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There are many, many aspects to negotiating a real estate transaction. Many assume negotiating just involves the price of the property, which is truly the largest and most important aspect of the deal. But as you get to  know the deal you realize there are many, many issues. It would take me three or four years to really teach this course to an agent and expose that person to enough deals to relate, because they are all very different. But I am attempting to give you a huge running start with this information. Sorry, buyers you are more to the end of this.

Dealing with the counter part (the other principle(seller/buyer) and agent) is critical. When I first got my license I went to the slash and burn college of negation. Price was my only target and I was a wonder at getting them down. What I didn’t realize was I was missing a lot of things and that there are many aspects to the deal.

Finding out about the many issues my client was concerned about, relative to what the seller”s issues are, gives you the ability to really work the deal out to make both parties happier and generally get an even better deal for my client. It’s often as simple as knowing the seller needs to close fast and will accept less if you can. Sometimes you need more time to get your money or job situation together or special help with financing from the seller or even offer the seller a little more for a little more time to close.. Or accept them not doing repairs to a bathroom or kitchen you plan on remodeling for concessions you need. Something they might be compelled to do, but you don’t need, but give them and get a lower price for the property.

But it really starts with the client/agent relationship. If a good agent with his clients interests foremost, has his clients trust in action as well as word, the agent who has talent can really get the most out of the deal for the client. So the ingredients must all be there; An agent with the experience, talent, training and volition to do his best for the client. A client who has the need to buy, financing and trusts his agent. A deal worth doing.

What often happens is it takes a little time for the client to believe the agent is really telling the truth. It seems strange at times. You know the client trusts you and likes you. But they still won’t list low enough to sell or the buyer still won’t go as high as you advise. They lose one or two properties they like and then they maybe look at the comps you have been showing them and realize you might be telling them the truth. Then things start to happen. But it’s sad because we often lose that best deal… But there is no getting past learning curve and if you buyer or seller are not comfortable with the deal; it’s hard enough to do a deal you want me to do, much to much work to push you into one, I assume. So we must be patient while you get some experience before you find your home. I admit most deals go pretty smoothly and I love getting clients great deals. But the education is in the bumps, so enjoy and learn from them.

If it isn’t raining, snowing, or earth quaking. If it isn’t the X mas holiday. If you price your property properly and have it properly marketed in the MLS it will sell within two weeks. Why is this true in any market? Because priced properly, is a price that comparable properties are selling for at the time. So if the properties are truly comparable and all factors the same it logically and realistically will sell within a short period of time. If not something is not being done correctly.

This is a business of details and it is amazing how many details I see agents/sellers missing. I should hire out to do listing evaluations;-} Well these mistakes cost you money and if you are not a pro and are thinking of doing this on your own. Wow, can you imagine playing me table tennis or going up against a pro fighter? Don’t find out during one of the most important deals of your life, it will cost you a lot of money.

Now like I said there are a lot of factors. What kind of face does your deal have? Does your property have red flags all over it scaring away top dollar buyers and making the investors mouths water? Does the roof have a tarp on it? Is the paint peeling, landscape shot? If so your property is negotiating for you poorly.  A good agent will guide you through making your property a good negotiator for you. No matter your cash situation there are things you can do. “Take the blue tarp off your roof.” I just told a neighbor who keeps relisting his house. Two big company agents,”top sellers” came to his house many times with a blue tarp on the front of the roof and never mentioned how that might effect his price????? I can’t imagine anything more obvious.

When your agent puts many photo’s in advertising such as the M.L.S., do they compliment the house, no matter how bad it is? Does the description they use compliment the house and sound like it would draw people? Does it say nice things about the area, shopping, schools and people? People from out of the area look at that information and decide to move here or not. Now I am not saying to lie about the house/property, I see that often and just don’t understand. But I can rave about the neighborhood, yard and fireplace, not mentioning the bathroom has alligators. It’s not easy selling real estate and that’s why we make a lot of money when we do it well. We need to be good at many aspects of negotiation, marketing, appraisal, home inspection, law and if we are not we leave the client hoping. That’s bad, so find someone who can do all the jobs not just market themselves well.

