“HUGE leap to proposed new topic: Our 4th offer failed, we’re settling in for a long haul, and we would be riveted (better late than never) by a discussion on what protocols govern behavior among real estate agents, firms, and customers here. I can’t find a way to introduce new topics myself.
Rain City Guide
Your Guide to the Seattle Real Estate Market
Silly question here from a lender: why not just offer $575k with a solid buyer and a preapproval letter (fwiw) stating the borrower is preapproved (or approved subject to the house conditions) for $575k and not a penny more?
That’s a good idea Rhonda. Can I get a preapproval letter for any amount I want? What if I have 3 properties that I plan to offer 500K, 600K and 700K? Can I get 3 different preapproval letters from my lender/agent?
Chaina, yes–assuming you are preapproved for those amounts. I often provide clients with preapproval letters are various amounts. If you’re preapproved for $700k but offering $675k, why show more than $675k to the seller and listing agent?
I am confused by sellers who are “insulted” by an offer per #2 and refuse to even counter. Is this really a common thing? I think if I had a client like this I would make them watch “Wall Street” and understand this is a business transaction.
I like Rhonda’s idea and do actually have multiple preapprovals done at times to cater to my particular offer. Most agents know it is a negotiating tactic, but I still feel it helps in my negotiating – I don’t want to go in there with a pre-approval stating the amount that they really are willing to pay for it.
As far as the knot in the middle of the pond – I have no problem going low as long as I can be strong in other parts of the offer. I try and have buyer clients decide on what is important to them – closing costs, price, etc. and focus in on making sure they get that while still offering other things that the seller can get rid of to make them feel like they are still negotiating. It does vary per house though and price as well as neighborhood play a big part in that.
It would be easier to make suggestions to Dennismurf if we knew what he had done/offered in those 4 situations.
Dennismurf, in general, the likely issue is the prices you are offering are too low to be sensible to the sellers. Ask yourself this: if your property is on the market at $650,000 would you really consider an offer for $550,000? Why should you if you haven’t even tried $625,000, $600,000, and then $575,000 first? That kind of spread rarely works because it isn’t realistic (even if the house isn’t worth what the seller thinks it is, they still are unikely to budge that much).
Here are some other thoughts/strategies:
*Are you offering a fast closing date of 30 days or less?
*Do you present with your offer a 3% – 5% earnest money deposit?
*Are you making your inspection period be 5 business days or less?
*Are you using any agent at all, and if so, the same one for all 4 offers? Are you listening to that agents advice?
*If making offers directly via a sellers listing agent, are you ‘hitting it off well’ with that agent? If you don’t have good, friendly communication with the sellers agent, you aren’t likely to get very far into a 30-day relationship … ie, if the agent thinks you’re difficult to work with, that’s a lethal thing in negotiations!
b – Many, many homeowners are emotional about their homes, and many would be heartbroken to have it suggested that they should consider it a “Wall Street” type of transaction. They want to sell to someone who will LOVE their home, and many sellers will actually sell for a lower price to a buyer they believe will love their home the most.
The buyers agent does a great job for their buyer by relating to the seller in a way that will make friends and not make a seller irritated, stressed, or made to feel inferior in any way. If the seller dislikes the messenger, the deal is likely never going to happen, come hell or high water in many cases! If the seller likes the messenger, but dislikes the buyer, the deal still might happen, that especially depends on the skills of the buyers agent (messenger!).
I have ‘won’ in many bidding war situations for my buyers because the sellers and their agent liked me & and my presentation of my buyer client, and disliked another agent or buyer due to some behavior taken as rudeness, sloppiness, pushiness or general obnoxiousness.
Behavior and perception of ‘decency’ matters so much more than many buyers think is possible.
Rhonda, most of my buyers have several pre-approval letters in different amounts. As a sellers agent if I see a lower offer from a buyer, together with the loan approval letter that says they only qualify for that dollar amount, we just ignore the letter, counter the price, and ask for a new letter.
The letter really confirms the buyer has had credit checked and in general will qualify. Most people do look in a price spread, often as high as $100,000 either direction, sometimes more.
Ardell makes the most important point in the last paragraph of her post: if your offer is low, make the rest of it strong and compelling. Remember, you don’t get both price and terms!
I must need a cup of coffee! It was Courtney’s last paragraph that I was reading :-)!
“…why not just offer $575k with a solid buyer and a preapproval letter (fwiw) stating the borrower is preapproved (or approved subject to the house conditions) for $575k and not a penny more?”
Often that strategy doesn’t work, Rhonda AND it could backfire if another buyer steps into the arena for a few bucks more. As “first offer in” you might have gotten a counter for the extra $2,500. But if you conveyed by the approval letter that you couldn’t afford the extra $2,500, that strategy could cost you the house.
When these things happen, there is often what I call “chatter” between the two agents. Often the seller’s agent will advice against leaving no “back and forth” room, as the seller will consider the buyer to be “unreasonable” if they won’t move by even $1,500 and not want to sell them the house AT ALL!
You would be surprised how many sellers take their homes off market entirely due to their emotional reactions to offers.
The Listing Agent and the Buyer’s Agents have many “couched” conversations during negotiations, and those conversations are ultimately the difference between success and failure most times.
Say the seller was ready to reduce the price from $600,000 to $575,000, it’s important for the buyer willing to pay $575,000 to know that, or he will be overpaying at $575,000. Probing for more info in the correct manner is tremendously important before determining an offer strategy. Reading BETWEEN the lines of what is said is where all the info lies. Smart agents know when to shut their phones off during negotiations.
