Negotiations CLASS 4

Securing the Buyer's OfferThe right house—at the right price—should prompt an offer to purchase. Follow

these tips to help ensure that your prospects become buyers:

Educate buyers. Reduce the fear of the unknown by preparing a chronology of events that occur during a home purchase.

Prequalify buyers to know for certain they can afford to purchase. Being unrealistic ensures that they can’t make an offer. (See the tool kit on Questions for Prequalifying Buyers.)

Create a strong sense of anticipation for the one or two homes you think best fit the buyers’ needs.

Don’t let your personal preferences prejudice you against a home that might be just right for your prospects. Remember: There’s a buyer for every house and a house for every buyer.

Listen to their objections. Let buyers voice their concerns. Don't jump to respond.

Remind buyers of outside motivators that should spur their actions—job transfer, inadequate size of current housing, change in family size (baby or parent coming to livePaint imaginary pictures that help prospects visualize themselves in the home).

Securing the Buyer's Offer

Reinforce the buyers’ feelings. Get excited if they’re excited.

Be sure you have all the decision makers present. If a parent or spouse needs to approve the purchase, bring them along to the 2nd showing.

Give buyers some quiet time during the drive between showings to assimilate what they’ve seen. Don’t overwhelm them with information or idle chatter.

Ask for the offer. Sometimes that little extra push is all prospects need.

Getting Prepared to Present the OfferOnce you have a written offer in hand, your next negotiating challenge is to get the sellers to

accept it. As with many things in life, success rests largely upon sound preparation.

Update your comparable market analysis. Extract new data on list prices, sale prices, and terms for comparable properties in the area, especially if the property has been on the market for more than 30 days.

Examine buyer qualifications. Buyer eligibility is just as important as the price and terms of an offer. Sellers won't take their home off the market without some assurance that the buyer can perform. Have details about down payments and loan prequalification.

Getting Prepared to Present the Offer

Choose a venue. Select a time when all parties who need to approve the offer can be present and a place with minimal distractions. Your office gives you access to files and copying facilities; other experts suggest the sellers’ home, but only after the children are in bed.

Anticipate objections. View the pros and cons of the offer from the sellers’ point of view. Gather the information you'll need to respond to objections—market analysis, etc. If you have the seller, make sure you have a net sheet

Estimate sellers’ costs. Calculate probable closing costs—mortgage payoff, transfer taxes, tax and utility prepayments, and your commission—so that sellers can see what they will ultimately realize from the sale.

Sure-Fire Strategies for Presenting an Offer

Cover all key points. Be sure to cover all the key points of the offer, not just the price.

Look for motivation. Look for something in the offer that will tie in with the sellers’ motivation. If they are buying another house and need to sell before they close, for example, reinforce that point before you present the offer.

Show buyer's soft side. Make the buyers human to the sellers before presenting the offer. Ask the Buyer’s Realtor to tell you a little about the buyer so you can share that with the seller and what they liked about the house, then spend a minute telling the sellers some personal details about the buyers and how much they loved the house.

Join forces with the sellers. Reassure sellers that you're working for them, say “our buyers.”

Sure-Fire Strategies for Presenting an Offer

Don't disparage the sellers’ property. Don't say: "This is a good offer because your house is in a high-crime area and needs a lot of repair." Say instead: This is a good buyer for your property because he sees its potential. You won't need to paint or make major repairs."

Avoid telephone presentations. A seller can say “no” over the phone, but “yes” requires a signature. Simply say, "I want to discuss the terms of the offer in person. Is 7 o'clock tonight OK?" If you must present an offer to out-of-town sellers via telephone, set up a conference call when everyone can be present.

Summarize. Keep the contract out of sight until you're ready for the seller to read it. While you're discussing the offer, put a blank sheet of paper on the desk and write down the offering price, the downpayment, and the proposed settlement date.

Stop talking. Let the seller tell you what they think.

Be thorough. Go over each paragraph of the offer, explaining what it means and how it affects your client.

Get agreement on smaller points, like leaving behind draperies or appliances. This creates a climate of acceptance for the larger issues.

4 Elements of a Standout Offer

Flexible timing. A buyer who will consider options about closing and move-in dates is in a good bargaining position.

Well-qualified buyer. A preapproved buyer provides much greater security that the deal will close easily and rapidly.

No contingencies. A buyer who doesn't have to sell another home or who is willing to waive all contingencies helps give the deal a green light.

Taking the Sting Out of a Contingency ClauseBe sure that a contingency clause:

States the exact purpose of the contingency so its scope cannot be expanded later in the transaction.

States exactly what will happen, including any forfeitures or damages owed, if a condition does not occur.

Avoids subjective language — a suitable home, in a reasonable amount of time — which can lead to disputes later. Also, each contingency should be broken down with two words: ‘If’ and ‘then’.

Sets realistic time limits — neither unreasonably short or too lenient — to complete contingency conditions.

Indicates if the seller can cure any problems found during an inspection.

Is removed from the contract once the condition has been met; or is initialed by both parties as it is satisfied.

Taking the Sting Out of a Contingency Clause

Watch Your Wording

Improper wording can be confusing and misleading. Be sure to always state your intention clearly and with as much detail as possible.

Bad: "This contract is contingent upon buyer obtaining financing." Does it mean the buyer has an obligation to go obtain financing and to cooperate? Within what period of time? It just doesn’t cover what happens if the buyer doesn’t get a loan? What happens then?