If yo are checking out an agent look at the advertising they use for their other listings.  As you know the things people say about you can be very important. Some might think “reduced $40,000″ properly markets a property, instead of showing a lack of competence and now desperation. I have heard many times from clients that an agent sitting an open house will quote a price when asked and then make a statement about how motivated the seller is to hear an offer. I think we are much better off being confident, experienced and priced right.

When we negotiate the contract of sale there are many issues; dates, contingency periods, and conditions that need to be agreed upon. Without the proper experience you won’t know what to ask for or watch out for. I have been in escrow many times and the other agent has asked “Do you really want the refrigerator/whatever it was in the guest unit?” Yes, that’s why I put it in the contract and I am sorry you didn’t notice it;-}? How carefully do you and they read it? Did you really understand what you signed? Did you give your agent plenty of time and patience to make sure you understood everything? Make sure you do or it could cost you a lot of money or worse. Or worse is buying a house with major issues that you could have found if your agent had done their job.

Escrow is a process and a time of getting all the paperwork together to close the deal, after your offer is accepted. During this process we work out the contingencies which are represented by things like the; appraiser, home inspection, termite report, mold inspection, pool leak detection, radon….   Due to the fact that the house is probably not new (New houses need an inspection and do have issues.) it has a few issues. When these issues come up you need someone to use major talent and experience to have things work out the way you need. Life is easy and great when you have the money and the problems are simple. But when things get tough you really get to find out who your friends are. An experienced agent can really make a difference.

In many cases its just knowing when to be quiet and listen. An agent of mine called me and asked me to call the other agent and ask who was going to do an aspect of the termite report. I believe it was an unattached garage. She was afraid he would tell her no?  I love having a chance to show my agents how well I can do for them. But in this case I told her she needed to do it herself.

Normally when an agent has tried everything and can’t make the deal or issue work, they will call their Broker and ask for help. So when the Broker calls the other Broker or Agent it’s usually something big. I happened to know the other agent and knew he was hard to deal with. I told my agent that if we pulled the big guns/me when we were first dealing with an issue we didn’t even know was an issue yet, we would tip them off that we were scared or weak and should just act like things were going to go our way. As they did.

In most cases it’s as simple as quoting a price and waiting till the other person reacts. Then doing something positive to motivate the potential client to buy.

People love to talk, so it’s best to let them and thus it’s important to listen to them with a clear mind so you can really hear what they are saying. To really negotiate you have to try and have some understanding of your counterpart. This takes a little research and a lot of listening. Most people will give you all the facts you need if you let them.  But as a good negotiator you will be very careful of being nothing but supportive, positive, resourceful, knowledgeable, powerful and quiet.

At an open house a potential buyer asks, “How much are they asking for the house?” I smile and respond, “$990,000 and we’ve had a lot of positive showings today, if you really like it I hope  you will get your offer in today before it’s too late;-}” It’s in the details. All the details. Every aspect. Really. You must be positive, upbeat and know your stuff. If not it shows. Get behind a pro.

Buyers have it just as tough as sellers and must find a knowledgeable agent they can trust. I should mention that buyers as well as sellers need an agent who has time to take care of them. I know agents who have many listings and spend a lot of time knocking on doors or bothering people on the phone. If they are busy doing this instead of marketing or searching for your home or handling your issues you will lose out. If any agent or I have more than ten listings and don’t have the staff to handle the paperwork something will have to give. So how many buyer are you working with? How many listings do you have? How many assistants? How often will I be dealing with an unlicensed assistant verses talking to you my agent? Or you might want to know how many deals they do  and do they have a day job? Because there are a few agents out there who need to have there attention somewhere else 9-5.

Buyer often  think they will save something if they find the house themselves. It does make sense, since they are doing all the leg work and finding the house. But what likely happens is the listing agent gets both sides of the deal. The agent negotiates the best deal for the seller who he probably has a longer better relationship with and more likely hood of referrals from. Even if he gives you all of his commission the fact that you have nobody really on your side could cost you a whole lot more in the price of the house and the issues that may come up. If you were ever sued would you go the the other guys lawyer for defense? You probably laughed! I must admit many agents have more integrity than some attorneys.

