Mastermind #8 June 22 2011
If today is Wednesday it must mean Mastermind. Great turn out again, even as we enter the summer months. Thanks for everyone who turned up. As usual we talked about a few hot topics including bully offers, the buyer consultation meeting, the buyer rep agreement, dealing with intimidating agents and how to get a seller to lower their expectations. Along the way we exchanged some wonderful stories and shared some laughs. Today I am going to focus on the two biggest topics. Bully offers and
Bully offers. In today’s real estate climate, sellers are holding back offers and some buyer agents try to push through an offer before the day scheduled for offer reviews. For the purchaser to be successful the bully offer has to be substantially higher than the asking price. The seller may decide that accepting a bully offer is the best way to get a house sold with the least amount of hassle, but selling agent beware; you need to call everyone who has previously viewed the house and let them know there is a bully offer on the table that the seller is willing to entertain. Bully offers work 50% of the time and here is why; First, as a seller the first thing that comes into your mind is the fact that if one person is willing to pay over asking then perhaps there will be more people on offer date. Second, the listing agent may encourage you to not look at the offer because he or she does not want to call all the previous showing agents for fear that if they forget one they might be legally liable. Consider also that good agents will get all the details about your bully offer over the phone and then give those details to the seller. If, as can happen, the selling agent gets his own offer, he is now equipt with some powerful information. If you come back to the table on offer date, recognize that you have shown all your cards before you even sit down.
We had also had a good debate on lowering the expectations of sellers. In the example we discussed, an agent had listed a home 2 months ago and had already negotiated one price reduction. The house was not downtown and it was clear that the house would not be under the same pressures as homes in the core. Finally an offer came in that was $10K less than the new listing price. Despite his best efforts, the seller and the buyer could not come to an agreement. The seller had a ‘magical’ number in their head that they absolutely would not go under. The agent did everything he was supposed to do to keep the sellers informed. The group decided that there were two additional strategies the agent could have tried; translating the amount that they were apart by a percentage rather than a dollar amount and suggesting that they offer that amount less on the house they were planning on buying. It was finally decided that the agent should give the sellers some time to cool down and regroup and then try to tackle the problem from another angle. Tell the sellers that you are going to prepare an Offer to Sell, with their reasonable expectation of what they could accept, and present it to the buyer. By doing this, the seller would feel that you were, in fact, working hard on their behalf. Another obvious benefit to this approach is that it deflect’s the acceptance of the offer to the buyer, and puts the buyer’s agent back to work.
Mastermind meetings are going to keep going all summer. So check in regularly.