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Details of each transaction are very different. The process of negotiating the contract will vary depending on the applicable laws, as well as local customs and procedures. Some negotiations are quite simple; some are impossible. To exhaustively treat real estate negotiating would fill several volumes, so we will address only the most important factors. With the growing popularity of buyer-brokerage bringing increased emphasis and poignancy to the always important negotiating phase, negotiating will be generally discussed from this standpoint. Negotiating a contract for your client should be a challenging and exciting part of your job. It will be satisfying to see the effort you have spent come to fruition: From the planning; the searching of the countryside for that perfect home; or that one ready, willing, and able buyer; to mapping the strategy and executing the plan. Visualize the negotiation process as traveling down a road. The beginning is marked by a buyer’s offer to buy. He will have complete control over the timing and content of that first offer. At the end of the road is a contract to purchase the home in which he will live happily ever after, and that the seller will happily never after see. Of course, the contract must be mutually acceptable to both buyer and seller, a meeting of the minds. If it is to be legally enforceable, which is highly desirable, it should be written. You, as an expert agent, will also have a good deal of control over the final content of the contract, and you will exercise this control by sharing your expertise during the negotiation phase. But the road can be filled with bumps and potholes (surprises), can wind over hill and dale (confusion), and will surely contain many forks (decision points). So keep your eyes on the road, your hands upon the wheel. You might recognize at this point that it would be rather cumbersome if we had to negotiate a written contract each time we wanted to buy a loaf of bread. So, what’s the difference? One difference is that homes are unique in comparison to loaves of bread and neither the seller nor the buyer has nearly as much experience with the transaction, assuming they either buy bread or own a bakery. The home’s price is less certain, hence the need for negotiation. In addition, home purchases are more complex and involve more details, hence the need for writing. But also important, consider the length of time between the agreement and consummation of the agreement, or closing. If the buyer and the seller agreed on a price and other pertinent details and went immediately to closing, all necessary information and funds being available, then written contracts might be avoided. But this is not practical, as we know very well. Therefore, negotiation and written contracts will continue to be an essential part of the home buying process for the foreseeable future, and a critically important part of our function. When clients become dissatisfied with their agent, it is frequently due to problems that arise during negotiations. If there is one big blind spot shared by too many of us, it is lack of appreciation for the importance of the negotiations. The term “negotiating” has a nasty ring to some people. The seller sees the buyer’s offer as an insult. This buyer obviously wants to steal the home, a bottom fishing, low baller! The seller’s not prepared to take a penny less than the asking price and the buyer will not pay another dime! Feelings seem to be overpowering thoughts. An adversarial yelling and screaming match is imminent. Even the agents are getting emotional. Although the above scenario is possible, it rarely happens. Skilled agents focus on the facts and concentrate on resolving differences not on creating or even orchestrating them. Buyers and sellers almost always will settle for what they believe to be fair and reasonable. You will sometimes find that the responsibility to keep negotiations moving forward in a meaningful and unemotional manner rests squarely on your shoulders alone. That is why you are making those big bucks. It will be most satisfying to see your own calm advice prevail. But be sensitive to the fact that negotiations will produce more anxiety for your clients than any other phase of the transaction. Negotiation is the process of give and take during which a fair and reasonable set of terms and conditions is defined into an agreement or contract. Your objective is to convince the other party and his agent that your client’s position is fair and reasonable. You will have a major advantage if your position is close enough to fair and reasonable in order to seem so. Stretch the credibility of your position too far and negotiations will fracture. You are the agent and you are the broker. Consider what these terms mean in a general sense. As an agent, you normally will not have the power to act for or to commit your principal, so don’t even try to play this role. You are charged, however, with using your expertise to advise your client what is in his best interest: What to do, when to do it, and how. You are also charged with having the required expertise. This is a big responsibility. On the other hand, you are acting as a broker: Bringing the parties to the transaction together. But when buyer meets seller, your job is not done. In fact, it is only beginning. As you very well know “bringing the parties together” includes conceptually, in the form of a meeting of the minds evidenced in writing. This is the most important reason a seller needs an agent. This is the most important reason a buyer needs an agent. This is the main reason you get paid. Remember, if you negotiate so ineptly that there is no agreement, it is worse than a lose/lose situation. It is a lose/lose/lose situation and one in which you do not deserve to be paid. Your role is to negotiate the very best set of terms possible for your client within the context of what you have to work with: The seller, the buyer, the other agent, the laws and customs, et cetera. Negotiating toward a super deal for your client that is too far from agreeable to the other principal is a waste of everyone’s time, not to mention a disservice to your client. Remember too that you are the advisor; the client is the decision maker. And regardless of the outcome of negotiations, you have a prime responsibility to keep your client out of trouble. The secret of successfully negotiating the negotiating process is control. To control the negotiation, control yourself. Never let the tone reach a state of emotional strain. To do so will always cost time and money and frequently will destroy the ability to reach an agreement. In all stages of negotiation, maintain a reasonable or at least a defensible position. Always project your sincerity, friendliness, and understanding. Avoid emotion and stay in control. These overall guidelines along with good information plus a clear and firm mindset will lead to your client’s most favorable contract. |
