The Duncan Fremlin Blog

Best Negotiating Tool? A Good Offer & A Few Smarts!

RE/MAX International funded a large survey a few years ago.  The idea was to learn from our customers what they valued most about our services.  Somewhat surprisingly, we were told that our number one assest is our negotiating skills.

RE/MAX has been offering top rate negotiation courses for years.  I've taken most of them.  They are very helpful and have contributed greatly to many of my sales.  

Negotiating by definition pretty much covers every aspect of a deal.  Knowing when to shut up is an excellent negotiating tool.  Understanding the nuances of a good asking price, a good initial offering price, a well worded contingency clause, the inclusion or exclusion of certain other clauses... these are all decisions that make or break a good negotiaton.

Example #1 - I was the listing agent for a Rosedale home owner.   It stated clearly on the listing that and we clearly informed everyone to "bring your best offer".  The Vendor did not want to send offers back to the buyers for further consideration in an attempt to milk even more money out of them.  If there is $100.00 separating the top two offers, so be it.  On offer night, we are considering three offers. Two are good and we are discussing their merits.  The first one is clearly better in terms of price and closing date.  However, it is conditional for 1 day on financing.  The Realtor tells us the buyer wants his dad (the source of his downpayment) to have a look at the property before authorizing the cash.  This Realtor also tells us he has not met the dad and does now know what he does for a living or even if he lives in Toronto.  The second offer is lower by .007% but is unconditional and the Realtor is professional and can answer every question clearly.  She exudes confidence.  My client accepts the lower offer and the other Realtor goes ballistic.  Clearly, this well crafted offer won because of what it did not contain and how it was presented.  

Example #2 - I'm representing the Buyer and I'm told we are one of two offers.  The listing agent is from Markham, a town where homes aren't generally sold with multiple bids.   I wonder if I can somehow take advantage of this.  When my client and I were visiting the house the day before, I noticed a business card from a Brampton Realtor sitting on the kitchen table.  As it turns out, we are competing with this fellow.  Bidding on houses doesn't happen often in Brampton.  "Ah", I say to myself.  This could be good.   After both offers are viewed by the Seller, we are informed that both buyers can reconsider their offer and improve on it if they choose.  We increase our offer by a few thousand dollars.  Our offer is also sparse (no unnecessary clauses), it contains the closing requested by the seller and the deposit is huge...oh, and it's unconditional.  

The selling agent then calls me back a third time and asks if we want to improve our offer... again.  My client, though exasparated, really wants this house so he increase his offer by a few thousand... again.  However, I tell my client that we might be able to capitalize on this situation.  I discuss with him the idea of keeping the highest offer in my brief case until it looks like it's needed.  I ask him if I can present the lower offer and if that doesn't appear to be successful, then I can pull out the higher offer.

I was right.  When I returned to the offer table the third time, I asked the Seller if she was still considering the other offer and she said "no".  So, our lower offer was successful.  I saved my client $7,000.00.  

That's good negotiating.  

High Asking Price Often Means More Conditions in Offer

There are a few vital, even urgent, decisions that a Seller must make as they tiptoe their way towards the successful sale of their house or condo.  Experience tells me the top three are (1) choosing the right Realtor, (2) the enhancement (preparation/staging) of the home and (3) establishing the best asking price.

It's a common perception in some circles that a house/condo should be listed a bit higher than market value to allow for negotiating room.  That idea is left over from the old days, before multiple offers,  when houses would remain on the market for a long period of time and sales were negotiated around offers and counter offers.  This does still happen, just not as often as 25 years ago.

The pitfalls of a high asking price are obvious.  Either no Realtor will make the effort show it to their clients or perhaps the client/buyer will decide they don't want to view it.  Or, sometimes, as a neighbour is researching the asking price of their own home, they will view the overpriced properties to get some idea of what an overpriced property looks like.  These appointments are easy to arrange because there's not much fear that they will be sold anytime soon.  

