By Riki Markowitz
Negotiating is a unique skill, best left for those who are confident and assertive. For REALTORS, making offers and countering; turning down bids and asking for more money are some of the most important work you will do. To find out how to get the best deal for buyers and sellers, Realty Line spoke with three Austin real estate professionals.
Don’t be emotional
Candy Cooke, a REALTOR Negotiations class instructor with ABoR, suggests discussing with buyers ways that emotions can interfere with their end goal. “In this market, people are bidding like crazy and they can’t afford it.”
Kelly Freeman, an agent at Twelve Rivers Realty, says that she’s had buyers offer $20,000 above the asking price because they just had to have that property, but then the appraisal comes in. If the buyer doesn’t have the cash to cover the difference, not only do they have to back out of the deal they became emotionally attached to, but it’s the agent who has to break the news to the other side.
Get to know your team
Of course, the reason there is a rule about emotions is because it’s human nature to act on feelings. Tim Landy, an agent with Twelve Rivers Realty, tries to stay in front emotional bidding by getting to know his team early in the process. During his conversation with the lender, he finds out if his client is pre-approved, how much they can afford, and if there are any problems that can come up before closing. Arming himself with this knowledge can be an advantage in a bidding war and help a buyer stand out from the crowd, which does not necessarily mean offering more money.
When competing against several bidders, consider different options
In Austin, properties can go under contract after just 48 hours. Some homes don’t even make it onto the MLS. One strategy Landy uses when a client has their heart set on a property – along with four or five other potential buyers – is to go straight to the seller’s agent with the asking price. “At the bare minimum, the seller already has been offered their full asking price and are also getting bids over list price.” There’s no point in throwing out a low offer and negotiating up from there, he says. “Most sellers are not going to respond to that because they don’t have to.”
Rather than encouraging his clients to throw more money on the table, first Landy asks the seller’s agent about special considerations. Does the family have to be out of the house by a certain date? “If everyone else is coming in with a 30 or 45-day close, I’ll ask the lender if they can do a 21-day close.” Or do they need some leeway on their move-out date? If Landy can get his client to offer $0 lease-back, that’s another way to stand out.
For some sellers, agreeing on certain concessions is more important than walking away with an extra $5,000. “Not every buyer has to offer more money,” says Landry.
Don’t be uncompromising
When negotiations get difficult, it’s easy to resort to being pushy and combative. Landy says there’s another mentality that works best for him: “I say, ‘Let’s find a way to make it work.’”
Negotiating Tips for Sellers
There’s the belief that in Austin’s low-inventory market, sellers have all the say. Certainly they’re calling many of the shots, but buyers do have some control, says Cooke. “There are 32 different ways for buyers to get out of contract and get their money back. There are just three on the seller’s side.”
Don’t be emotional, II
The idea of a big payday can be seductive. But with so many opportunities for buyers to change their mind while still in contract, snatching the highest offer is not always the best option. “It can be quite the opposite,” says Freeman. “You have to study all the terms.” Look at your net, but also your closing date. Are buyers asking for warranty? Are they asking for your appliances?”
Here, too, sellers have to keep emotions in check and not let the possibility of an extra few thousand dollars go to their head, especially if they need to move by a certain date, or need the capital from their sale to go toward a new home. If the buyer backs out for any reason, the seller can suddenly swing from earning more than asking price to settling for a lot of terms they would otherwise not have.
Pick the deal that can close
For the most part, Austin sellers are walking away from deals with more money than ever. But the real estate professionals that spoke with us couldn’t stress enough that choosing the highest offer – unless it’s cash – can actually backfire. “Anyone can make an offer on a property, says Landy. I need to help my client choose the offer that can close.”
Expand your professional circle
There are definitely advantages to having a large professional network. “I go out as often as possible, partly to meet other agents and build a rapport,” says Landy. Developing these connections have definitely helped him make some tough decisions. If there are 15 potential buyers and he knows the agent submitting a particularly attractive offer, Landy is more likely to suggest going with the REALTOR he knows, if all things are equal. “I know they’re going to guide their buyer through the transaction and they’ll handle any unforeseen issues.” On the other hand, if a seller is tempted by an extremely generous bid from an agent he’s never worked with or even talked to before, there’s a real concern that something can go wrong. “It’s always a hard conversation when you go with the wrong offer and then have to tell your seller it’s not going to close; we need to go back on the market and get into contract with someone new. No one wants to start the clock over.”
Stay off social media
Cooke has seen her fair share of reset clocks; and not that long ago, social media was one seller’s downfall. A client shared on a networking site that she needed a cheap way to get her water heater fixed. That post was shared with hundreds of neighbors and because the broken water heater was not previously disclosed, when the buyer in contract caught wind of the busted appliance, he backed out. “The buyer starts worrying about what else is the seller is not disclosing,” says Cooke. A different approach may not have sent the house back on the market.
Getting from offer-to-close can be fraught with a lot of uncertainty and anxiety for buyers and sellers. Over her three decades in business, and now in one of the longest housing bubbles in recent history, Cooke realizes that tempering expectations early is probably the most important deal-brokering skill of all.