Happy Hump Day. I hope you are getting through it with flying colours. With this weather, what’s not to like? For us at Bosley Real Estate, Wednesdays are Mastermind Days. We believe in the power of inter-office discussions so much that we actually hold two per week, one Uptown and one Downtown. Great discussions every week, so if you missed today, you missed some great conversations follow-up discussions about Bully offers. So let’s get started.
If you are a buyer these days, chances are you are feeling the fatigue of the chase. It is getting tough out there and I have talked about some interesting ways buyers are trying to get any added advantage. This post will touch on one. One such advantage, potential as it may be, is to have your agent try to submit an offer ahead of the offer date. This is known as a Bully Offer. You have to know your stuff to either make a Bully Offer or to present one to your clients. The discussion at Mastermind today centred around whether or not you disclose the contents of the offer before presenting. Lets say an agent wishes to submit a Bully Offer. The listing agent asks what the terms are but the buying agent doesn’t want to say. We have been taught not to talk price before the presentation but Bullys are a little different. Our group agreed that they would communicate the details of the offer to the client before presentation. Here’s the thinking on that. If I have a listing and you call me with a Bully Offer, I want to know that it is worth my client’s time. If the house is $499k and your Bully is for $640K I will go to the end of the Earth to get this information to my clients. For a Bully of $520K I will still try to find them but I probably won’t recommend that they take the time to look at it. We also talked about agents who say they can’t get in touch with their clients. Do you actually expect me to believe that your clients cannot be reached? Today? Seriously? No phone? Seriously? That just doesn’t fly (unless they are actually flying, but most likely they will touch down in the next few hours). So when they say they can’t be reached, what the agent is really saying is “I don’t really want to work tonight to get the best price for my client”.
The take away on this is pretty simple and goes back to something that I focus much of my energy on. Give your clients all the possible scenarios when you list their home. Let them know that the house might not sell on offer day, it might sell in multiple offers, or they might get a Bully offer. Outline the disadvantages and advantages of each situation and let them decide what to do. If the clients categorically do not want to look at offers BEFORE the date set for offers, have them put it on paper. Scan it and send it to your phone so that you can forward it to potential Bully Offer agents. Simple. Yes, it is a lot more work, but you need to be prepared for any eventuality.
When you spend as much time in the office as I do, you get to hear some pretty interesting things. Last week was no different. I got to sit in on a great story; One agent was telling another agent that she was in her third sign back on a house. She was handling it well. The house had been on the market for several weeks and hadn’t sold. Both the sellers and the buyers were digging in their heels on price, and the agent was explaining that they were going back for the third try, in ten days, this time without the patio set and the built-in BBQ.
It had me thinking. Is this multiple offer market making us forget about the fine art of real estate negotiating? Buyers are coming to the table with condition free offers. They are giving sellers everything they want in an effort to secure the house. The only thing separating the winner from the loser is the size of the bag of money but when the house doesn’t sell in multiple offers some agents are left thinking…..ok, now what? The answer is simple. It is time to negotiate.
Wikipedia defines negotiation as a dialogue between two parties intended to reach an understanding, resolve a point of difference, or gain an advantage to produce an agreement. Negotiation is a process where each party tries to gain an advantage for themselves by the end of the process. Negotiation is intended to aim at compromise.
I am reminded of a story of a new real estate agent who was an amazingly skilled negotiator. Back in the eighties, this agent, a recent immigrant to Canada, with limited English, carved a very successful career within his community. At the time (25 years ago) the real estate market was a completely different creature, yet this agent would constantly amaze his fellow agents. While most would be tempted to give up after five or six sign backs, this agent would often negotiate 30 sign backs. When questioned about his tactics his response was simple. He knew that if he could get one person to sign an agreement he would have a deal……it just took a bit of time.
A successful negotiation doesn’t always end when the two parties meet in the middle. The reality is that there is far too much emotion in the process for that to happen. Successful negotiation begins with listening to both parties and evolves into a little give and take. “I will give you this if you will give me that”. While money is an important motivator, it can often be the simpler things that get a deal done, like a closing date or an inclusion.
There is no question that we are going to run into a completely different set of challenges when the market balances or moves into a buyer’s market. Successful agents will need to transition from skilled persuaders to trusted negotiators.
If its Wednesday it must mean there is a Mastermind meeting. And a good one it turned out to be for all in attendance. This morning we had a number of good topics so if you didn’t make it, here is what you missed.
1. When doing an Agreement of Purchase and Sale, agents often leave key information blank only to fill in the details, such as price, at a later date. It is important to make sure that the clients initial the hand written inserts. Also remember that listings on MLS often include standard office clauses in the form of a schedule. Remember the top portion of these schedules are often left blank and agents are required to add the names of both the buyers and sellers as well as the address. It is important that these handwritten additions are initialed too.
2. Too Often, agents are working with clients that are a little on the frustrating side. Sometimes it is tough to get both buyers together at the same time, they don’t want to offer on properties with bidding wars. It seems that they are not really committed to buying a property. We talked about overcoming some of these obstacles. First, deal with the decision maker exclusively, but keep the other buyer in the loop. Second, make sure that they have the means to jump on a property quickly; for example, they need to have the funds available for deposits as often we hear “oh yeah, I have the money, it just might take me a few days to move it around”. Third, show them a list of all the properties that they have seen. Point out how quickly the have sold and stress the importance that they need to start offering on properties. There are countless examples of good properties that sell below asking but they will never buy a house if they don’t offer on any. Finally, an agent pointed out that she had success showing clients two types of houses; those that have offer dates and those that have been on the market for a couple of weeks. The ones that have languished on the market are usually overpriced and need a ton of work.
3. The Classic. Seller Jones lists his house for $499K under advice from the agent. Their hope is to generate enough interest to spark multiple offers. On offer night there is only one offer. The buyer agent brings in a full price offer (because he recognizes the house to have that value), with no conditions and the exact closing date the seller has asked for. What happens? the Seller signs it back for $530K because that was their expectation. The reality is that the seller and the seller’s agent are guilty of false advertising. If they want $530k they must do a price change on the property. Believe it or not, more than a few agents in attendance today had experienced this scenario. This is a great topic that might be better saved for future blogs so stay tuned.
4.Finally, we had a lengthy conversation about what to say to people who have their property listed with another agent, but want your advise. Sometimes they call you out of the blue because they know you specialize in the area or maybe they are friends looking for some words of wisdom from a trusted source. The reality is that helping people is in our DNA. Just remember, the person you are talking to is under contract with another agent so you cannot interfere under any circumstances. It’s okay to answer questions about the market or speak generally about properties or buildings but if someone asks you why their house isn’t selling you must decline to answer. Here is a good rule of thumb; always be thinking… what if this conversation was being taped. How much trouble could I get into? Exercise extreme caution. Simply answer that you cannot interfere with another agent’s contract and direct them to get answers from their agent.
Have a great week and don’t forget to check in next week.