When I was but a mere grasshopper at the feet of the real estate kung fu masters, I was led to believe that negotiating the real estate transaction took place between two professionals – a listing agent and buyer’s agent – working to promote the interests of the respective clients to achieve a “win-win” and move the transaction along to a settlement date.
It is true, I was told, that any successful negotiation leaves both sides just a little bit dissatisfied. Neither side gets everything they want but neither side feels like they’ve given awy the store just in order to, er, give away the store. Supposedly, there is this give-and-take. You know. Either a low price or lots of closing help but not both. Extended settlement date or post-settlement occupancy. Fix the roof but not the bad door jamb.
The end result is supposed to be people passing keys around a conference table and exchanging information about trash pick up days with lots of smiles.
Going To The Mat With Your Client
As it turns out, lo, these many years later, the negotiation with that other agent is a piece of cake. It’s the negotiation with someone ostensibly on the same side that’s a real pain in the patootie and calls for every negotiating trick I’ve ever learned.
It’s not the other agent I have to convince about the fair market value of the house. It’s my client. It’s not the wisdom of asking for certain repairs or making those repairs that require a sit-down with the other agent. It’s a sit down with my client. It seems that virtually every aspect of the process either on the listing side or the buying side needs a negotiated settlement between the agent and their client. Price, condition, location, financing, access to the home…it doesn’t matter.
My Plumber’s A Better Real Estate Agent Than You
The sad fact is that most people who use real estate agents to help with the home buying or selling process don’t like us, don’t trust us and are only using our services because they don’t have the time or the inclination to really do it themselves. Of course, the fact that the law allows (encourages?) people to try and work through the real estate transaction by themselves only exacerbates the problem. Hell, if the State thinks they can do it…
So, it shouldn’t be any surprise when sellers and buyers quote from the Book of Uncle Joey, chapter and verse, about how things should be and how things should proceed. I always am. I always think that the reason people employ professionals is to get the type of assistance they need to have the best outcome possible.
I’m almost always wrong.
The negotiation starts at the initial consultation whether I’m talking to a seller about a listing or taking a buyer out for a few home showings. It continues throughout the process. In fact, working out the details with the other agent is sometimes the least stressful part of the process (sometimes). After all, they have a stake in getting the deal done, too.
Finessing the deal with someone who is supposed to be your ally isn’t what they taught in Real Estate 101. Maybe they should.
Greg Barnhouse
July 10, 2010 at 10:05 am
So true, Ken! I am going through a transaction at the moment that fits this to the “T”. It has become readily apparent to me that the other side has gotten “whipped” by their client with the demands they are making in their repairs amendment. Now my seller had agreed to most of the requests, but after being jerked around a bit, is now making a final offer of cash-in-lieu of repairs. Needlessly painful.
But, thanks for the great post (as always)!
Ken Montville
July 10, 2010 at 10:13 am
Greg,
I can feel your pain.
My biggest challenge, recently, has been Sellers who “don’t want to give it away” and would rather continue to pay a mortgage,utility costs and insurance plus upkeep (like mowing the lawn) … on a vacant house.
Erica Ramus
July 10, 2010 at 1:03 pm
I’m right there with you on that one. Without motivation to sell, what do we have?
Not much hope of selling.
Maxwell McDaniel
July 10, 2010 at 10:47 am
Ken, I couldn’t have said it better. It’s amazing how some clients are such a pleasure to deal with, look up to us for our professional advice, and respect our opinions on how to move forward in a deal. Then…
There is the other kind of client who tries to tell us how to do our job, refuses to do anything asked of them (like get a pre-approval) and then gets huffy when things don’t go the way they want them to. It took me a long time in this business to finally spot those types of clients right away, but now I can peg one in an instant.
Our time is too valuable to spend with clients who won’t cooperate with us and wants to make an argument out of all our systems. I will bet we’ve all heard these before “Staging? That is a waste of money.” “Pre-inspection? That is a buyer’s expense!” “This is the way my house looks and the buyer’s are going to have to like it, cause I’m not changing anything…” And I’m not even going to go into pricing conversations.
So, what is my takeaway? Spot these kind of clients as early in the process as possible and refer them out. Take your 25% and take a deep breath, cause your life just got a lot easier.
Ken Montville
July 10, 2010 at 2:48 pm
Amen, Brother Maxwell!
BawldGuy
July 10, 2010 at 10:49 am
Way back in the day, a client who was a doctor, told me how hospitals make patients who leave against medical advice are made to sign a doc saying just that. I’ve been doing my version of that ever since. Most of the time they begin to understand how serious I am about the harm their action might cause them. On the other hand, the rare times they sign it and do what they want, I have a piece of paper in my file saying I told them in no uncertain terms they were doing so against my professional advice not to.
Ironically, many times what I’m advising them against doing costs me money, and they still get upset.
Ken Montville
July 10, 2010 at 2:40 pm
I kinda like this idea. Maybe I’ll bring it up to my local Association forms committee. A nice standard form would carry a lot of weight.