It definitely is an artform, and what separates the girls from the broads 🙂
P.S. EVERY offer has a pre-approval letter from the seller’s point of view. They rarely make distinctions in the quality of a letter and NO offer is considered without one.
So having one is not a strategy for success…it’s a minimum requirement to even being in the game.
Thanks for being my shill, Ardell 🙂
The real mystery to us, however, is protocols – those unwritten rules governing real estate agents’ and brokerages’ behavior toward each other and their customers. We’ve figured out a few of them, but we’re sure there are more.
b asks: “I am confused by sellers who are “insulted
denismurf,
It’s almost time for 4:00 RCG Talk show…so I have to go. But give me some more detail. There are THOUSANDS of little quirky “rules” and expectations and protocols. It would take a series of books to define them all and it takes years in the business to get them all down.
Give me a for instance while we’re “on the radio”.
Denismurf,
You can be “our guest” next week on the online show and we can talk it through if you want. I bet it would be fun and educational for many if you’re up to it.
Maybe negotation has nothing to do with it.
Hire professional experienced real estate counsel who understand the market dynamics and pricing.
Michael,
The whole purpose of blogging is to give people more than: “hire someone else to do it”. Sure many will, but even those that do hire someone, want more info so that they can better judge the professional that they hire.
It’s never a satisfactory answer from an agent to say “hire me and your problems are solved”…especially on a blog.
Transparency regardng the ins and outs of what we do everyday is the whole purpose of having a blog in the first place.
Denismurf,
Most of “the rules” are not unwritten. There are scads and scads of them that ARE in fact written. They just aren’t generally available to anyone other than agents because for the most part, and in past history, they haven’t applied to anyone but agents.
Ardell and Denismurf, I tend to agree with Michael L from the point of view that hiring a professional can well save you time and money. Dentists, doctors, CPA’s, attorneys, insurance brokers, real estate agents, auto mechanics, finish carpenters … you name it, there is a professional out there that can make a great deal of difference because of their years of training and experience.
No matter how many tips we give Denismurf, and anyone else, whether they be a seller or a buyer, they still don’t have the actual experience or the training. What we do as agents isn’t as simple as it seems.
I agree with you Ardell that people are reading blogs for knowlege and part of that need for knowlege is to determine if they can do it themselves. But, I think we lack professionalism if we don’t point out that we ourselves think what agents do is important and not to be taken lightly. (And, Denismurf, I am not saying that’s what you think at all).
Ardell, the way you describe how you help your sellers get their homes ready for sale and how you advise your buyers tells me that you are not only a very ‘hands on’ agent, but that you also have years of skills, knowlege and experience, which is something quite distinct and major that you as an agent bring to the negotiation table.
It’s that solid experience with every detail, including negotiations, that makes having a transaction with a seasoned, experienced agent involved MUCH more likely to be a better transaction for both buyer and seller than a transaction where they did it themselves. I say that with a view towards both time and money.
It’s nice to educate, but it’s also more than prudent to point out that what we do isn’t easy, and is full of nuiances. Denismurf after 4 offers might well happen to agree … :-)!
And, AMEN to the statement regarding emotional sellers and buyers! Keeping them apart so they won’t come to blows is very often the critical key. I had a seller wife burst into tears during my presentation of my buyer clients offer, so of course I stopped talking, not sure of what I had said. My buyer wasn’t offering full price, and they also were asking for the refrigerator, which was pretty nice, not the best, but still, newer and nice. That’s what set off her tears – it was literally the first nice refrigerator she’d ever had in her life, and she was afraid if they sold it with the house that her (miser!) husband would never let her get another one. We scratched off that refrigerator faster than you can imagine!
Ah yes, Leanne, you said it well:
“I agree with you Ardell that people are reading blogs for knowlege and part of that need for knowlege is to determine if they can do it themselves. But, I think we lack professionalism if we don’t point out that we ourselves think what agents do is important and not to be taken lightly. (And, Denismurf, I am not saying that’s what you think at all).
Ardell, the way you describe how you help your sellers get their homes ready for sale and how you advise your buyers tells me that you are not only a very ‘hands on’ agent, but that you also have years of skills, knowlege and experience, which is something quite distinct and major that you as an agent bring to the negotiation table.
It’s that solid experience with every detail, including negotiations, that makes having a transaction with a seasoned, experienced agent involved MUCH more likely to be a better transaction for both buyer and seller than a transaction where they did it themselves. I say that with a view towards both time and money.”
————————
But most importantly, our job is to see that the job gets done right for our clients. Most of my day today has revolved around conversations with highly emotional buyers and sellers, some who are on the market and some who will be on the market. I’ve been dealing with repairs to be done before listing a home, inspection items that need to be addressed on a sale, a “drive by” appraiser who knocks on the seller’s door unannounced, price reductions for a seller and reviewing the comparables and this was all just this afternoon! Buying and selling is extremely emotional. We agents bring some levity, reality, and high level support to our clients as they go through this entire process.
And yes, investors get emotional, too. I am working with one right now who is very emotional about the selling process.
This is a big deal to people and a very important part of their emotional and financial lives.
Leanne et al,
We work very, VERY hard here at Rain City Guide to support a consumer oriented theme and blog. Discouraging non-industry people from speaking their mind and seeking information so that they can do it themselves, is just not what we at Rain City Guide are about.
Please respect that in this place.
Thank you.