Sellers worry about listing too low.  The last thing they want (and Realtors share this concern) is to negotiate a sale and then feel regret thay maybe they sold it at too low a price.  When the market is favouring the sellers like it's been here in Toronto these past many years, this is less likely to happen.  As long as the market has an opportunity to view and consider a good house priced right (even too low), then these same buyers will elevate the selling price to where it should be by a multiple offer/bidding process.

In spite of these pricing strategies, it's likely that if a property is priced too high to entice multiple offers, any offers that appear later in the process will have at least one or more conditions.  And what is a condition?  It's not often described this way, but given the wording of these conditional clauses, a condition is simply an escape clause.  These clauses often use phrases like "financing satisfactory to the Buyer".  This is a pretty general phrase lending itself to various interpretations and it gives the buyer an easy out.

So, when a Realtor is helping a Seller decide on a correct asking price, they'd be best to give a lot of consideration to the correct asking price.  This will set the tone for the sale and will have the most impact on the final sale price.

Problem Solving Means Survival In Real Estate

I'm a very good Realtor.  I became a good Realtor for all the obvious reasons.... hard work, long hours, great mentors, a great company, learned from my mistakes and so on.  But it takes more than that to earn a living at this job.  We have to be resourceful.  Here's what I mean.

I had a listing recently and I was representing the executor of an estate.  My go-to person was the estate lawyer who was advising the executor on each and every decision.   Yes, I was working for the executor but it was her lawyer who was making the decisions and running the show.  

An offer was presented.  It was an excellent offer and there was no likelihood that we would ever get a better one.  The estate lawyer said the deposit (consideration that accompanies all Offers of Purchase and Sale) was not enough.  So we returned to the buyer and we asked for double the amount offered.  The buyer said "no" and was going to let the offer expire.  The estate lawyer was also going to let the offer expire.  He was firm and inflexible in this regard.  It didn't make any real sense but he was calling the shots. 

Upon consideration, I felt that this decision was not in the best interest of the estate so at the last minute, I called the lawyer and suggested that, with all due respect to his position as adviser to the estate, my professional opinion was that the initial deposit offered was adequate.  The amount conformed to industry norms and this offer should be accepted.  My tactful presentation to him was impressive if I do say so myself.

In short, I pulled a rabbit out of the hat and saved this great offer from dying a quick death, never to be revived again.  

This is one of the many reasons why the world needs Realtors.  We've been working in the trenches of real estate for so long, and seen so many of these scenerios play out, that we can anticipate what will likely happen before it actually happens.  My guess is, good lawyers can do the same thing within their profession.

 

Smoking Cigarettes and Hockey Goonery

Consider the social status of public smoking 25 years ago.  The change in attitudes that has occurred in such a short period of time is really quite remarkable. 

Today, if you are a non smoker, ask yourself how many good friends you have that are avid smokers?  If you are a serious smoker, how many of your good friends are "not" avid smokers?  It's become a huge societal divide.   Smokers hang around with smokers.  Drunks hang around with drunks. Hockey fighting advocates hang around with other fighting advocates.

I'm witnessing, at least in the hockey dressing rooms I visit, a similar evolution of attitudes toward fighting in hockey.  There are two camps and those who straddle the fence are few and far between.  Either you think fighting is barbaric and should be outlawed, or you think it's what makes hockey the great sport that it is.  

Perhaps we've turned the corner on this and it's only a matter of time before the hockey power brokers relent and ban this ridiculous behavior.  The trend is not easily reversible.  The momentum is clearly on their side.  

The youngsters who are coming in to the game today have young parents who are much more protective of these little skulls that previous generations.  I didn't wear a helmut until I was 15.  It was never a consideration.  Today's parents are a different breed.  They've seen a player die as a result of a fight.  They don't want their little Johnny to die.  I doubt they'll put up with this much longer.  Also, it's one of the reasons fewer Canadians are taking to the game.  It's not just the cost and the inconvenience of getting up at 5 in the morning on their day off to drive to a cold and barren rink somewhere in the middle of nowhere.  The dangers can no longer be ignored.  

Or, maybe this great divide will continue and hockey and it's community will isolate themselves from Canadian society in general.  When the CBC loses Hockey Night in Canada soon, that might be the beginning of the end for hockey as our national pastime.