We are in a different marketplace, aren't we? The market totally rolled over into a buyer's market in a lot of price categories. And because of that, we need to hone our negotiation skills. So today I'm gonna give you 10 strategies to help you be a better negotiator. Because we know if a buyer feels good about the negotiation, they're gonna often be excited, and tell their friends and family to use use to purchase their next property.
Remember, it's all about referrals and doing an amazing job.
1. Discovering the motivation
It's simple, but it's interesting how many agents haven't done that. We just had an offer come into my office over $2 million and guess what? It was electronically sent without a phone call to the other agent. Very frustrating experience for the listing agent. But this is the example of a lot of buyer's agents that don't have any training. They're not calling the other listing agent and asking simple questions. Just engaging in building a relationship with that listing agent is super important. So ask the question about motivation. Why are they selling?
If they don't reveal a lot, go to their social media and check out what the sellers are self-reporting.
A lot of times there're gonna be an open book about why they're selling. Could be a job transfer, new baby in the house, kids going off to college, they're downsizing. There's a lot of reasons why people sell.
2. Check the listing history
Often this is not done, but the listing history is simply going back and seeing how long has the property been in the market. Was it listed previously, came off the market, came back on the market? Have they had any pending offers? Have they reduced the price? If so, how many times have they reduced the price? All of this can be very revealing into where the seller's motivation might be.
3. Find bottom
We've been so conditioned to come in at full price or with escalation clauses that often we don't even think about it as much.
But now is the time to find bottom. How do we do it? We're gonna come in under the list price if we're not competing. The question is by how much? How much are we gonna discount that price?
Well, there's a few things we can look at:
The first is the difference between list and sales price in your market. My market today is 97%. So I know 3% would be an average discount, but let's look at what else we can look at. Remember, most agents are still basing their CMAs on sold properties, but if your market is declining, that sold property number may be too high because those sold properties may have sold months ago. So we've gotta look at what are the activities and the pendings and base our sales prices on that. So try to find bonds, see where the seller's willing to go.
4. Ask this question:
"The buyers really like your listing, but we've narrowed it down to a couple. Is there anything you can tell me that would help me sell the property?" And again, just being an open book with that listing agent, seeing what they're willing to tell you. Often you're gonna find they're gonna tell you a lot more than maybe they should. Remember you're representing the buyer here.
5. Ask for concessions
Again, we've been so conditioned not to ask for anything, but depending on your loan type, you have different limits on what you can ask the sellers to pay for on the buyer's behalf. Closing costs, down payments, points, those kinds of things.
So find out from your lender what you can ask for with this loan type. And then ask for it. You don't know unless you ask. And in this market, it's okay to ask because we often are not competing with anyone else. So it's an opportunity.
6. Provide options
If that seller has the ability to carry a contract because they own it free and clear, you can ask if they would carry a contract.
And if you do, pay them a higher price if you're giving us a little bit of a discount on the interest rate. Or we can go get regular financing, but we're gonna have to pay you a little less because we gotta pay for the financing. Options, a lot of times, is a way you can get a better deal.
7. Use interest rates themselves as the reason for your lower offer.
So in your cover letter, which explains your offer, you could say, that your buyers would've loved to purchase the property last year at your list price based on 3% interest rates. Unfortunately, we've had to adjust our offer to offset the difference in payments at these higher interest rates.
8. Provide clarity
The sellers will trade dollars for certainty. If they know when they accept your offer that it's going to close, then they're gonna feel much more excited about accepting your offer. So a few things you can do here is demonstrate your success and say how you closed 96% of the deals you put in escrow. If you have that stat, use that stat, right? If the buyers have cash, make sure you give them that letter of funds that you have available that shows proof of funds if they're pre-approved rather than pre-qualified. Give that proof of pre-approval. If they have already approved the disclosure statements, give them that. Whatever you can do to provide more clarity that they're gonna be able to close, that's gonna empower your offer.
9. Try to find a win for the seller
In these conversations you're having with the listing agent, see what's important to the seller other than price. Figure out what's important to them and see if you can give them a win on any level.
10. The most powerful negotiation strategy is to walk away.
Now in this market, we can get away with this because sellers often aren't out having buyers lining up at their door. So if we get to a negotiation stopping point, it's okay to stop and walk away. And watch as those listing agents and those sellers come back to you and say they'll consider your offer.
Always a risk-reward situation because there could be another buyer that comes in behind you. But if you got a strong buyer and they're okay playing hard wall in the negotiation, this can win some big points and actually create some sales that you might not have had otherwise.
So guys, there's 10 quick strategies that might help you in the market. Hopefully that'll be something that you can use in your local marketplace.
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