When I ask my accountant friends a question, they don’t answer “hire an accountant.” People deserve a lot mre respect than “let us do it” as the pat answer for everything.
Ardell, in no way was I trying to discourage anyone from speaking.
I don’t get at all why you think that?
What I simply was saying is that seasoned agents add value to a transaction, which is a fair consideration to point out to prospective do-it-yourselfers. That is my opinion, and one obvious reason why people reading these blogs come for information: obviously they value our experience etc.
Answering peoples questions helps them make choices. But, to suggest that they can do as good of a job as someone seasoned & experienced (in any field, not just real estate) doesn’t make sense. But, they can ask questions, make decisions, and thus be as prudent as possible about their choice. An analogy: I may not have good carpentry skills, but if I ask a lot of questions, I either will figure out that I do want to hire that finish carpenter, or that I want to do it myself. If I choose to do it myself, I know there is risk. Having a finish carpenter tell me that I’m not likely to do as good of a job as he can doesn’t keep me from asking more questions, or even deter me from trying to do it myself, it just adds the pointed statement that experience matters.
Someday soon, people will fill out lmortgage applications online, and feel they can do without the advice of a mortgage professional. They probably already can do that. Do any of us feel that works for most people? Doubtful, but we’d certainly answer questions from those who think they want to.
That’s all I’m doing here, answering questions, giving opinons.
…and some day people will even do their own tax returns! What’s the world coming to! I think agents should be like accountants and lawyers. Sometimes you need ’em; sometimes you don’t.
Can everyone just stop acting like no one can buy or sell a house without an agent in tow. It’s insulting to them and embarrassing to the industry.
Sure some people need an agent, maybe even most. But let’s help everyone need us a little bit less. That is why we blog.
How did a thread about negotiating strategies turn into an agent’s do it better post?
Ardell,
Get you facts straight next time. Those words didn’t come out my mouth. Don’t attribute them to me.
I am not a residential agent. He can’t “hire me and your problems are solved
Michael,
I recognize that you are a commercial agent and not a residential agent. I also recognize that Denismurf ISN’T buying commercial property.
Your comment: “Hire professional experienced real estate counsel who understand the market dynamics and pricing.” suggests that denismurf shouldn’t have asked the question in the first place, but should have hired an agent instead. Clearly he knows his options in that regard.
It’s like telling a For Sale By Owner that they shouldn’t BE a For Sale By Owner in response to a question they may have.
Whether it’s you or Leanne or Debra, the thread got “hijacked” from its topic, and that is a shame and not respectful of this community. The topic is negotiation advices. Anyone, not only you (you just happened to be the first) who doesn’t offer advices in keeping with the post topic, but turns the topic into “hire someone else to do it”, is taking it out into left field.
There are plenty of places on the internet for agents to talk to each other about how consumers shouldn’t try to do things themselves. RCG isn’t one of them.
Ardell,
Again you are putting words in my mouth. Nothing in my post says or suggests “that denismurf shouldn’t have asked the question
Ardell, I have to say I think you overreacted on this one :-). We all gave negotiation advice, which is what your post invited.
As you stated in your post “This is going to be one of those posts that plays out in the comments section. It’s one of those Ask 10 agents; get 10 different answers
A strategy that worked for a buyer last spring, and has worked for me in the past:
I was working with a strong buyer (>20% down and had the ability to close quickly)
House listed at $670,000 in an outstanding neighborhood. In recent markets might have sold for over $700,000. House was vacant. Sellers lived out of town.
Market time was around 60 days or so at the time of first offer.
Client offered $630,000. Seller countered at $660,000 and agent informed me that he had other interested parties.
My buyer really didn’t want to pay much over the $630,000, so I advised him to “wait in the bushes” for at least 30 days. If something else came up better, we’d look, but in the meantime we watched.
IMPORTANT! I kept casual dialog with the listing agent. After a couple of weeks he admitted the other interested parties were investors and one had offered $650k, which the sellers refused. We chatted about current inventory and absorption rates, etc.
After 30 days we made the exact same offer of $630k. This time the seller countered at $647k. I advised my buyer to “lightly” soften his position and we countered at $634,000. The seller then countered at $640.
My buyer was set on his price. I went back to the Listing Agent again and extolled the virtues of my buyer’s strength and ability to close quickly. We also reviewed the absorption rates and market data. We countered back at our last position of $634,000 and had a signed around deal within a 1/2 hour. We also had no problems with legit inspection issues that came up.
The keys that lead to success were:
1. We were patient. It took us 6-7 weeks to put it together.
2. I kept casual dialog with the LA. I was never his adversary — in fact quite the opposite. I was helping him to move his listing.
3. We were always prepared with detailed market statistics.
4. My buyer had a strong financial profile, offered substantial earnest money and had the ability to close quickly.
5. In the end, the listing agent was sold on the fact we were his best option. He sold our offer to the sellers.
Other keys were market time, vacant house, out state sellers, etc.
I’ve assisted several buyers with this kind of strategy. There are risks, mainly with the house being sold, but frankly currently buyers have selection.
Sellers and buyers always need to remember this “law” of negotiation, “Time is the enemy of the seller”. (not the buyer!!!)
How many times have we seen a seller turn down an offer, only to accept much less down the road?
And…..an editorial comment. I dislike offers being labeled as “bad offers”, or “lowball offers” or “bottomfeeding”.
