or trying to be a hero) and will typically agree to pay more. Thus, countering is normally the best response to a reasonable, but unacceptable offer.
To obtain the highest price for your seller, try a two-price strategy. During your private consultation, determine your seller’s bottom line. This amount becomes their fall-back secondary price, below which they’re prepared to lose the buyer. Then agree on a higher primary amount to present to the buyer agent when you all return to the table. If the closing date is acceptable to your seller, have a secondary tolerable date to interlace into the counter-offer proposal. Remember that you’re negotiating; it’s give and take and perception is four-fifths of reality.
When the buyer agent rejoins the presentation, tell them straight away, not that their client’s offer is rejected, but that your client will not accept the offer. Terminology is important here. A flat refusal, which is how your news will likely be perceived anyway, may shock the buyer’s agent into acquiescence. Rather than accept a rejection, they’ll normally ask (beg) for a counter-offer. Make them ask for it because it will bring the power into your court; they become the supplicant.
Maybe after another brief (staged) private chat with your seller (or even exchanging a predetermined code sign like a subtle mutual nod or a particular word) with a suitable preamble such as “upon further consideration”, announce that your seller wants to be fair. They’ll grant the agent’s request for a sign-back at the higher primary amount (obviously without mentioning the secondary lower amount) and with your seller’s preferred primary closing date. Tell the buyer agent that your seller will agree to all other terms. Then, get the buyer agent’s reaction – both verbal and non-verbal. Watch their body language.
At some point, you might ask the buyer agent about their client’s priorities. Since the most important terms are typically price, closing date and conditions, ask which single term is most important to their client. If the buyer’s priority is price and their agent seriously balks at your proposed primary counter price, ask the agent for a price proposal, since they may have a glimmer of what their buyer will pay for the property. If they suggest an amount equal to or greater than your seller’s already secretly established secondary figure, with a nod from your client, inform the buyer rep that the seller will agree to the agent’s suggested counter price if the buyer will agree to the seller’s primary closing date. Once the terms are verbally agreed, make the written changes and proceed to affix initials and signatures.
If the agent refuses or is unable to offer a suggestion, then your seller could give a little on their primary price proposal, but maybe not as low as their secondary price. Or in exchange for your seller countering at their secondary price, maybe the buyer would consent to dropping a condition or two and agree to your seller’s primary closing date.
If the buyer must have a particular possession date, advise your seller to agree (if possible) to the buyer’s demand for that specific date. In exchange, ask that the buyer be fair and agree to the seller’s primary price, provided that all else is fair and reasonable.
I often obtained the higher primary price for my seller just by “agreeing” to the buyer agent’s request for their client’s preferred closing date. You’ll have to think fast.
Remember – it’s a dance between two variable positions – the ideal primary and the acceptable secondary. And that dance is sometimes a quick-step.
In my next column, I continue to describe the highly successful strategy I used regularly during my four decade career.