This Negotiation Is Not About You And Me

Helping my Buyer Clients to find the right property, and then researching and discovering the hidden secrets relative to that property are certainly important elements of what I do as an Exclusive Buyer Agent. What happens after my Buyer Client has identified the property they want to buy and are ready to make an Offer is what really matters. This is when the negotiation begins.

After we have found ‘the property’ that turns their light green, I discuss with my Clients how to proceed. First we look at all the comparable properties, such that they are. We dissect the subject property as best we can so as to get some idea of its possible market value. That does not mean looking at the Assessed Value and using that as our benchmark. Matter-of-fact, there is really nothing we can use to get a spot-on number. The Assessed Value and even an Appraised Value are merely guess-estimates used for specific purposes and guided by subjective opinions and data. Probably Comparable Sales, if there are any, are what will establish the closest value number, but no two properties are identical.

After we are done thoroughly reviewing the market data and discussing the various ways to approach negotiating an Offer, my final advice to my Client is to think about it and knowing what they know now, ‘offer what it is worth to them’. Don’t misunderstand, I am not talking about making a 'lowball offer'. What exactly is a lowball offer? I was reading an interesting interview the other day with Jeffrey Stanton who is a Negotiation trainer. For clarification sake, I will use the Martha’s Vineyard real estate market as my reference going forward. In a ‘balanced market’ the average margin price difference between the asking price and the selling price is usually around 3-5 percent. In today’s ‘buyer’s market’ the average selling price is usually 6-12 percent below the asking price. However, there are incidences where a property may sell for between 13-20 percent below the asking price, or even less. Usually properties are passed by when Buyers think they won’t stand a chance if they offer what they believe the property is worth when that number happens to be way below the asking price. Just to confuse matters even more, in any market the exceptional properties (i.e. those that stand out above the rest for one reason or another) will sell above the asking price, and where multiple buyers are engaged those properties will sell well above the asking price. I always tell my Clients if they are hesitant to make an Offer, “If you really want it what’s the worst that can happen? The Seller can say no”.

There have been occasions when I have presented a thoughtful and respectful Offer that was considerably lower than the asking price. Even before the Seller Agent presented the Offer to the Seller they would tell me that ‘they’ were personally insulted by the Offer. Oh really! This is not about You and Me! This is about my Buyer and your Seller. But of course if that is the tone the Seller Agent is going to accompany my Buyer’s Offer with there will probably not be much of a chance of success for anyone. But that is okay because I can deal with that. Stanton suggests in cases like this that the Buyer’s Agent request to present the offer to the Seller in person. That does not happen on Martha’s Vineyard mostly because the Sellers rarely live on the Island year round and are usually not here during negotiations. This is why I am always ready to present my case to the seller agent supporting my offer with the facts – as my Client and I see them.

The other mistake that Seller Agents and their Sellers make is that they do not respond when they perceive an Offer as being too low. The biggest hurtle to jump is from looking at a property to making an Offer on a property. By not responding to an Offer, that means there can be no conversation. It should not matter what the Offer is; beginning the conversation is all important. Stanton said, “A lot of times, a lowball may be all the buyers can afford.” He went on to say. "It could be an investor or a buyer looking to steal the property, or a buyer who really likes your property and is just taking a shot at it, never knowing if you're going to say, Yes or No. Just don't take it as them disrespecting you." Sellers should not be offended by a low Offer and they should realize that when they make a Counter Offer, no matter how small that Counter Offer may be, it is saying, I am willing to engage …. (Note: By law, real estate agents are required to present all offers to a seller.)

Once the conversation has begun between the Buyer and the Seller that is when the true motivations of both parties will start to appear. It is really important for both the Buyer Agent and the Seller Agent to manage expectations on both sides and control emotions --- including controlling their own emotions. And remember, this negotiation is not about you and me.