I believe all offers are good offers. It may not be an offer a seller chooses to accept, but it is an offer. Good things can happen when an offer is made. I don’t know how many times I’ve seen that “ridiculous” starting offer come together favorable to a seller. Or a piggyback offer comes in to compete. When I’m listing a property, I want to see offers! I would rather turn them down than never receive them. Sellers need to be coached with these principles to help them keep a business, rather than emotional perspective.
Negotiating is a matter of conversation and attitude. Agents are far better negotiators when they remove the emotion and “ego” and listen. A good agent helps sellers and buyers through the emotional issues as well. When the attitude is good, creativity is high. When creativity is high, things happen!
Greg, as you know, a low offer combined with sloppiness & rudeness is a royal pain to deal with, and could be the definition of a bottom feeder offer! It makes you wonder why they bothered to waste the paper … 🙂
Generally, I think nearly any offer is a compliment! I tell my sellers, hey, here is someone who likes your property, and that’s a compliment. Now, let’s see if we can find some middle ground for you and the buyer.
Working with people who are emotional is our job, but it sure is nice when we get the opportunity to work with reasonable people as well — reasonable meaning manners, attitude and professionalism.
Some of the low offers are presented so rudely that it makes you wonder why the client chose the agent.
Leanne,
While I’ll agree that some offers (low, sloppy, rude) don’t have much of a chance to come together, I have learned to cherish that offer. It’s the other side that spent their time looking at the house and making the offer.
As I said, that offer may become a competing offer. No way do I have to tell a competing agent what that offer is. I leave that to their imagination.
I always try to get my client to counter…even if it’s their original position (buyer or seller).
If I have an unskilled person on the other side, I try to assist them.
To me, all offers are good offers. This is the attitude I take to work with me.
Anyway, back to protocols.
I’m a retiree with 6 earlier buy-sell cycles under my belt. After a lot of interviews with brokers and input from friends and relatives with recent experience, including one who’s a real estate agent in a different city, we decided to list our old house and buy our new one through less-than-full-service (or whatever they’re called here) brokers, specifically Johnson Realty in St Louis and Redfin here.
Before moving here, we read up on Washington’s agency and fiduciary rules. Nothing in there or anywhere in our experience prepared us for the protocol that says that listing agents are NOT responsible for showing their listings to potential buyers. I won’t recount all the baffling phone conversations we had in trying to set up house viewings before we got here on a house hunt trip or the next round that ensued after we signed up with Redfin as our buyers agent. We didn’t really “get it” until an exasperated agent told us explicitly that calling a listing agent for a showing is “against protocol” unless you agree that that listing agent will become your buyer’s agent for that property. We now accept that and just don’t look at properties unless there’s an open house. Do we have that one right?
Another protocol we’ve inferred from our experiences here and as sellers in St. Louis is that brokers are not to transmit offers of less than 90% of the current asking price to the listing agent without getting the listing agent’s permission to do so in advance. Does that sound right?
I’ll stop here on this protocol stuff.
“Another protocol we’ve inferred from our experiences here and as sellers in St. Louis is that brokers are not to transmit offers of less than 90% of the current asking price to the listing agent without getting the listing agent’s permission to do so in advance. Does that sound right?”
No this is not right. All offers must be submitted.
“Nothing in there or anywhere in our experience prepared us for the protocol that says that listing agents are NOT responsible for showing their listings to potential buyers. I won’t recount all the baffling phone conversations we had in trying to set up house viewings before we got here on a house hunt trip or the next round that ensued after we signed up with Redfin as our buyers agent. We didn’t really “get it
“I just don’t see in any discussions that the thread got hijacked from giving negotiaton advice; nor did anyone suggest that DIYs couldn’t do it themselves, simply that some of us feel that professionals do it better.”
Some agents do it better…many don’t. Some buyers do better on their own…many don’t. There is not magic great negotiator pill given to people with their real estate license.
Let’s assume that our readers CAN do it as good as MANY agents and just give advices of how.
I “over-react” Leanne, because it gives RCG a bad name to not be totally open minded and come from a place where we educate people as to how they can better do it themselves.
It’s like going to costume party without a costume, or a fancy dress affair in sweat clothes. I do expect people to keep the tone of the post and not turn RCG into another agent to agent only forum. There are WAY too many of those on the internet. It just isn’t Who We Are, and yes…I do ask you and othersto keep that in mind when commenting here. Not everywhere. Just here.
It’s like asking buyers to where booties and not track mud into your listing 🙂 It kind of spoils it both for the owner and the other viewers.
” We now accept that and just don’t look at properties unless there’s an open house. Do we have that one right?”
That really is up to each agent. I suggest that you first ask if they are going to be having an Open House, andif so when. That puts the listing agent on notice that you are not planning to use them as your agent, you just want to get into the house. If they are having an Open House tomorrow, great. If they say they are not planning to have one, then simply ask how you can get into the house to see it without using the listing agent as your agent.
If you take the conversation in that direction, I think you will have more success. Sometimes the listing agent lives next door and it’s no big deal. Sometimes the agent lives ten miles away and it IS a big deal. Often I’m going over with flyers even if there is not going to be an Open House and say I can meet you there later today, I’ll just bring my flyers at a time that is convenient to you.
The tone of the conversation is most important. The agent is doing you a favor, really. It’s not a YES or NO protocol, it’s more about your attitude during the call. It’s like when I went to France and everyone spoke with me because I didn’t EXPECT them to be able to speak English. As soon as someone EXPECTED them to speak English, they acted like they couldn’t. Attitude is the key, Denismurf. Hope that helps.
