By Greg Perry
Kirkland Realtor
Sometimes a good answer makes a good post. I wrote an answer on a post over on the rain city guide that sum up my basic attitudes on negotiating.
A strategy that worked for a buyer last spring, and has worked for me in the past:
I was working with a strong buyer (>20% down and had the ability to close quickly)
House listed at $670,000 in an outstanding neighborhood. In recent markets might have sold for over $700,000. House was vacant. Sellers lived out of town.
Market time was around 60 days or so at the time of first offer.
Client offered $630,000. Seller countered at $660,000 and agent informed me that he had other interested parties.
My buyer really didn’t want to pay much over the $630,000, so I advised him to “wait in the bushes” for at least 30 days. If something else came up better, we’d look, but in the meantime we watched.
IMPORTANT! I kept casual dialog with the listing agent. After a couple of weeks he admitted the other interested parties were investors and one had offered $650k, which the sellers refused. We chatted about current inventory and absorption rates, etc.
After 30 days we made the exact same offer of $630k. This time the seller countered at $647k. I advised my buyer to “lightly” soften his position and we countered at $634,000. The seller then countered at $640.
My buyer was set on his price. I went back to the Listing Agent again and extolled the virtues of my buyer’s strength and ability to close quickly. We also reviewed the absorption rates and market data. We countered back at our last position of $634,000 and had a signed around deal within a 1/2 hour. We also had no problems with legit inspection issues that came up.
The keys that lead to success were:
1. We were patient. It took us 6-7 weeks to put it together.
2. I kept casual dialog with the LA. I was never his adversary — in fact quite the opposite. I was helping him to move his listing.
3. We were always prepared with detailed market statistics.
4. My buyer had a strong financial profile, offered substantial earnest money and had the ability to close quickly.
5. In the end, the listing agent was sold on the fact we were his best option. He sold our offer to the sellers.
Other keys were market time, vacant house, out state sellers, etc.
I’ve assisted several buyers with this kind of strategy. There are risks, mainly with the house being sold, but frankly currently buyers have selection.
Sellers and buyers always need to remember this “law” of negotiation, “Time is the enemy of the seller”. (not the buyer!!!)
How many times have we seen a seller turn down an offer, only to accept much less down the road?
And…..an editorial comment. I dislike offers being labeled as “bad offers”, or “lowball offers” or “bottomfeeding”.
I believe all offers are good offers. It may not be an offer a seller chooses to accept, but it is an offer. Good things can happen when an offer is made. I don’t know how many times I’ve seen that “ridiculous” starting offer come together favorable to a seller. Or a piggyback offer comes in to compete. When I’m listing a property, I want to see offers! I would rather turn them down than never receive them. Sellers need to be coached with these principles to help them keep a business, rather than emotional perspective.
Negotiating is a matter of conversation and attitude. Agents are far better negotiators when they remove the emotion and “ego” and listen. A good agent helps sellers and buyers through the emotional issues as well. When the attitude is good, creativity is high. When creativity is high, things happen!
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