Ed's Chesprocott Region Blog: How Good are You at Negotiating?

How Good are You at Negotiating?

How Good are You at Negotiating?

That was a question that came from left field from my buyer client and caused me to ponder the purpose of that question before I responded. This client was getting upset at not being able to find a home to purchase.

Part of the frustration was the size of the house needed and the amount of money she was able to spend. The additional frustration was borne of the lower than normal inventory for being in winter.

How Good are You at Negotiating?

Her thought was to go well beyond her upper financial cap and attempt to get the sellers to negotiate down to her comfort level. There are many factors that need to be considered when evaluating the house one wants to buy and how the process of getting a good deal is worked, or negotiated.

First, assuming the idea house has been found, the real estate agent for the buyer has several ways to determine how much leverage they might have when negotiating the contract. Has the house been priced competitively for the market and for the current condition of the home? And over priced hone may have a lot of movement potential, but if the sellers are trying to hit that big slam themselves, they might be less likely to give up much.  Stands to reason if they had the house listed too high.

What Types of obligations are there against the house? A trip to town hall will allow the agent to see what types of encumbrances, or liens, there may be on the property, all of which would need to be resolved, before the home could pass title to a new owner.

HELOCs, or lines of credit in the form of equity loans could be there and have money owed against them. Tax liens or mechanics liens for work done but not paid, or even judgments against a title holder of the home.

 

How Can An Agent Get Us a Good Negotiating Position?

Negotiating strength comes first from having a sound offer. This starts with a pre-qualification letter from a lender that may not only show the value for which the buyer is approved, but also a property specific letter. This lets the sellers know that their agent has talked to the lender in depth about the property.  The agent may ask that the letter show a value less than the total amount the buyer can pay.

If the property is high for the market, then the offer can be sent forward with recent comparable sales. These may serve to reinforce the agent's claim to their sellers that the home is over-priced and that it is apparent to anyone that takes the time to do some research.  This may allow the agent to get some concessions on price for the buyer.

A low-ball bid strictly to get a strong negotiation should be looked at by the sellers as just the start of the process. A counter offer of reasonable value will let the buyers know they will negotiate but are not willing to come down to that low-ball price. If the buyers and sellers use their common sense, they may reach a common ground and get the contract initiated.

With all the information available to a consumer online, it is possible for a buyer to have a good feel for a home price and respect and understand that the sellers want to sell it at a reasonable price, just as much as the buyers want to buy it for same.

How Good are You at Negotiating?

 

 

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Ed Silva  RE/MAX Professionals,  www.edwardsilva.com  203-206-0754

Comment balloon 64 commentsEd Silva • February 19 2016 06:39PM

Comments

Hi, Ed. There are a lot of things that need to be considered when a buyer wants home and then goes to make an offer. Nice article here. Thanks for sharing your insight. 

Posted by Debbie Laity, Your Real Estate Resource for Delta County, CO (Cedaredge Land Company) over 1 year ago

Ed - Great job, as we all know negotiating is an art and some agents certainly are better at it than others.

Posted by Troy Erickson, Your Chandler, Ahwatukee, and East Valley Realtor (Diverse Solutions Realty www.ChandlerRealEstate.weebly.com) over 1 year ago

Good morning Ed Silva .  There is an art to negotiating and some folks have it and some don't.

Posted by TeamCHI - Complete Home Inspections, Inc., Home Inspectons - Nashville, TN area - 615.661.029 (Complete Home Inspections, Inc.) over 1 year ago

Looks like you've go the negotiating thing down pat Ed.....great post.

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) over 1 year ago

Good morning Ed. Outstanding post, it should be featured. You took on the topic very well, I put my money on you.

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) over 1 year ago

Good morning Ed Silva ,

Excellent post which I hope to see featured soon. There is definitely an art to negotiating and you have it down..establishing a win/win most often works best for the seller and the buyer.

Posted by Dorie Dillard, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.346.1799) over 1 year ago

Hi Ed.  Excellent blog.  It is not about low balling the seller.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) over 1 year ago

Good morning Ed. I think you were right to wonder why this question was being asked.