If you say “I don’t want to put you out, but I want to see it before contacting my agent as I plan to use Redfin to purchase”. Now what do you do if they say they will give you the same Redfin deal OR they say they will give you the WHOLE 3% if you buy it as long as you represent yourself. Be prepared for an answer to that one, as more and more Listing Agents are doing that to move product.
“Another protocol we’ve inferred from our experiences here and as sellers in St. Louis is that brokers are not to transmit offers of less than 90% of the current asking price to the listing agent without getting the listing agent’s permission to do so in advance. Does that sound right?”
In every state in the Country…EVERY ONE, the Licensing Commission of the State requires that all written offers be presented to the seller. Some include verbal offers and some do not. I have never, ever, in 5 states heard anything about 90% of anything. That’s just BS.
Even a seller really can’t instruct an agent not to present an offer “unless it is at least X”. You still have to contact the seller and convey the offer.
I agree with Greg 31 and in this changing market, more agents will have to agree with Greg 31. Buyers are few and far between and to be treat with kid gloves and like gold. The seller doesn’t have to bend over for them, but the agent’s job is to remove the emotion and understand that any buyer with an offer must be worked as long and as hard as possible. It could be a long time before you see another one, and the next one could be even less.
This is a new market…the times they are achangin’ Often it takes everyone’s best effort to get to the end and everyone has to give a little something. Don’t look back at the last three years, look at the real market as it is right now.
It’s not as much of a buyer’s market as many buyers would like it to be. But it’s not a seller’s market anymore either. So doing things differently is clearly in order.
Leanne et al,
I have had a couple of buyer’s agents try to bring comps and present them to the seller to convince them they are over-priced. It hasn’t worked out well. The sellers get really mad.
Have you seen this technique work?
Denismurf,
This section of Greg’s comment is VERY IMPORTANT!
“My buyer really didn’t want to pay much over the $630,000, so I advised him to “wait in the bushes
Leanne,
“Ardell, you work extremely hard to help your clients, and you are like a mother bear with them — you fiercely make sure their best interests are protected. You have to have a personal opinion that you provide a high value to your clients, and provide them a transaction better than what they likely could have done themselves.”
I can still do most things better than my kids too…but they have to do things at their own level and I can’t always do it FOR them. People want to learn and grow. So Denismurf failed four times…maybe the advices we give will help him get a house he really likes. Maybe he didn’t like those houses enough to negotiate well. There are always many variables.
Maybe I do it better than you. That doesn’t mean you should give me all of your clients, does it? Of course not. So someone else is able to do it better can be said of most every agent too, not just buyers and sellers.
Dennismurf, Greg is correct, I don’t think either example is really our overall ‘protocol’. It’s nice that you’ve given us all a chance to answer your concerns. To be fair, you’re partially right about the sellers agent and the buyers agents duties, at least as far as how historically we’ve worked.
Historically, as well as today, as a buyers agent I have only asked a sellers agent to show my buyer client a property when I’ve been unable to rearrange my schedule to meet the buyers needs. As a buyers agent, I wouldn’t dream of suggesting to them that they take their time to go around and see a bunch of properties and then come back and tell me which one they wanted to buy … I happen to think my agency responsibility under WA State law means I have more interaction with my client, which has to include, at bare minimum, seeing the actual property they want to buy, and including seeing a majority of the ones they didn’t want to buy. My advice to them depends on it.
And, for years, that’s been how the majority of buyers agents have worked: we expect to always be the one to show properties to our buyer clients, and sellers agents were expected to market to other real estate agents (brokers opens, flyers) and market to the public (advertising, open houses), and to occasionally help a buyers agent by showing their client a property. That was protocol for years and years, and years and years.
More recently, the advent of the internet has spawned many new companies, some with a money-saving approach: let the buyer do the footwork, and the buyer will save money by doing do.
That’s a fine idea, but the companies that started these new models, didn’t research within their own business community to find out if their model would meet any resistance. Obviously, there was resistance, in part because they were passing the time-consuming job of showing properties to someone who wasn’t going to benefit from the pay for that job: the listing agent.
The pay for being the listing agent never included showing other agents clients as a constant, regular part of the job. Even before Buyers Agency, if an agent got a call from a prospective buyer, they expected if that buyer bought the property, that they would earn the entire commission, and represent only the Seller. Buyers Agency developed so buyers could have representation, and the duties seemed clear to agents: you work with the buyer and I’ll work with the seller. It seemed pretty simple really.
The evolution today is that most of these companies now offer a fee-based way for buyers to see more properties, and I think that is balanced, and fair.
I think when the market was so frenzied, and agents were so busy, that listing agents felt abused by these new companies.
All of a sudden, in addition to being asked to do what felt a lot like doing “the work of the other agent”, because of Buyer Agency and Seller Agency laws, listing agents were being asked to walk that fine line of showing a property to a buyer, but not being able to completely and fully answer the buyers questions because they represent the opposing party: the seller.
And, many buyers were very aggressive about getting to see these houses at inconvenient times, and often were not honest with the listing agent simply because the market was so intensly fast, and some felt they had to lie to get into the property. That’s an unfortunate part of the growing pangs of that business model, and hopefully becoming a distant memory, both for those who felt abused, and for those who felt they had to lie.
I think new business models are great, but the initial implementation of them can certainly be difficult :-)!