Good: "This contract is contingent upon buyer obtaining a new conventional loan at an interest rate not to exceed 7 percent. If, after making good faith efforts to obtain that loan, the buyer is unable to qualify, then the buyer may cancel, in which case the earnest money will be refunded."

Counteroffer Dos and Don'ts for the SellerWhen you're putting together a counteroffer, use these tips to help keep sellers focused:

Don't be too quick to give a counteroffer before sufficiently going over the initial offer first.

"In writing your counteroffer, you may want to emphasize the areas that you do agree on before you begin asking for modifications." —Jim Remley, "Sell Your Home in Any Market"

Don’t let disagreement over a minor point take the focus away from a well-priced offer. Remind sellers that the value of the concession is probably far less than the profit they are making on their home.

Counteroffer Dos and Don'ts for the Seller

Guard against “negotiating fever,” where sellers feel that going back with a counteroffer is part of the game. If you think the price is reasonable, encourage sellers not to keep pushing.

Help sellers put a lower price offer into perspective. On a $200,000 home, an offer of $198,000 is only a 1 percent reduction. That’s like offering $.99 instead of $1. Encourage sellers to weight the offer based on their own urgency to sell and the time the house has been on the market.

Tips for Presenting a Counteroffer

Appeal to fairness. "We’re willing to lower our price by $5,000, but it’s only fair that you not require us to repaint the house."

Focus on the points of acceptance. "The buyers felt that everything in your offer was acceptable, but one minor point..."

Remind buyers what they like about the house. "When we were deciding on the original offer, you said that this house had the perfect backyard for your children."

Present the offer in person. Just as you would with an initial offer, don’t discuss a counteroffer over the telephone.

Get the buyers prepared. When you write up the original offer with buyers, remind them that their first offer may not be accepted. That will help their time frame for making a counteroffer that sellers will like.

“Split The Difference” Theology- The American way!

3 Reasons Buyers May Want a Counteroffer

To spark negotiations. A buyer might make an opening offer just to get the negotiations going.

To reach compromise. If the seller has an unrealistically high asking price, the buyer might make a low offer to try and strike a compromise.

To find affordability. A buyer who can't afford what the seller is asking might offer something close to his or her maximum, hoping the seller will make a viable counteroffer.

11 Body Language Essentials for Your Next NegotiationIf you aren't in control of your body language, it doesn't matter how much you've prepared for a negotiation. Here are some top tips.

1. Mirror Their Actions

Mirroring is when one person adopts another person's body language, vocal tone, and behavior, which builds rapport. For example, if the prospect is engaged, he or

she will lean forward and follow your movements. If that's not the case and the person is leaning far back and crossing his or her arms, be sure to find a way to

bring the person back in and ask what isn't right.

Taken from: www.inc.com/11-body-language-essentials-for-your-next-negotiation.html

2. Nod Your HeadLightly nod your head and maintain eye contact. Doing this in negotiations defuses tension and builds alignment, even during contentious conversations.

3. Pay Attention to Your Hands

When people are nervous or stressed, it often shows in their hands. When you're negotiating, make sure your hands project confidence and poise. Fidgeting or clasping your hands tightly together reveals that you're nervous. The other party can take advantage of that. Try putting your hands just below your chest and put your fingers together when you want to confidently make a point.

4. Plant Your Feet

Your face, head, and hands are obvious body parts to control when negotiating. But your feet? Not so much. Keep them firmly planted on the ground to show your resolve. It also ensures that you avoid coming off as ambivalent or stubborn. This helps you stay confident, too.

5. Relax Your Body

Negotiations can be intense, so assume a relaxed body position to help ease the tension. Complement that body language with soft-spoken or non-aggressive commentary. This can help build trust and lead to more effective negotiations.

6. Remember to Smile

It's important that the environment doesn't get too intense. For the deal to be successful, it will most likely be a long-lasting relationship, and that can't happen if it's not friendly between both sides.

7. Keep an Open PostureBe Open!

Keep yourself pleasant and appealing. Lean in and act engaged, and keep your stance open. People want to feel like the deal is about (or at least includes) them, even if it's not in their best interest. So

they may not get exactly what they want, but they do want to know that you're interested in their thoughts or feelings

about a topic in the negotiation. Otherwise, they shut down.

8. Hide Your Nerves

Do not fidget during a negotiation. Any signs of being nervous or anxious can be a red flag. Don't bounce your legs, tap your feet, or touch your face. You want to appear calm and confident to the person with whom you are negotiating.

9. Keep a Poker Face

A good poker face is essential. I once heard someone say, "Don't negotiate like you're Tony Soprano unless you have a gun in your hand." That's true. People think they have to talk like a mobster in a negotiation. The best do their homework, come with really strong data and facts, and don't show their hand.

10. Show Your Patience

When negotiating, pretend that you are sitting with your grandmother. You need to focus because she might speak softly, and you certainly need to be patient explaining things because topics that are obvious to you (Facebook and mobile apps) may be foreign to her. Make sure to smile a lot, too. And focus on your partner; be empathetic to his needs.

11. Hold Eye Contact

Although there are other body language factors that can detract from your negotiation skills, faltering eye contact is the most detrimental.

The saying that eyes are the windows to the soul also applies to effective communication. Not

maintaining eye contact gives off a perception of uneasiness, as well as a lack of confidence and

conviction--characteristics that no strong negotiator embodies.

Remember We Deal With HumansAbove all, remember we are dealing with people.

Our end goal should be building the relationship with the client, to become their trusted advisor for today and in the future as well.

Pet Friendly ListingBe glad you don’t have to sell this house!

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