Posted by Sheila Anderson, The Real Estate Whisperer Who Listens 732-715-1133 (Referral Group Incorporated) over 1 year ago

It is the very heart of what we all do...or should be...to be knowledgable and practiced is a value good agents bring to the table...chair...roof,...basement...

Posted by Sally K. & David L. Hanson, WI Realtors - Luxury - Divorce - Short Sale (Keller Williams 414-525-0563) over 1 year ago

Today's buyers do have access to more information than ever but when it comes to actually knowing the true values and market will determine how good one can negotiate.

Posted by Bob Ratliff, "Sold with Bob" (Renowned Realty ) over 1 year ago

I can only negotiate as much as the buyer or seller has given me leverage to do so. If you don't have much leverage and the chips are stacked against you, there's only so much I can do. 

Posted by Nicole Doty - Gilbert Real Estate Expert, Broker/Owner of Zion Realty ZionRealtyAZ.com (Zion Realty) over 1 year ago

Sounds like they chose the right agent. I hope you are able to help them find a home!

Posted by Sharon Tara, New Hampshire Home Stager (Sharon Tara Transformations) over 1 year ago

Ed- negotiating isn't about going in with a low ball offer.  And to negotiate you need leverage and part of the way you get that is by knowing as much as you can about the property and the market.  Best way to get that is to hire a professional such as yourself. 

Posted by Kathy Streib, Home Stager - Palm Beach County,FL -561-914-6224 (Room Service Home Staging) over 1 year ago

Hi Ed, this is an excellent post. The art of the deal is something that shows a true salesperson.

Posted by Noah Seidenberg, Chicagoland and Suburbs (800) 858-7917 (Coldwell Banker) over 1 year ago

Oh for the days of negotiating an offer. The best we can do in our competitive market is tie everything up in a nice, neat bow and pray for the best. 

Posted by Jane Peters, Connecting you to the L.A. real estate market (Home Jane Realty) over 1 year ago

Terrifically put, Ed. Of course, you throw in a dash or two of ego, emotion and "controlling behavior" and we then have to put on our therapist's hat as well as our negotiating hat. 

 

Posted by Gayle Rich-Boxman Fishhawk Lake Real Estate, "Your Gateway to the Lake" 503-755-2905 (John L Scott Market Center) over 1 year ago

Ed Silva - truly when it comes to negotiations, you know what you're doing and that is exactly why I'd stand behind you and refer you to buyers and sellers in your area. This is your expertise!

Posted by Patricia Feager, Selling Homes Changing Lives (DFW FINE PROPERTIES) over 1 year ago

Ed there is a lot more to this business than most people realize, and it takes a professional like you to provide the representation they need.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 1 year ago

Hi Ed, normally I'm good but, good negotiating can only be good if both sides are willing to reach a common goal. If the seller won't budge or keep an open mind, you get no where regardless of negotiations.

Posted by Ellen Caruso (Daniel Gale Sotheby's International Realty) over 1 year ago

Negotiations are an extremely important part of what agents do for their clients. Of course magic isn't a part of the deal. Sometimes clients are wishfully thinking that they can get what they want without there being any sounds logic to their expectations when it comes to price.

Posted by Janis Borgueta, LIC RE Salesperson - Hudson Valley Homes for Sale (Key Properties of the Hudson Valley ) over 1 year ago

Well Ed, you can tell this isn't your first rodeo! Well layed out strategy!

Posted by Evelyn Johnston, The People You Know, Like and Trust! (Friends & Neighbors Real Estate) over 1 year ago

Well said Ed and shows you have the skill and knowledge to lead your clients in the right direction.

Posted by Debbie Reynolds, Your Dedicated Clarksville TN Real Estate Agent (Berkshire Hathaway HomeServices PenFed Realty, Your Clarksville Real Estate Professional) over 1 year ago

I got a different take from your blog. It seems to me this is not about negotiating at all. This is about working with a buyer who can't afford to buy what she wants, a buyer with champagne tastes and a beer wallet. That's a totally different story, and I can't say that I would willingly take on such a beast in a hot market, but more power to ya! You're a better man than I, Gunga Din.