Joe Loomer
July 10, 2010 at 12:31 pm
Scripts and dialogues help this, and listing appointments armed with statistics usually deflect the blame for the market to, uh, the market. Some years ago a wise friend told me to be ready for the next generation – they trust no one and have no fear of asking blunt questions. Guess that time is now.
Navy Chief, Navy Pride
Ken Montville
July 10, 2010 at 2:46 pm
Bluntness, as such, doesn’t bother me as much as people just outright ignoring solid professional experience and expertise. Kinda like showing a listing client the mountains of data and stats and having them say, “My place is still nicer.” or “Let’s just try [x] for awhile.”
I’m getting to the point where my script, at that point, says, “Well, then, you’re on your own.” or as Maxwell (above) suggests, it might be more like “Let me refer you to an agent that can probably help you more that I can.”
Nadina Cole-Potter
July 10, 2010 at 2:27 pm
It’s the same in commercial, even with corporate-type investors. The mom-and-pops’ fantasy of a sale that supports their retirement disappears; the owners with other investors are under pressure from the investors regardless of the caveats in the private placement memoranda. Lowering expectations on price, opening up minds to alternative types of transactions is a big part of the job. And these folks have personal guarantees and, perhaps, cross-collateralized properties on the line that are not going to go away without a knowledgeable team, including an attorney, working on their behalf.
As for pre-approvals on the buyer side (or proof of funds), without that documentation, they are just tire-kickers. On the seller side, particularly in the case of a short sale or bringing in a joint venture equity partner, unwillingness or foot-dragging to produce financial documents to me so I can assess the actual situation carefully is another sign of tire-kickers — or an owner so caught up in his/her own ambivalence and fear as to be impossible to work with. Or an owner who is such a poor manager that the financials aren’t in any form that can be analyzed.
Next!
Ken Montville
July 10, 2010 at 2:47 pm
You’d think commercial and professional investors would know better. I guess not. Kinda disappointing.
Agnes Czajkowski @ChaiCRE
July 10, 2010 at 2:59 pm
Without motivation on the buyer and seller side, we can negotiate all we want and the outcome will be mere…
Our time is valuable and I am a strong believer we may choose who we work with. We get frustrated when our time is wasted but we don’t always ask the right questions to save time. It’s all about relationships. If for any reason client and I don’t make a fit, it’s OK. I’m ready to move on.
BawldGuy
July 10, 2010 at 3:28 pm
Used to kill two birds with one stone with this. I’d refer a poorly behaving and/or know-it-all client to an agent I didn’t particularly like or who’d been underhanded with me. One of these agents called me after a few years of paying me for these ‘referrals’ and asked me why I was giving her them occasionally. I told her it was because I’d felt there’d been a nice personality match, and that I knew I wouldn’t have been able to help them achieve their agendas.
“Would you stop referring to me? Please?!”
“Well, sure, if that’s the way you want it.” 🙂
Ya gotta have fun.
Greg Barnhouse
July 11, 2010 at 11:04 am
That is hilarious! I especially liked the “personality match” comment and that she then recognized what you had been doing and asked you to stop the referrals. Touche!
Your idea of having a “release form” above seems really effective, too. Would be grateful if you would share that.
Thanks!
BawldGuy
July 11, 2010 at 11:31 am
Greg — Glad you liked the approach. I don’t have any forms, I just liked what hospitals did. Each time I do it, which is relatively rare, I compose a letter on my letterhead which is worded to address the exact circumstances in each case. I also use pretty harsh wording. You might be surprised to learn that most of the time, when I tell a client I won’t do something they want, they stay with me, don’t leave. That decision usually is made immediately after they read the letter I want them to sign. They know it’ll be in my files. 🙂
Here’s a paraphrase from one I sent to a client who actually did leave, who was hell bent on investing in Vegas of all places — using 0% down!
“…the idea itself is so lacking in understanding of the current local Las Vegas economy, not to mention the national economy, that I cannot allow myself or my firm to be attached in any way to the proposed investment. I won’t even discuss the lunacy of 0% down payments. It’s my opinion you will not only fail, but that your other income properties will most likely be negatively affected. If pressed to used the vernacular, I’d say this move might be characterized as ‘dumb as a post’…”
They left me. They invested in three Vegas properties. They lost all of them three years later. Their credit is gutted. They called me late last year for help, but I had to tell them there was nothing I could do to improve their other properties, also now in trouble due to bad loans they put against them to save the Vegas debacle.
The Rod Serling P.S.? They’ve since referred people to me. 🙂
Mark Brian
July 11, 2010 at 12:30 pm
I was blessed out by a seller about 2 years ago that were upset with the cash offer I got them and that I strongly suggested they take it. Today, the same home is on the market for $5000 less than the cash offer. And the owner has made payments for those 2 years also.
I knew the cold hard truth, and the seller would not accept my advice in any way. When the listing was about to expire, I simply suggested that another agent might be a better match for the property owner/seller.
I have to agree with the strategy Bawldguy uses in referring problems to your competition.
BawldGuy
July 11, 2010 at 12:32 pm
Mark — Your story reminds me of Dr. Phil — “So, how’s your way been workin’ out for ya lately?”