This house buying and selling stuff is often the biggest transaction people do in their lives. Generally with no experience. So it’s really important the agent knows what they are doing and cares about the client.

Buyers tend to start out looking at neighborhoods. Good second step. First find a good lender that will represent your interests. A mortgage broker is often the best choice due to their ability to shop many institutions which give them a discount so they can give you a better deal and still make money. With this person they will become “pre approved,” a process that will take a week or so and cost a few hundred dollars. Please check out all of your options, sometimes banks want to offer really competitive rates and just give the best deals to their agents. But don’t count on that. Research and education really make a difference in this.

The lender we want to work with will ask for three years tax returns, pay stubs and other proof of funds. They will send out notices to your credits to check them and verify their reality. If the lender likes what they see they will issue a “Pre Approval” letter for you. It will have an max amount of the loan and an expiration date that will cause the lender to need to check you out again if it expires. There will be no contingancies except clear title and an appraisal.

If the lender does their job right, they will find out all the credit/money problems that might come up to mess with the close of your deal. If we get a lazy lender or you don’t get pre approved then you find out you have problems when you are trying to get the loan and close the deal. Usually you only have so much time to close the deal and so if you are solving problems that might take months you will lose your deal. This often wastes a lot of your time and money. That’s why a good agent won’t work with a buyer that’s not pre approved. And it really is much more fun solving a problem when you are in no hurry than under the gun.

If you read the book “Winning Through Intimidation” you might find that a lot of negotiation is won by simply being prepared and thus knowing what you are talking about.

Many things can be learned from the sellers agent. When you look at the advertising how well does it represent the property? This tells you a little about the expertise of the listing agent. Check out the property, are a lot of little issues making the property look bad? Is it set up to show to get top dollar? As you know different types of people work differently. Did the agent sound like they felt confident about the price? If problems arise a good other agent will help us solve them and maybe even negotiate a better deal, if I can convince him it makes since!! Others are difficult to even get on the phone? I did a deal with Mike Glickman once, it’s a long story but I never heard from his office till the end of the deal!!?? His client never heard from him or his office?? No representation, just stuck him in the MLS.  Not as uncommon as you would think. (Mike, you can sue me anytime you like, but the house was on Cass Ave. in Woodland Hills, and it’s not slander if it’s true.)

Sellers tell you a lot by how they treat you. Sellers that don’t clean the property or make it easy to show often don’t get top dollar and often aren’t as easy to deal with when problems arise. Some tend to be emotional instead of logical/solve the problem. Sellers that make the house as nice as possible, easy to show and priced correctly/competitively generally sell the fastest and get the most money. Mostly they do this by selling fast when the market and excitement are hot for the new listing. I or any good agent will guide you to this.

The next step is to find your best neighbor hood. Look at transportation and where you work. Or it might depend on where your kids, parents or work are located. Notice bars on windows and people walking the streets. Moms with kids are a good thing to see. The uniformity of the area; Houses are painted, have good roofs and landscaping.

I advise people to buy the worst house in the best area they can afford. Then as they clean up the property they get a lot more appreciation. Try and buy house that need noticeable repairs, so when other buyers see them they leave and when you fix them they stand out as new. Foundation, plumbing and electrical are hidden things you don’t want to have to fix.

So I am often asked how much lower than full price should I offer? Well if the property is an REO/Bank owned property and they are listing it low to sell it fast, your offer won’t stand a chance against people who based their offer on comparable sales not the list price. Which is the educated way to do it. A house that should in today’s market sell for $600,000. is listed for $500,000. if other people have access to this deal it will get bid up. If you follow some formula that says bid 10% less than asking nobody will want to deal with you and you will waste time till you get it.

Sometimes you can get a good deal by finding it and making an offer and it gets accepted. But often you find everybody is looking for good deals and there are multiple offers on the good ones. The good ones  get bid up to an ok not really great deal. So it really depends on the market. Often you want to bid on overpriced listings that have sat on the market for a while. They generally know something is wrong and can sometimes be worked into a very good deal. They often aren’t the sharpest sellers or agents and that’s why they are overpriced wondering what’s wrong with buyers and “Why won’t they at least write a low ball offer we can negotiate?” (Another line I have heard a thousand times.) Why? because they are buying the listings that are priced right so they don’t have to work with you and your lack of acceptance of reality.

