You Might Not Need A REALTOR IF....
You know how to, and LIKE, negotiating.
I see people that have this WRONG more than they have this right. There are some core things to keep in mind when negotiating an offer.
• As a seller, you love your home. In this market, you are feeling pain and loss because the value is not as high as the perceived value a few years ago. Get over it. Your buyer is still likely spending more money than he EVER thought he would. It’s likely YOU never even spent this much money on anything, even the very house you’re selling.
• When you get an offer, if it is for $1 and has every contingency on the planet, and comes with a cover letter that insults you to your very core, don’t get insulted. I am not suggesting that you should take the offer, just that you should not get insulted and react emotionally. Let’s consider some potential reasons the buyer has presented the offer like this:
o He loves your home most of all, more than any other home in the world, and yet, it’s the best he can do.
o He loves your home most of all, hired the wrong person or got the wrong advice or whatever, and he thinks this is how you’re supposed to negotiate.
o He figures, “what’s the worst that can happen?”. I once had a buyer who did a home inspection and asked that everything on the inspection be taken care of by the seller. I don’t usually suggest this in a resale (it depends), but when I said to the buyer “you want to ask her to take care of ALL of this?”, he responded, “why not?”. In his case, we were successful, but it created undue stress on the sale. By adopting a “why not?” attitude, you could kill your sale – no matter what side of the transaction you’re on, so proceed with caution.
• Don’t play hardball. You’ll lose and then what? You may not be able to back up and accept what was previously on the table. Even if your contract position allows you to, trust me when I say that if you put unnecessary stress on a contract situation, it starts to wear on the other party. And, with each new stress, you’re adding more emotional, and perhaps financial or other types of pressure, and everyone has a breaking point. When you reach that, it is a point of no return and anyone who wants to get out of a contract bad enough will.
• Negotiating something to a successful outcome is actually the result of parties willing to work together. Remember the Golden Rule now more than ever: “Do unto others as you’d have them do unto you.” This applies EVEN when you are negotiating from what you feel is a position of strength.
• Maintain focus on what you have in common. OFFER flexibility where you have it. TALK through responses to the contract before you put them in writing… and talk nicely. Explain feelings but stay objective.
o “I appreciate your offer, but we simply can’t fathom accepting a price that’s $50K below our asking price. Am I right to assume this is just a ‘starting point’ for you in the negotiations?” , or
o “We’re likely going to counter on the closing date. Can you tell me why the buyer chose this date?” or,
o “We’d be fine with allowing a home inspection, but if we’re accepting this price, we don’t plan on making repairs, even if something is found. We’re willing to allow your buyer the option to ‘take it or leave it’ after the inspection, but we’ll want the right to continue marketing and accept back up offers until the home inspection contingency is removed, and we need that to be within 5 business days. Does that sound acceptable?”
You might be surprised at some of the answers you get.
Once you are comfortable with the general principles of successful negotiating, then it’s time to move on to the core issues.
What CAN you legally negotiate?
What clauses are you required to keep in the contract?
Do you truly understand the contract, each part separately and then cumulatively?
In Virginia, limited service brokers are supposed to give sellers certain disclosure forms and explain some of this to them. However, I am on the buy side of a deal right now where the sellers used a limited service broker (just to list in the MLS), and they had never seen those forms, and had no clue about the Lead Based Paint or other seller disclosure forms that were required. They didn’t know anything about the Property Owner Association laws, required disclosures, or costs associated… and they certainly wouldn’t know that you can’t, even by contract, waive these rights.
While in this case, I feel certain that the seller’s will get through this transaction fine, that my buyers WILL buy and all will be wonderful, that’s NOT guaranteed. I can tell you that if my buyers change their minds, I can get them out of this transaction without much effort. On the flip side, the sellers can not get out of this contract unless my buyers agree to let them. Because of my client's representation, and the lack of representation of the sellers, the buyers have the full contractual advantage.
If as sellers, you had thought you’d negotiated an air tight contract, and made decisions (like quitting jobs to retire, settling on a new home and moving half way across the country), and then ended up still having this house on your hands… well, that could financially devastate many people, and put a financial strain on most.
So what if the contract IS air tight? What if the buyer simply doesn’t do what he promises? Do you have any rights or recourse?
These are things you need to know.
If you are a real estate attorney, or have other relevant experience, and are comfortable with this kind of detail, then you might not need a REALTOR. I have found, however, most attorneys KNOW that they don’t know this stuff as well as a seasoned agent, and when coupled the other services offered by an agent on either side of the deal (buy or sell) they want an agent to assist them. I have several attorneys that are or have been clients, and they like when their agent can speak to the legal technicalities with ease, and in a manner they can relate to… while still giving good practical advice and explaining things to other family members in a more common language… so everyone understands the risks, the benefits, and the “what ifs”.
You can hire an attorney or an agent to represent you with negotiations, but keep in mind that attorneys and agents work best as a team if something is sticky. One has practical “industry standard” knowledge about how things are “normally” done and what “usually” happens, and how to AVOID the courtroom. The other often primarily has experience AFTER things have fallen apart, they don’t know how it could or should have been avoided… they just know what to do NOW, and it often involves a lawsuit. Do you LIKE being in a courtroom? Do you want to have things pending for months so it can wind its way through the system? You need to know your comfort level here before you decide. And, write it down, so you don’t forget later what you were thinking.
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Stay tuned to the REAL ESTATE WHISPERER for the rest of the posts in this series.
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