Real Estate Negotiation Skills: What Are They And Who Has Them?

It’s not hard to find real estate agents who hold themselves out as “expert negotiators.”  There is even a certification – Certified Negotiation Expert, or CNE – that agents can obtain to further enhance their skills and reputation.  But really, what makes for a great negotiator when buying or selling real estate?  And who has those skills?

At it’s most basic level, “negotiation” is a subset of the art of persuasion.  An expert negotiator knows as much about the opposite party as possible, and in particular their motivation for entering into the proposed transaction and their desired result.  For example, when negotiating a purchase, the negotiator should be asking herself, “What is motivating this seller?  What can my buyer do to address the needs of this seller?”  The negotiator uses this knowledge to meet the seller’s needs as much as possible, which of course will help to facilitate the sale.

There are other elements to being a great negotiator.  For example, a negotiator may be able to extract a significant concession by setting up and standing on a bluff.  This is the “poker-face” aspect of negotiations.  Depending on the circumstances, a good negotiator may play it “close to the vest” and not reveal much about the party for whom she is negotiating.  This is, to a certain extent, the flip side of knowing the other party’s motivation.  If you don’t reveal your motivations, the other party will not be able to exploit them (although they won’t be able to address them either).  That said, this is  not a particularly helpful skill in real estate because the negotiations are in writing and not face-to-face.  Plus, there is always risk in bluffing, because if your bluff is called your position will be weaker in the future.

Empathy is also a good negotiation skill, particularly in the context of residential real estate.  Buyers and sellers of their homes have a significant emotional investment in the proposed transaction, and therefore they may not act “rationally.”  For example, a buyer may think he is requesting a modest concession following the inspection, but the seller is highly offended by the effort and the deal craters as a result.  A good negotiator takes this emotional component into account.

Finally, there is the most important negotiation skill (particularly in a highly competitive market like this one): The ability to assist the client in relinquishing some contractual rights and assuming some contractual risks in order to strengthen the offer.  Admittedly, this skill is only relevant, generally speaking, when there are multiple potential buyers and multiple offers.  But in that situation, there will be one winner and a whole bunch of losers, and everyone wants to be that winner.

When drafting an offer, a buyer generally includes several contractual terms that protect the buyer at the seller’s expense.  For example, there is a financing contingency, so if financing fails the buyer gets back his earnest money; there is an inspection contingency, so if the buyer is not satisfied with the condition of the property the buyer gets his earnest money back.  A good negotiator will have an intimate understanding of these potential contractual terms.  That negotiator will explain to the buyer how these terms protect him, and how buyer can forego some or all of those protections (like, for example, by foregoing the protections of the financing contingency).  The buyer can then make an informed decision about which protections, if any, to forego.

The expert negotiator can then specifically structure the offer, such as by using an addendum to alter the  terms, to make the offer much more attractive to the seller (basically eliminating the buyer’s protections so if buyer doesn’t complete the purchase for any reason the buyer must forfeit the earnest money).  In doing so, the negotiator will significantly increase the buyer’s chances of beating out other buyers.

So who has such skills?  Of the four examples above, a good real estate agent should fully understand and be able to apply the first three.  The fourth?  That is the practice of law.  Agents are neither trained nor authorized to apply this skill.  If you rely on a real estate agent for this service, you do so at your peril.  If you want a negotiator who has this skill, you should hire an attorney to assist you in the negotiations.

Selling Your Home – 15 Good Photos

Gone are the days when you can advertise “must see!” to sell your home, as if people have to come into your house as the first step in the home buying process. You can scream that from the roof top all you want, but unless you have a location that would cause anyone and everyone to come to and into your home, it’s all about the photos.

So where do your start? You start with The Three Basics – Paint -Floorings – Clean

Home For Sale

Once you have your walls and floors together (see post linked above) you move to taking your “test photos”. Once you know which angles will end up in the 15 Photo Display, then you stage those “photo areas”. because it’s all about the 15 mls photos!

rkit

The cost to stage the above townhome was $2,500 BUT I staged it myself within the cost of Listing the home. I used that $2,500 as follows. $1,500 to refinish those now gleaming, satin finish hardwood floors on the main floor and $1,000 to have the place painted. We also put in all new carpet and the $1,000 to paint was for the main pro painter and did not include the prep-tape-helper. I use a painter who let’s me bring the “helper” myself, to save on cost.

Of course there are whole HGTV shows devoted to ALL of the steps that lead to FIFTEEN GREAT MLS PHOTOS.

I just try to give you a snapshot of the process…one blog post at a time. Both of the above homes are recent. The top one closed in December of 2012. The lower photos are of a Pending townhome over in The U-District. The top one sold in 1 day, the lower one in 2 days. The top one took SEVEN WEEKS to get ready for market. The lower one about THREE WEEKS.

So “SOLD IN ONE DAY” took from September 7th to October 25, 2013 to get it ready to list…and sold on October 26th as to Offer and Acceptance. The lower one “SOLD IN TWO DAYS” took from January 6, 2013 to Jan. 26 to get it ready to list…and sold on Jan. 28 as to Offer and Acceptance.

A few recent real life examples…to give you an idea of what it takes to get your house from Day One to SOLD.

Discrimination – “Love Letters” to Sellers

A Cautionary Tale that Multiple Offers can lead to Discrimination in Housing…somewhat inadvertently.

I had a young couple ask me if they should submit a “love letter” to the owners of the home with their offer. I had not heard the letter called “a love letter” before, but it reminded me that I had used a letter like this back in 2006 or so when the home had over 20 offers. I included a lovely picture of the couple and their two children.

Fast Forward to 2012. This year there were many multiple offer situations and in one case a lovely old couple who had lived in their home since it was brand new and for over 30 years did not choose my clients and I was told it was not about price. ??? What WAS it about then?

Long story short…my clients did get the home. Sometimes Sellers say “I want a nice family who is going to raise their family in “our” home the same way we did”. They identify with the buyers of the home and want to picture a “loving family” in the home that they love so much. They don’t intend to discriminate…but…net result???

There has been a lot of talk over the last 5 or more years about “Why do we NEED an agent?” A reminder that often the agent is the ONLY one in the room who can see when a law is about to be broken…intentionally or not.

We are not licensed to SELL Real Estate.

We are licensed to represent people who Buy and Sell Real Estate.

Many agents believe that they are simply passing paper back and forth between buyers and sellers and must follow the instructions of their clients. This is a CAUTION that many people need to be told when they are entering into that gray area of “unlawful” as it is not always blatant discrimination.

Sometimes the seller asking

“which offer is from that cute couple with the baby?”

IS discrimination.

The agent should say: “Let’s look at these offers on their merits, without regard to WHO is making the offer”. People who discriminate often do it quietly, without notice, and sometimes scream the loudest that they are NOT…when someone calls them on it.