I left off last time with the reading and explanation of the terms and clauses of an offer. Now, in this third of the series on offer negotiation, let’s get into the strategy behind the technique that worked so well for me during my career.
You’re still gathered around the table. You could ask the buyer’s agent to leave the room so you can have some privacy with your client. Sadly, this has been my experience when representing a buyer client. However, permitting them to remain a little longer will provide the opportunity to question them.
Before counselling your seller, it’s prudent to know, for example, if the buyer is pre-approved for the mortgage, if the closing date is set in stone, if the deposit can be increased or even if the buyer is prepared to negotiate. Ask if this is their client’s final offer; their verbal and/or non-verbal response can reveal much. They may prevaricate or say it’s a starting point. In either case, this typically means the buyer is open to a counter.
If the offer is conditional upon the sale of the buyer’s home, it’s critical to know the terms of that listing or if it’s even listed. If so, how long has it been actively available? Is it priced correctly? If not, their offer may not be worth the paper upon which it’s written. So, determine viability of any conditions.
Having the buyer agent present also gives you the chance to get some personal background on the buyer. Get a feel for them through “small talk” with their representative. How long have they been searching for a home? Do they have children? How suitable is the home? How excited are they? It’s critical, though, to avoid this being perceived as an interrogation. To avoid alarming them, casually sprinkle the questions throughout the meeting. With such information, you’re better equipped to sense the degree of buyer motivation.
Many agents talk too much. And they may not consciously realize that you’re not engaging in purely social drivel. If properly asked, subtle probing questions can provide answers that could prove pertinent to the negotiations and help you better advise your seller. Finally, so you can consult confidentially with your clients, ask the buyer’s agent to leave the room and retain at least one copy of the offer.
If you’re representing a buyer, I caution you to be selective about the information you share; don’t gab too much. Keep your cards close. You don’t want the listing agent to know, for example, that your clients are really excited. Delicately convey a subtle message that they’re interested in buying the property. But unless your buyer finds the terms acceptable, they’re prepared to continue their search. They may even have another home already in mind. It’s all about position. Whoever appears the most anxious will lose the high ground and end up capitulating to the demands of the apparently less so.
After the buyer agent has left the room, begin your private consultation by briefly summarizing the offer. It’s important for the seller to understand and address the less significant terms before tackling what is usually the most contentious issue, the price. As you progress quickly through the clauses, once again beginning with the least important, ask your sellers if each is clear and acceptable. If an objection arises, make a note of it and say you’ll return to it later. Objections aren’t always genuine, but simply veiled attempts to slow things down. They may need time to think before making a decision. And their ostensible objections may vanish into thin air. Then ask for their feelings.
In the fourth installment, of this series, I’ll continue to address this most critical of real estate services, and the one that most directly leads to commission generation.