Sometimes by the time you come along they are quite desperate and their agent doesn’t know how to help them and you can get a very good deal. Start by running the comps with your agent and getting the real picture. I often call the other agent and act dumb and tell them I am writing an offer and need to prove the price to my buyer and can’t find any comps. Could you, the listing agent find me some?  When they go to work not finding any good comps to support the price they go the the seller and start softening him up for you, as a matter of course.

So when you get to the bottom line you have to give some bottom line stuff. Bottom line; get pre approved, find a good agent who has time for you that you trust, take your time, make no decision quickly, educate yourself, check out many lenders and Realtors, read the contracts, ask questions, understand the contracts before signing them.

Your questions and comments are appreciated.

I hope you are enjoying this awesome day.

Best

Scott

A “B.P.O.”. is a Brokers Price Opinion. Banks now a days like to use B.P.O.’s to ascertain value of their inventory before they list it with an agent in the M.L.S. (Multiple Listing Service) for sale.  B.P.O.’s are much cheaper than an appraisal (Usually done by and agent for free hoping to get the listing.)but can be very accurate. Sometimes the bank will use three agents B.P.O.’s to make sure of the value.

Pricing your home to sell in any market. The best way is to hire an agent that knows what he or she is doing, you can trust and do just that, trust them and let them work their magic.  It usually takes a few years to learn the ins and outs of adjustments and neighborhoods, larger vs. smaller lots and houses, valuing a view… etc.. So choose carefully. Some agents will tell you a high price just to get the listing. So make sure whatever you are told is backed up by comps/facts. And be sure to be patient and give the agent all the time they need to make things very understandable for you. You should never agree to or sign something you don’t completely understand and are comfortable with.

It is very important to time the market properly and price your home accordingly. Generally the best time of year to list your home is the first of April. Normally the beginning of the hotter time of the market, Spring.  Like I often say you can’t really time the market, but you can pick the best time of year, if you plan and are lucky enough to choose.

It takes years of training and in the field experience to become a licensed appraiser or even to do a good B.P.O. so please don’t think you can outguess a real pro. Let me or your agent share the comparable listings with you. I/your agent will explain how each property compares to your property and what adjustments are made to come up with a value of your property.

I can’t tell you how many times I have taken my few months to thirty years of experience and training (I taught at Pierce Jr College for years.) and hours of specific work on a valuation to give a value and they tell me I am $100k to low?????? And “You are not giving your house away!!” (I really have heard that line a thousand times.) So if I am nice enough to take this overpriced listing, after about two weeks, I am almost guaranteed to hear my marketing sucks, why are there no offers. Well if my expert opinion had meant anything you would likely be in escrow by now.

I really am on your side. When I do a good job and you like me, I will get your referrals. That means  a lot to me since I am a long term  part of the business. But if you don’t believe me? it won’t get priced right and it will never sell, and you will tell everyone my marketing sucks. In most cases there is some “learning curve’, the time it takes you to start really believing me, and that’s when things start to happen. So most of the time it just takes a little time for people to really understand what’s going on. I wonder why? It took me years and I need them to get it in weeks. That’s why I like the idea of the this blog, it’s all here in writing. Even better if the friend that sent you to me had it happen to them, but life isn’t always that easy;-}

I could really write a book on that one. I guess I will do a blog at least. I have seen buyers pay fifty thousand more for a worse house, because they wouldn’t give up $2000 or so and often lose the house of their dreams. Seller’s with buyers spending hours and not writing the offer because it was overpriced screaming I won’t give my house away. Well when the market dropped more than a hundred thousand for the house they did end up giving it to the bank. So if you aren’t willing to look at the facts/comps I present, and listen reasonably to my answers to your questions. Please hire someone else, and when it doesn’t go so well, please remember who told you the truth. In a good market or booming market inexperience can cost you tens of thousands, in a crashing market it can cost you hundreds or worse.  I hope someday you will let me be part of your team, because I care about you and hate to see things like that happen.