Posted by Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents, Put 40 years of experience to work for you (Lyon Real Estate) over 1 year ago

Nicely explained Ed. Gathering the facts, evaluating them, chosing a strategy in support of your client's position and convincing the opposition to accept your arguments is what negotiation is all about. It's a lot easier to know what to do than to actually do it. I've witnessed it in the classroom, practiced it on-the-job and every negotiation is different.   

Posted by James (Jim) Lawson, DBA, Broker Associate, RSPS, BPOR, HI & PE (DomainRealty.com LLC) over 1 year ago

There are so many variables in negotiating, having facts and figures is always a must. Being reasonable on either side of the transaction is not under the agent's control.

Posted by Raul Rodriguez, Looking out for the client's interest and not my p (Covenant Partners Realty) over 1 year ago

Clients often hear stories of someone getting a "deal" on a purchase (or a sale) and want the same, or better. Many times, the two parties come together the right circumstances make it happen: buyer loves the house and the terms, seller is thrilled with his/her side of the transaction. In a seller's market, buyers have fewer opportunities to negotiating the price down and they have to understand that.

Posted by Marzena Melby, Realtor, Twin Cities Minnesota Real Estate (Coldwell Banker Burnet Realty) over 1 year ago

I've been negotiating for over 40 years, so my negotiation skills are pretty well tuned by now. I was also well-trained in the concept of "decision-tree" at the Harvard Business School which teaches you how to think through the ramifications of all decisions. It's all about thinking through your strategy in advance and adjusting throughout the process.

And at the end of the day, I always sign the sign of a good negotiation is when all the parties at the table have walked away feeling like a winner.

Posted by Nina Hollander, Your Charlotte/Waxhaw/Fort Mill Area Realtor (RE/MAX Executive | Charlotte, NC) over 1 year ago

The listing price is to invite showings and may be get some offers.  If its too high you risk having no showings

Posted by Sham Reddy, CRS (H E R Realty, Dayton, OH) over 1 year ago

Sometimes buyers want what they cannot afford and they think we stink because we can't get them a $500K house for $350K. Sorry, that's just not a realistic request.

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, 914-419-0270, kat@thehousekat.com) over 1 year ago

It seems more and more people are wanting a deal. They have to be realistic with offers or risk just being rejected . The happy medium is when it is close and both sides are willing to negotiate. DOM and a realistic price determines what kind of negotiations can be encountered.

Posted by Rose Mary Justice, Elite Realty Group (Elite Realty Group) over 1 year ago

Ed, sounds like you have all the answers! Knowing the details of the subject home as well as the market will put you in a strong position to argue your case when you have what you consider a decent offer.

Posted by Olga Simoncelli, CONSULTANT, Real Estate Services & Risk Management (Veritas Prime, LLC dba Veritas Prime Real Estate) over 1 year ago

Yes, it's best to be in a position of leverage and often that comes in the form of knowledge.

Posted by Women of Westchester Working Together, Women helping Women get ahead (Women of Westchester Working Together) over 1 year ago

Once I learned to make sure the other guy wins...I have been winning steadily

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 1 year ago

I love that you stated you need to start with a strong offer.  It is hard to negotiate a low-ball offer. Period.  Negotiating involves using persuasive  dialog and it is hard to convince a seller to walk away with less money unless you have facts, ie days on market, comps, repairs, etc.

Posted by Shirley Coomer, Realtor, Keller Williams Realty, Phoenix Az (Keller Williams Realty Sonoran Living) over 1 year ago

I agree the best negotiations begin with strength behind you terms, preparedness, and reasonable starting point

Posted by Joy Bender, Who You Hire Matters (Pacific Sotheby's) over 1 year ago

Ah I think so , well maybe good , now i don't want to offend anyone so possibly ,I guess ?

Posted by Michael J. Perry, Lancaster, PA Relo Specialist (KW Elite ) over 1 year ago

This is a great post.  There is so much more to negotiating than beating someone over the head.  Compromise and communication are essential when negotiating and the objective should be win/win not win/lose. 

Posted by Chris Lima, Local or Global-Allow me to open doors for you. (Atlantic Shores Realty Expertise) over 1 year ago

Brilliant negotiating strategy, Ed. Sounds like we have similar markets. The longer I am in this business, the more I realize it is about client needs. The need has to be there first on both sides before buyer and seller can come to a meeting of the minds. 