When people are not honest with each other, that creates some hard feelings, and I do think many listing agents felt abused by some of the new models of real estate companies, not because they were asked occasionally to show their sellers home, but because they were suddenly asked to do a lot of what they used to do rarely — show another agents client properties.
So, I think in a very busy market, buyers didn’t realize that what seemed normal to them, wasn’t really normal in previous years. A bit of a learning curve, for everyone.
As to offers being lower than 10%, well I think the reluctance of many agents comes from time involvement. It’s a lot of work to prepare and present an offer, and we drop things in our personal life to make sure the offers get handled expediently, and well. The law of probablility makes the outcome of a more than 10% low offer less likely perhaps, but if the other components of the offer are good – it may not be impossible to me at all. I still believe most sellers will choose to reduce their price more moderately before just accepting a really low offer, and if the offer is “too low”, a seller is likely to counter with a higher price than he might have if the offer was initially better. Short answer: it all depends!
In the 80’s we learned that “you don’t get both price and terms”, and I think that will hold true forever. If you want a low price, offer a carrot of substance. A sense of fairness, a sense of what might be compelling to a seller, those are certainly part of getting a low offer acceptable to a seller.
“Let’s assume that our readers CAN do it as good as MANY agents and just give advices of how.”
If the readers can do it as good, then the readers don’t need advice. If they can’t do it as good, then they need advice. The skill set exists or it doesn’t. If advice is sought from the experienced, then less experience is implied and the job is not as good.
# 37 comps – no Ardell, it doesn’t work, and it infuriates the seller and likely the listing agent too. Usually the agent bringing low comps hasn’t actually brought true comps, so then you have the situation where you either have to get into the ‘your comps aren’t even close’ which infuriates the other agent, or you simply say, ‘thanks so much for all the work you’ve done on this, we’ll discuss this and get back to you’, a nice, neutral approach.
And then you have the discussion with the sellers as to what do they want to do, and what do you, the agent, recommend they do. I find many agents out there are being too hesitant in their discussions with their buyers & sellers, and not making recommendations. Agents: it’s our job to make a recommendation. Guide your clients. Give them your professional opinon. They don’t have to take your advice, but they sure do want to hear what you have to say. If you are not comfortable giving advice, you are in the wrong career.
Michael,
You have posted a few times, and I have yet to see your advices to Denismurf on how HE can be more successful at what he is trying to do. That’s the topic. Now how someone else can be better at what he is trying to do. But how HE can be more successful at what he is trying to do.
I don’t know how to make it any clearer. What is your favorite method?
Denismurf: “We didn’t really “get it
Re:37
What works for me is working through market absorption rates. If we are offering on a home that is holding over 1-2 years of inventory at the current rate of sale, and can show that the rate of sale is continuing to deteriorate, the listing agent and the seller look hard at their real odds of making a sale. So take Kirkland for example, let’s say there exists 105 homes priced between $1mil and 1.5 mil and between 1 and 2 homes/week are selling, WHAT DO YOU THINK THE ODDS FOR SELLER SUCCESS ARE?
If you (SELLER) get THE offer with a well qualified buyer, you’ll have to think VERY hard about how you’ll respond to the offer —–especially if market time is building, along with paying the holding costs of a vacant house, etc.
Coming in with, and presenting real, no BS market information has helped me immensely in negotiating for buyers. With those odds of selling, I’m not advising coming in with a strong offer, and I’ll be able to demonstrate to the other side why.
Again, I work hard to work with the other agent, openly and professionally — carefully explaining why we are offering what we are. In the end they end up selling their client on the merit of our offer.
Ardell,
I know the topic of your post. I can read. I didn’t see any rule posted that comments about comments are prohibited. I don’t appear to be the only person commenting about comments. If that is your request, then the request needs to be directed to everyone rather than one individual.
Why is the property priced the way it is? What is the seller’s motivation? Unfortunately, what is the agent’s motivation? A few unethical agents will do anything in the buyer’s favor to fill their own wallet. If the property unique, then the probability it will sell for +/- 3% of the list price regardless of the TOM is 90%. A low offer is probably pointless if the seller/agent is aware of the statistical probability from doing their homework.
If you believe a specific property is overpriced, then prove it and make a low offer. Professionals shouldn’t get upset. If the property is mispriced, then the seller needs to blame themselves and/or the listing agent and nobody else. the seller and listing need to get over the mistake and move on.
If you believe the market in general is overpriced and apply that idea in blanket fashion to every offer, then you may have a losing battle. You will alienate those in which the property is priced appropriately. Each property needs to be evaluated on its own merits and valid comparables.
Pricing real property is fuzzy math especially for residential property. It isn’t as easy as pricing other portfolio assets. Real property has many qualitative components. the economics have their on issues like the Sticky Price Theory, etc. There is larger margin of error. If you have plenty of valid comparables, time on market, other data, etc then you can run regression analysis and trend analysis to determine price in a relevant range.
Michael,
We don’t have hardly any “rules” here. Each author manages their own posts and comments. Thanks for the negotiation advices for Denismurf. Much appreciated
One way to get a lower price is to let the seller stay for some time after closing without charging them rent. If the primary objective is to get a low price as a hedge against future market conditions, and you are staying with your parents 🙂 You could let the seller stay to help bridge the gap between what the seller wants and what you want to pay.
That also helps the seller because it gives them a time to find a place to go and move into it. I have used this method several times and it works well.
It’s one of the “carrots” that Leanne mentioned. Sometimes you have to trade something for lower price, and post occupancy is very effective for a seller who doesn’t know where they will go if their house sells.
