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Finally, some unsuspecting buyer is making an offer on your seller’s property. Upon hearing an offer, you should ask some questions to help define what type of buyer you are dealing with. A few examples: ¨ A first-time buyer is apt to be cautious, if not downright scared, liable to withdraw the offer without warning, never to return. ¨ An incoming transferee on a five day house hunting trip will buy for sure, and usually has no home to sell. Do not delay, and do not let him get away. ¨ A serious local buyer might have a home to sell. Is it on the market? Is it reasonably priced? Has he seen many homes or made other offers? What happened? Is there any urgency? ¨ A bargain hunter or “bottom fisher” is willing to live in a cave as long as the price is discounted by 50%. Your offer is likely to be one of many such offers. Each type of buyer needs special handling. Has the buyer seen enough homes to be satisfied that your seller’s is the one? How long has he been looking for a home? What features did he especially like? Were these features present in any other home? A host of new considerations can surface during the presentation of an offer. A few examples, all designed to implore a seller to accept the offer, are the following: ¨ The market has suddenly worsened. ¨ Interest rates are about to rise. ¨ The home will not appraise for more than the offered price. ¨ Some investment newspaper article is predicting doom. ¨ The buyer likes another home, a close second, and that offer is already written and waiting. ¨ The buyer can afford no more. ¨ The price offered is even greater than the seller’s real estate tax assessment. This is not the time to ask a seller to make an important decision based on brand new, alarming, unverified, irrelevant, or fabricated information. So we agents must quench any consuming desire to get this one signed and get on to the next one, and re-pledge our troth to fiduciary duties. Remind yourself that your seller’s position is justifiable. You are on firm ground. You have an unbeatable team, you have done your homework, and you have much more ammunition (information) than the buyer does. Approach the problem carefully and logically. What information formed the basis for the buyer’s offer? Do you need to rebut the tax assessment myth? What information is the buyer lacking? How can you impart the understanding required to bring the buyer’s errant view into line with yours? Can you offer information on comparable sales, a recent appraisal, or perhaps your original market value analysis? Work through the selling agent, who will be your messenger. Convince him, and you are at least halfway there. By the way, the selling agent dearly wants this to work or else he will be back on the road showing properties instead of paying bills and going to the grocery store. It is no surprise that price is usually the most difficult factor to negotiate. The price is composed of two parts, the down payment plus the mortgage. If necessary, reexamine the buyer’s financial data. Can the down payment be increased through the sale of liquid investments, borrowing from retirement funds, a new loan on a paid-off car, or a gift from relatives? Will the buyer’s income support a larger mortgage? Recognize that an extra $5,000 on the price could cost the buyer less than $30 per month. Always send the selling agent back with the additional monthly cost number in hand. This is a powerfully convincing tactic. What kind of a mortgage is the buyer seeking? To stretch the maximum mortgage amount, ask that the buyer consider a loan with a longer term, a lower interest rate, or even a lender with higher qualifying ratios. In general, your seller should never accept a price lower than 90% of the asking price unless he is in dire straits with the anchor dragging. By settling for too low a price, you bypass an entire segment of the home buying market that never saw the home because they never dreamed you would give it away. So before you do give it away, expose it to the market at a 5% to 10% lower price. You might just end up with multiple offers and full price. While you are busy offering and counter-offering, ask your seller to consider this sobering thought to help put the offer into perspective: Assume he is asking $200,000, and the buyer is offering $191,000 on the second round of negotiations. Your seller is considering counter-offering at $195,000. If the buyer accepts, you all should be happy. But if the buyer walks off, the seller has in effect just purchased his own home for $191,000 with the expectation of selling it for $195,000 in the near future. Was this a sound business decision? Portray your seller as being personable and likeable. The buyer will be more inclined to give concessions to a nice seller. If at some point someone has to be the bad guy, just step right into the breech. It is in your job description. In addition, be sure that you and your seller are instantly contactable by telephone during the period when offers are being reviewed by the buyer and the selling agent. |