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) over 1 year ago

Ed, great topic to bring up for discussion up front with a client.  Always be straightforward & show them the comparables and how you have your bag of tricks in that Santa bag of yours!!  Ed Silva 

Posted by Ginny Gorman, Homes for Sale in North Kingstown RI and beyond (RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate) over 1 year ago

In a sellers market, unless the house has been sitting on the market for months, it is going to be hard to convince any seller to entertain a lowball offer at all. Sounds like the buyer has a Mercedes dream with a Toyota budget.

Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) over 1 year ago

Ed

All excellent points, especially for someone who is in a financial position to purchase a cparticular home. But you can only negotiate so much, and this person sounded like someone who wanted something they are not qualified to buy, but hoped negotiations could make it happen! Negotiations cannot necessarily make the unrealistic real.

Jeff

Posted by Jeff Dowler, The Southern California Relocation Dude - Carlsbad (Solutions Real Estate ) over 1 year ago

I love the post. I hope home buyers and sellers  will read it and learn from it.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 1 year ago

Real estate brokers don't make prices, the law of supply and demand does. 

Posted by Anne-Laure Touchard, Agent immobilier à New York - USA (Charles Rutenberg, LLC) over 1 year ago

Ed, often the most important negotiating skills are the ones we use with out own clients!  We have to convince them of the best strategy for finding a great house that fits their budget and their needs.  Then we deal with the other side.

Posted by Patricia Kennedy, For Your Home in the Capital (Evers & Company Real Estate, Inc.) over 1 year ago

Ed, thanks for putting your thoughts on Negotiation in such clear perspective.

Our job seems to always be to educate the consumer. Real Estate prices are not based on what I hope them to be but on what the market determines.

I agree that to negotiate from a strong position we need to be knowledgeable of the current market for that property and to be able to present that knowledge in a way that impacts the direction of the negotiations.

Posted by John Wiley, Lee County, FL Real Estate GRI, SRES,SFR,PSA (Jones & Co. Realty) over 1 year ago

In my market, a low ball offer WILL NOT make for a strong negotiation. IF the seller decides to responds, its often with a "dug-in" position. To get the best deal in my market, you've got to do your homework and be prepared to come in with a strong offer. 

Posted by Jeanne Dufort, Madison and Lake Oconee GA (Coldwell Banker Lake Country) over 1 year ago

Well I bet you had to think quickly when asked that question! There are so many aspects to negotiating--and making that initial offer is the first step in the process.  I hope your buyer understands that she will be restricted by her budget and available inventory, no matter how good you are as a negotiater

Posted by Mary Hutchison, SRES, ABR, Specializing in Brookside, Waldo, Prairie Village (Better Homes and Gardens Real Estate-Kansas City Homes) over 1 year ago

I try to discourage buyer clients from shopping too far above their comfort level. They might fall in love with a property only to find the seller is fairly firm on the price.

Posted by Dana Basiliere, Making deals "Happen" (Rossi & Riina Real Estate) over 1 year ago

The negotiation process starts well before we write an offer. We have to negotiate with our buyers to help them write a competitive offer. If we haven't been realistic, they're going to be shocked when the offer isn't accepted.

We need to negotiate with our buyers on what sort of properties we should be viewing and offering on, depending on market conditions and their purchase ability.

What the buyer WANTS to pay has little bearing on the property's actual value.

Posted by Wendy Remley (Utah Prestige Real Estate) over 1 year ago

The first offer the buyer is negotiating against themselves really, I stress this with my Sellers and tell them the next ask to the dance may be just what they are waiting for...don't be insulted, dont be rude back - no matter how badly you want to tell them to take their offer and oh well we dont have to go there....

Posted by MaryBeth Mills Muldowney, Massachusetts Broker Owner (TradeWinds Realty Group LLC) over 1 year ago

Sometimes the best way to negotiate is to get the listing agent to talk to you.  This can be extremely beneficial if the listing agent is willing to take a few minutes and talk to you.  Since one is talking first to the listing agent, it makes sense to trying to establish a working relationship up front, if this is possible.