Re 44: My original question that Ardell carried over for me had nothing, zero, to do with negotiating. I referred to our 4 failed offers only as an explanation of why we’ve been so involved for so long in real estate that we became aware of the existence of protocols, or whatever you’all want to call them.
The negotiating tips are appreciated nonetheless.
I do at least now understand that there are historical precedents for the protocol (I’m just going to call it that) holding that the listing agent is not responsible for showing their listings to potential buyers. I do hope, though, that the real estate community understands how this protocol can produce bafflement, hurt feelings and anger among us non-initiates. Here are 3 anecdotes.
Our listing agreement in St Louis stated explicitly that showing our house was NOT among the duties of the listing agent. That task was listed among OUR duties. As I described earlier, our listing agent commission was .34% plus $500 for the MLS listing. I assumed, as most people would, that a full service, full commission broker would show our house to potential buyers. I brought that assumption along to Seattle.
After telling several local friends about getting chewed out for asking listing agents to show us their listings, one of them related this story about friend (A) who listed her house for a little over $1 million somewhere in N Seattle. This friend (A) told another friend (B) about her (A’s) house. A couple of weeks later, B told A that she (B) called the listing agent to look at A’s house, but that the listing agent told B that it was not was his job to show the house, he didn’t work for free, etc. So A called the listing agent and told him if she ever heard again that he refused to show her house, she would fire him and get somebody who would.
Final example. Those signs in front of houses for sale frequently say something like, “Contact me for a private showing,” accompanied by a picture of the realtors’ smiling face. Somebody tell me – to whom is that invitation supposed to be addressed?
Denismurf,
Going back in time a bit, the 3% belonged to the agent who “procured” the buyer by showing the property. In some areas it was called “the threshold rule” and whomever crossed the threshold of the home listed for sale with the buyer who bought it was paid the “co-op” fee, usually 3%, by the seller.
Even Redfin didn’t understand “the protocols” when they started their business model. Procuring Cause still exists, and an agent can claim the 3% given to you by the seller from the listing broker, if it is later found that you saw the property with an agent before you approached it on your own.
So we have to be very careful. We could owe the 3% paid to you, after the fact. If the wrong agent gets it, no problem. He had to bring it back “to the table”. But if the buyer gets it, then all hell breaks loose if someone submits a Procuring Cause claim against the listing broker for the 3% you left with.
It really isn’t as simple as people think it is. The mls is a B to B site, with B to B rules. The seller gets lots of agents showing it in exchange for following those rules. To date there have been few problems. Buyers “owning their side of the equation” presents many difficulties that many are trying to work through and find resolutions for.
Denismurf (No. 49): Thank you for your clarification and examples. Again, I am uncomfortable speaking about agent protocols. I do not deny that they exist, it’s just that our firm often goes its own way. Anyway, whether or not we show our own listings depends on our agreement with the seller. An agreement made at the time of signing the listing. Naturally, it depends on how much money we make on the transaction.
In any case, please note the difference between a listing agent showing property to a potential buyer and showing the property to a potential buyer already represented by an agent. As described above, we may or may not show our own listing to potential buyers. But, regarding a potential buyer already represented by an agent, well, we are NOT going to show the property and pay their agent a full commission. One or the other, but not both.
Anyone (buyer or seller) is free to pick any type of agent or firm to represent them, or of course, choose to do without. However, if you hire a firm that offers less than full service, you cannot expect the firm on the other side to perform the difference. This is the modus operandi of many discount firms, which take advantage of longstanding, ill-conceived agent protocols.
Regarding A and B. I can think of many questions to ask about this scenario, but let me ask just two: Did B have an agent? And if not, what happened to the buyer’s agent’s commission if B bought the house? Admittedly, the listing agent is probably in the wrong here, but it’s hard to tell given what we know.
Regarding those “smiling face
“Final example. Those signs in front of houses for sale frequently say something like, “Contact me for a private showing,
A clear disadvantage to consumers trying to negotiate on their own is that they have missing information. Remember the two agents share some, though not all, of the information between one another. The listing agent often knows how low the seller will go. The buyer’s agent often knows how high the buyer will go. The listing agent knows what the seller might be willing in trade for a lower price. The buyer’s agent knows which of the inspection items create the most fear and concern for the buyer.
Most times a buyer and seller end up in agreement due to the exchanges between the two agents, so without two agents in the room, there is an information gap that often causes the parties to not end up with an agreement to purchase.
Ardell,
Valid points in 53.
I think it’s also fair to say that not all agents are good negotiators. However, when facing an experienced, market savvy agent who is a good negotiator, an inexperienced buyer or seller working on their own behalf could find themselves at a severe disadvantage. I see people all the time who “think” they got a good deal, but really pulled off a real “stinker”. “Wisdom” sets in a few years later when it’s time to sell.
Many consumers feel that an agent’s main job is to find the property and base their entire value on this. In reality that is an important part of an agent’s job, however the majority of the work starts once the property is found. The ability to effectively negotiate is one of the most important attributes that a consumer should look for in an agent.
One of the things that plague is all is often “we don’t know what we don’t know”.
Thanks, Ardell, for your excellent suggestion in #35 on how to frame the request to the listing agent for a showing. Until we stopped asking for showings altogether, I used a “script” that included the statement that we would be working through Redfin if we ended up making an offer. Just so there are no misunderstandings here on this forum about our experience, roughly 3/4 of the agents we contacted for a showing responded with courtesy and professionalism and took us right in. It’s that other fourth who made the experience so unpleasant that we just stopped calling.
