Real estate negotiations are often complex and almost always involve big money. We’ve identified three ways in which we help our clients win at negotiations. From start to finish, let’s look at the big ways in which you can get what you’re after in a negotiation.
Establish Trust Through Consistency
Real estate transactions can vary tremendously in complexity but even the simplest of transactions have a number of different things that must take place, involving a number of different parties.
The more uncertain one side is of the integrity, knowledge and professionalism of the other side, the harder it is to get a deal done.
We have seen multiple occasions with our clients where we were successful in getting our clients the result they wanted due to our consistent approach with the other side. Professional, friendly communications early on goes a long way to establishing yourself and your client as the preferred party to deal with on a transaction. An agent who ignores feedback requests, doesn’t reach out to the agent on the other side to ask pertinent questions, prepares or receives offers with no notice – these are all red flags that make a deal less likely to happen.
This is true for both new or experienced Realtors, however a challenge for new agents is that they have no reputation or prior relationship with the agent on the other side when trying to get a deal done. In such cases, the agent they are dealing with needs to rely on other indicators to assess if the agent is trusty worthy. The reputation of the other agent’s brokerage comes into play at this point, with well known and respected brands conferring a level of trust to that agent. Conversely, a real estate brokerage with a reputation for poorly trained or unethical agents makes it harder for that agent to be trusted for this transaction.
Don’t Assume We Value Things Equally
One of the most obvious yet often overlooked aspects of negotiations is that what matters to one side doesn’t necessarily matter to the other side – and if it does, not to the same extent.
There are four key components to a real estate negotiation and for each, there are situations where it matters more to one side than another.
- Price – while this is always a factor, it is surprising how often it isn’t the largest determinant in a sale decision. Sometimes time is of the essence and a seller cares less about the higher price and more about the quicker closing date.
- Deposit – a seller who has been burned in the past by a deal that didn’t close may consider a large deposit an important aspect of an offer. On the other hand, a seller who is confident in the ability of the buyer to close may accept a smaller deposit if all other aspects are attractive.
- Closing Date – sometimes both a buyer and seller may have firm closing dates that they are unable or unwilling to change. In such cases, the sale price or other aspects are irrelevant as it can’t take place in the required time. In other cases, a seller may be moving to another property they already own and have negligible carrying costs with the home they are selling, so closing date is not a concern to them.
- Conditions – a seller with concerns about their house may react poorly to a home inspection condition, whereas another seller who is confident in the condition of the property may have no issue with such a condition. A buyer who is pre-approved for financing and has shared the intended purchase with their mortgage broker may be comfortable removing a financing condition whereas another buyer with less certainty may require it to remain on the offer.
Open and specific communication between both parties dramatically increases the chance that an optimal deal will be done. Holding your cards to close to your chest can result in grandstanding and bluffs that see no deal take place based on objections that neither party truly holds.
Explore Post-Settlement Agreements
During the course of a negotiation where neither party is committed to a specific course of action with specific obligations, it can be challenging to have a frank and honest discourse.
Once a deal is reached, whether fully signed, or simply offered without condition to the other side, there is often the opportunity to try to come up with an even better deal at no risk.
Put simply, when a deal is done, there is no risk to discuss potential improvements. At worst, the deal remains as is and at best, a better deal is agreed upon. We often see real estate transactions where closing date are adjusted after a deal is agreed, where both parties see the benefit in a different closing date.
Due to the structure of real estate transactions, there sometimes exists an opportunity to adjust a deal when it is firm on one side, but not yet signed off on by all parties. Consider this real life example.
A buyer submits an offer to purchase a property and we represent the seller. The seller likes the offer and is willing to accept that price but based on our interactions with the buyer’s agent, we believe there is room for improvement. We get permission to negotiate further and call the buyer’s agent to ask if their client would offer more money. They speak with their client and confirm they could go up by X amount. We ask them to resubmit that in writing. They do so and we accept the higher offer price, netting our client more for the sale of the property.
The above happens regularly with our clients, because we understand there is no risk to exploring this option. We have an offer to purchase that is irrevocable by the buyer until a certain date and time. At any point before that, we could accept that offer and we have a deal done. By asking for a revised offer, we open the door to a better deal for our clients, but we do not put them at risk of having no deal.
There you have it, three ways in which you can win at negotiations. In case you were wondering what happens when you hire an expert negotiator, here’s the answer.
When we look at the MLS stats for sale to list price ratio in the GTA, we see that Keller Williams Advantage agents sell homes for 5.39% higher than the average. That translates into over $42,000 more in actual dollars (on average) for our seller clients.
If you are considering buying or selling and want to work with agents who know how to negotiate to get you the best result, don’t hesitate to get in touch.