Posted by Susan McCall, Everyone needs a home, Quickly, professionally and with a little fun! (Compass Realty Solutions, Portland, OR & Vancouver, WA) over 1 year ago

Thanks for the points on negotiation Ed. I know I'm in trouble when my buyer client says " This is how much we will pay for the home, now go out and work your magic and get it for us Craig!" I think they may have watched too much 'Million Dollar' LA or NY. I find it most important to set very realisitc client expectations and then in an attempt to get the best price possible for a buyer, the buyer must make that first offer very reasonable. They are so much better served with an offer based on quality and comps than on what they can only afford to pay. Often, when the seller receives a severe low ball offer they will assume the buyer is shopping, can't afford it, or may even be insulted and believe the buyer isn't serious.

Posted by Craig Cooper, Creating-Preserving-Growing Wealth in Real Estate (Chase International Real Estate) over 1 year ago

When I have a buyer getting ready to make a low ball offer, I pull up the most current of the "day" comps and other information. Also if my buyer is asking nothing in contributions from the seller and with all that in mind we proceed with the buyer's offer which may seem low ball but possibly is not after all.

Posted by Theresa Akin (CORPUS CHRISTI REALTY GROUP) over 1 year ago

In the end it's really about the respective clients being willing to compromise and come to agreement. Yes, we can set the table but we can't make them eat. That said, I will submit any offer on any house that my client wants.
Pre Qualification, yes. Market research, yes. Discuss with the other agent, yes.

Morris "Bill" Austin ~ REALTOR® ~ Austin Board of REALTORS®
512-709-6343 ~ bill@teamprice.com
Team Price Inc.

Posted by Morris Austin over 1 year ago

There's nothing wrong with your skills it's with her strategy. "I want the house for x" is not negotiating.

Posted by Lyn Sims, Schaumburg IL Area Real Estate (RE/MAX Suburban) over 1 year ago

We are in a tight sellers market here.  There are some properties that are over priced, but not many.  My rule of thumb is if you come in at less than 90% of asking it is dead in the water.  If they are that much over priced they are just dumb and will probably not move.  If they are only slightly over priced they will lower the price before taking that big of cut.  Anyway, does not mean you should not look at each case individually.  

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 1 year ago

Ed, this is good information for buyers and sellers.  Gathering and analyzing information and data provide a negotiator with an edge in negotiation.  You've identified good resources.  Understanding the interests of all parties and thinking outside the box goes a long way in satisfying the needs of the buyer and seller. There are an infinite number of factors that impact the positions of buyers and sellers. 

Posted by Sharon Parisi, Dallas Homes (United Real Estate Dallas ) over 1 year ago

You can be an accomplished negotiator when working on your own behalf - but when working for a client you can only do what they authorize. Not an easy task.

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Posted by Floyd Hodgins over 1 year ago

Thanks for sharing and posting Ed Silva

Posted by Michael Kaim, Real Estate team serving the Cleveland Area (Berkshire Hathaway HomeServices Professional Realty) over 1 year ago

You've summed it up nicely here, Ed Silva.  To drag out an old nugget I've said many times before, home sales are like snowflakes; no two are exactly alike.  That said, all we can do is our best due diligence, educating of our respective clients, and utilizing our skills at the negotiating table.  Hopefully after all of that we have a closed sale and happy clients!

Posted by Greg Mona, YOUR Local Real Estate and Design Resource in AZ! (RE/MAX Platinum Living) over 1 year ago

Technically, I'm a Certified Negotiation Expert. But, you can't negotiate 50k off a home that's priced well. It's all about positioning, especially if yours is not the highest offer. I've had some clients give me bad reviews on my negotiation skills, but as I recall, they did not accept my negotiation advice and wanted to do it their way. Those who do take my advice save an extra 2% or more and give me great reviews on my negotiation. Funny how that works!

Posted by Eren Millam, Certified Negotiation Expert (Realty World Cosser & Associates, Inc.) over 1 year ago

Thankfully negotiating falls under Rich's responsibility and he has his CNE designation. He can make the deal come together!

Posted by Donna Foerster, Metro Denver Real Estate Agent (HomeSmart Realty Group) about 1 year ago

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