Re #51, I assume that B in my example was just looking and therefore had no agent and did not make an offer.
I also want to repeat that all of your thoughts on negotiating are very helpful. Thank you. Thank you.
I hope to post something on that topic later today.
You are very welcome, deinsmurf. I’m off to put new/more flyers into 3 different listings on the Eastside. Listing Agents are often AT their listings outside of Open House times. I’m usually at my listings at least once a week for one reason or another. There are many more opportunities to see a house than simply at Open House. You don’t want to miss a house just because it wasn’t Open before it sold.
Often buyers will call and say “I don’t want you to make an EXTRA trip, but if you are going to be at the house during the next few days, can I see it then?”
BTW, some listings say that the commission drops from 3% to 1% if the agent you buy with is not with you at the first showing. Unfortunately you can’t see that as it is in the agent only remarks section. There is much talk about whether this is enforceable. But don’t assume that there are no conditions on the buyer agent fee or that it is always 3%. You could end up with nothing for your extra trouble in the event the commission changes if you didn’t see the listing with the agent you will use to buy it with.
I hope all of you are getting as much out of these conversations as I am. If it would really be of general interest, I’ll describe our 4 failed offers in some detail and you can pick them apart. I do feel obliged to fuzz over some of the particulars to avoid getting into names.
First, though, our actions might not make a whole lot of sense unless I describe our assumptions and desires. I honestly don’t know if we are typical buyers in this market or not. You tell me, seriously. Here are the facts about us:
1. Everything we read and see going on around us nationally and locally indicates that we should rent, not buy. The *only* reason we insist on trying to own is that we have always (34 years) owned our homes and just can’t accept emotionally the idea of becoming long term renters. We assume that whatever we buy will depreciate by about half percent a month until …?
2. Even so, we are willing to suspend our good sense and make a reasonable effort to buy a house if the price is kinda right, and the process is smooth.
3. The number of acceptable houses where we want to live is increasing steadily, and prices for them keep dropping.
4. We believe we are pretty well informed about our target real estate market and increasingly well informed about intangible stuff like protocols. We are (overly, I’m afraid) sensitive about being treated like children or idiots by real estate agents.
Bare bones about our 4 failed offers:
1. Townhouse. No agreement on price.
2. Condo. Price agreed, but HOA problem.
3. House. Price agreed, but major inspection item not resolved.
4. Condo. No agreement on price, but with a wrinkle.
Well, want details or not? — Denis
Yes…details! I recommend you make four separate comments out of it. Sometimes really long comments end up in the spam filter. If that happens (you hit post and it doesn’t show) just email me and I’ll fish it out for you. You don’t have to retype it.
One more detail about our situation; make it “fact about us” #5 in our last post. We are preapproved for anything we could conceivably buy and can close real fast.
My question now is:
In your collective opinion, are we typical buyers in today’s market?
On the case histories, I must apologize. Except for #1, they get lengthy, and I just won’t be able to devote the necessary time to describe them right now. I’ll piece them together offline and drop them in here as they get done.
Re the talk show Ardell mentions in #14: I appreciate the invitation. Is it really on the radio or just online? Whatever it is, I’ll tune in as an observer and see if it would work for me. I’m dealing with a long term medical situation that snuffs out my customary brilliance and good humor frequently and unpredictably.
In the meantime, it would truly help our negotiating behavior to know whether our overall attitude and circumstances as reflected in facts 1-5 above are common today.
I know I’ve left some of your questions unanswered and will try to respond this weekend.
Denismurf,
Your approach to buying is becoming more common in some areas more than others. I’d have to see the detail, but “3rd time’s the charm” is getting more comon. On my last closing with a buyer, about a week ago, the first one had easement issues, the second one had offer shenanigans (I wrote about about it regarding is your offer a secret) and the last one was a really good house, though not cheap or a bargain.
People are taking the time to be sure of everything moreso than they have in many years. Lots of fear even though my last couple of clients weren’t 1st time buyers. Both had children, one was tired of renting and wanted a real home. The other had two children and were growing out of their townhome that they loved. Both were highly qualified buyers.
The other buyer I am mentioing had 3 failed offers before I met her. Both were doing it on their own before I met them with not much success.
RCG Radio is just us talking to ourselves online 🙂 I would just like to hear you describe the situation in your own words on a venue where I can ask questions. I do think it would be helpful to other buyers in the market.
Next week we have “The Tim” from Seattle Bubble. Tune in and see if you’re comfortable with it. It’s really just like a conference call and then it becomes the widget in the sidebar for a week.
Even without more details, Denismurf has provided good info.
1. Townhouse, no agreement on price.
If you still like the place, would you consider offering your first offer again, or even with some modifications, or have you found you don’t like it as much anymore?
2. Condo, price agreed but HOA problem.
Well, depending on the problem, I wouldn’t likely suggest you buy into “someone elses’ problems”. You have a much higher chance with condos or townhouses with HOA’s to simply not want to buy if the HOA has issues. Stay away can be the smartest decision – even if a price is a bargain. Again, depends on the issues.
3. House, price agreed, inspection item not resolved.
Is the house still for sale? Do you like it enough to go back and try a new offer?
4. Condo, no agreement on price but with a wrinkle.
Well … that one is hard to comment on :-)! We all have wrinkles …
Again, sorry, I have to suspend my active participation in this project for a few days. I will be back.
Thanks for checking in, Denis.