What principles should you keep in mind when negotiating for your clients? Christine Groves of Coldwell Banker in Wheaton explains.
With a busy market with multiple offers and low inventory, it is our job as agents to present our clients’ offers to the best of our ability. I always cringe when an agent presents an offer simply by faxing it with no explanation. Offer terms and acceptance are not always black and white. It is important to put each offer, whether you are representing buyers or counteroffers from sellers, in the context of why you are asking for certain terms and price as well as intentions. It has proved to me many times over to potentially make or break offer negotiations.
Here are some things to consider when making offers:
Client Prep – Home sales are a two-way negotiation. I discourage buyers from going too far with terms and low-ball offers. My job is to advise them how to make the right first impression so that the seller will seriously consider the offer. The first offer sets the tone, and low-ball offers never prove to achieve anything. You can start low but not offensively low. Researching comparable home sales to put pricing in perspective is crucial. Discussing potential terms like: good earnest; reasonable closing date; mortgage pre-approval; down payment; home close contingency (only if necessary); reasonable or no credit for closing costs; “as-is” condition (to sweeten the deal); and home warranty are all negotiating factors. It is also important to discuss realistic closing and out-of-pocket expenses to come. Some people can be dazzled by a home, but the reality of buying it can change their tune.
Client Financials – Presenting an offer with general information on your client’s good credit, mortgage preapproval, employment status, earnest deposit and motivations can ease the concerns every seller has that a deal will make it to closing. Seriousness and qualification are necessary if you are asking to take a property off the market.
Client Bio – Every time I hear “it’s just business” I have to disagree. In residential real estate, a person’s livelihood is usually in the equation as well as an emotional attachment. All of the documents and legalities may be needed to conduct business, but there is always a person behind the ink. For some sellers (not all), it can make a bit of a difference if they know a little about their buyer. A buyer’s reasoning and intentions with their offer, as well as their appreciation for the home, can prevent a seller from potentially being turned off or unmotivated to continue.
Client Confidentiality – It should go without saying that certain information about a client’s financial position and personal life should remain confidential and never become part of a negotiation to the other side, unless with express permission from your client. I always tell my clients how I will present their offer/counteroffer each time so that they understand and agree to my strategy. Maintaining a trustworthy relationship with everyone involved is of the utmost importance.
Agent Presentation – I can recall several negotiations when my personable dialog and prompt responses assisted greatly in getting a contract accepted, especially in a multiple offer situation. If you have the choice to sit across the table from an agent that is rude or non-attentive versus an agent that is efficient and pleasant, how hard do you think you are going to work for each other? If the other agent is problematic, it can also turn off the buyer or seller, compromising a potentially great transaction – sad, but true.
Negotiating on our clients’ behalf is one of the most important ways we show our worth. Losing out on a deal results in more work and frustration for everyone. It’s your time to shine.
Christine Groves is a licensed broker with Coldwell Banker Residential Brokerage in Wheaton.
She can be reached at 630.346.3272 or [email protected]