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Reprinted
with permission of Florida Realtor magazine © 2002
| How
to Negotiate for Buyers |
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Much
of Florida has experienced a seller's market over the last three
years, giving the seller the power in negotiation. Here, one salesperson
shows you how to negotiate for the buyer and balance the power.
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by
Jerry Stoffer, ABR
As
a buyer's agent, I believe that traditional negotiation in
a seller's market is ineffective. Traditional negotiation
tends to be a matter of power.
Obviously, the seller has more
power in a seller's market. Since the role of the buyer's
agent is to negotiate in the best interest of the buyer (your
client), an attempt to overpower or bully the seller will
likely fail in a seller's market.
In my experience with more than
1,000 contracts - mostly as a buyer's agent - I have found
that the best strategy is not to negotiate at all! By this,
I mean to present a contract that's accepted by the seller
with minimal changes, or no changes. This means taking the
time upfront to ensure what you're offering will be accepted.
Based on my experience, here
are some suggestions when representing a buyer in a seller's
market:
1.
Be There First
It's important to avoid
competition from other offers. If you get there first, you
tend to get more attention and better treatment. If your buyer
sees a property he or she likes, advise him or her to
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Diplomacy
is essential when the buyer's position is weakened in
a seller's market. Treat the listing agent, and the seller,
with respect, says Jerry Stoffer, a salesperson with RE/MAX
200 Realty, Orlando. |
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proceed
quickly to avoid the auction effect of multiple offers, which
pushes up the price.
Recently, a home one of my buyers
was interested in came on the market on a Wednesday. I showed
it on a Saturday morning because that was the soonest my client
could go. I wasn't aware at the time, but a contract had been
written Friday night with another broker. Good inventory moves
quickly. If you're not there first, your buyer could miss
his or her chance.
2.
Remain Calm and Diplomatic
Diplomacy is essential
when the buyer's position is weakened in a seller's market.
Treat the listing agent, and the seller, with respect. Some
salespeople use rapid speech and a high pitch, and do everything
they can to overpower the listing agent and the seller.
People prefer to conduct business with a calm, well-mannered
person. Speak slowly, and with a deep and calm voice.
Recently, my wife was representing
a seller, and the buyer's agent was demanding and speaking
rapidly. He didn't get the contract. Bullying techniques
convey urgency and compromises your buyer's position, which
is opposite of what you want to achieve.
3.
Get Your Paperwork Right
Make a favorable first
impression of the contract by providing a complete package,
beginning with a cover letter summarizing the benefits to
the seller. Also provide a prequalification or approval
letter on the lender's stationary. Ideally, the approval
letter should state the type of loan, and an approved loan
amount no less than the amount specified in the contract.
An interest rate lock-in letter would assure the seller
that the loan is stable.
Remember, your duty as a buyer's
agent is to present a ready, willing and able buyer. Present
the contract on a computer-generated, easy-to-read form.
Fill in all of the blanks
of the contract, especially those pertaining to financing.
A seller is less likely to accept an offer that is hard
to read or open to interpretation - which could delay the
timely acceptance of the contract.
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Fill
in All the blanks
of
the contract, especially
those pertaining to
financing. A seller is
less likely to accept
an offer that is hard
to read or open to
interpretation -- which
could delay the
timely acceptance of
the contract.
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4.
Know the Facts
As
the saying goes, knowledge is power. Demonstrate to the
seller's agent that you know the facts. Show that you have
knowledge about items such as the property's tax records
(sales history, assessed value, age and size), comparable
sales/expired listing data and details on financing.
When I represent a seller,
I like working with a buyer's agent who is knowledgeable
and sharp. It makes my job easier, and it leads to less
surprises at the closing table.
5.
Start With Positives
When presenting the offer,
avoid the temptation to "run down" the property.
Don't say, "My buyer likes the house, but the pool
needs resurfacing, etc." Present the buyer's attractions
to the property before any negatives are mentioned.
A seller will be more receptive
to hearing factual, albeit negative, comments after a favorable
first impression. If you make a negative first impression,
the chances of making a positive impression down the road
are limited because the seller might be offended or irritated.
6.
Make It A Win-Win Situation
Make it your mission to
learn what is important to the seller. One seller may want
to sell the property within 30 days. Another seller may
be in no hurry as long as he
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gets
the right price. And another seller may want to sell the house
without having to perform repairs.
Find out what the seller wants
and that will help you better present to your buyer. If you
give the seller what he or she wants, the chances of your
buyer getting what he or she wants, such as seller-paid closing
costs, dramatically increase.
7.
Keep It Fair
Fairness is an eternal standard
that will not only result in a win-win contract, but it will
also stabilize the accepted contract during the subsequent
and inevitable rough moments. Many times, a contract falls
apart because one party believes he or she wasn't treated
fairly.
A seller who believes he or
she is treated unfairly will attempt to restore equity during
conflict, and the contract unravels. It's wise to remember
that a contract that doesn't close is not a contract.
Applying these rules will not
always result in a contract. Sometimes, no matter how efficient
and professional you are as a buyer's agent, a counteroffer
will be presented instead of a contract.
8.
Give Them Options
In the case of a counteroffer,
be proactive and don't make ultimatums. Don't ask the buyer,
"What do you think of the counteroffer," because
more than likely he or she will already be frustrated. Instead,
recommend alternatives and choices. Get the buyer thinking
of other ways the deal will work.
Also, never tell the seller
to take it or leave it. People like options, so at least offer
a few. Ultimatums will put you in a corner as a buyer's agent,
especially in a seller's market when the seller may have other
interested buyers.
In response to offers they deem
unacceptable, sellers will sometimes respond with generalities
like "I want a higher price," or "The closing
date is too soon." Never amend your original offer until
the seller mentions specific numbers.
For example, say I ask the seller
what closing date he prefers, and he tells me July 1. I may
already know that the date would be acceptable to the buyer,
but if I give away that date first, I cannot negotiate.
In this case, I can say, "If
I can make July 1 work, can you offer a warranty?"
Remember, the key to effectively
representing your buyer in a seller's market is to elevate
the position of the buyer without downgrading the seller.
This way the chances for a win-win situation - and a contract
- are stronger.
Jerry
Stoffer, ABR, is an 18-year veteran in the real estate profession.
His patented trademark is The Real Estate Doctor and he works
as a buyer's agent with RE/MAX 200 Realty in Winter Park.
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