So if I price your house to low what will happen? Well truth is it’s not a bad tactic to get top dollar for your property??!!  List it low and don’t accept any offers for two weeks. Agents and educated buyers know the market. So when  a real good deal comes up, it causes excitement. Excitement can cause a bidding war and high profit. You have to know what you are doing though. Many emotional sales fall apart when the air clears and the appraiser and or home inspector shows up. So it’s critical to have an agent with foresight who will say demand a non refundable deposit on the property to show who is really serious about buying the property, and other things to create a contract that will be difficult to get out of when things cool off. Probably a good tactic in a really flat market.

Bank/REO listings use listing low to cause excitement often. I tend to like to price it properly and take about two weeks to sell at a fair price. Truth is an appraiser will be valuing the deal and if he doesn’t give his approval the price generally won’t close. So why not just do it right the first time?

This business is more about referral’s, then sales. If you put it any other way you lose. I admit many don’t get it. If I make a mistake valuing a property I am helping you buy, the appraiser will be right behind me with a lot of truth, making me look real dumb. If I list too high I get the listing but it won’t sell till I get the price down. Not fair to the seller.

I once knew a C21 agent we can call Greg. He was the top agent as I remember it in the country! His thing was to tell the owner/potential seller the highest price he could without laughing. It’s a long story but I went to work for him to find out his secrets. I was very disappointed. After listing high, a weak tactic, he would harass the people constantly to lower the price. I am really amazed this worked for him, and feel bad for all the people he pushed around.

The best way to sell your home is to find a place to go (May sound strange, but if you have no place to go, it is real hard to get there.). Then “time the market” if possible and price it accurately without your ego involved. I have sold a few brokers homes because they didn’t want to be involved. As I have said before, to price your home properly you must hire an agent you can trust, who will do the job right for you.

You must know the market you are in. In a raising/hot market it is generally very easy to sell your property, by “hot market” we mean one where prices are going up and there is a lot of money out there financing it. Price it to high and wait a short time and it will sell. But this is the only time that pricing high could ever profit you and it better be booming. Even in these markets agents see your house has been on the market for a while and assume something is wrong with it and don’t show it till the price gets very attractive. I really like doing it right the first time.

I wonder, after seeing the work some agents do if the client ever looked at the actual work the agent does. Do they look at the listings an agent has in the MLS and read the wording they use or judge the quality of the photo’s marketing their listings.  If you think “reduced thirty thousand, now priced to sell” will get top dollar and not express desperation, please help me. Do they keep track of how long it takes for an agent to call back or how often they answer? These things are critical when you are hoping someone is doing a good job for you.

If you price it too high in a flat or falling market you will generally lose a large amount of money. One March I met a client who showed me a home that needed a bit of work. I pointed out that I felt the market was going to fall in the near future and that they should fix up their home and get it on the market in the next few weeks or the market would drop and they would lose money.  I am not sure but I think I told them it was worth about $730.

She didn’t listen to my timing concern but loved my fix it ideas and went to work. A year later after many visits helping her with her ideas to remod., she called me to list her home. When I told her $699,00. she cried for a minute and looked at me and told me I lied to her!! I tried to point out what I told her a year ago and she just didn’t get it. So she ignored my advice and listed it for $725,000.

I watched many real buyers spend hours and never come back. As I understand it they sold a few years later for around $500,000. That’s a horrible loss, due mostly to not taking the advice of the person they hired to trust?? and a falling market.

So if the market is falling and you price to high. Sooner or later you realize the agent might be telling the truth and lower the price. The problem is, that by the time you lower the price, it’s gone down so much that you are still way high unless you take a really large drop. The sooner you get it the sooner you will sell. Or if you can wait out the market. In L.A. I believe it will always come back and boom again.

If we list your home at $750 when I tell you $699,000. . If we sell it at $750 it won’t appraise, because if I can’t find the comps the appraiser won’t be able to either. So if it’s a raising market you probably will sell at some point. But if it’s a flat market or falling market, in about two weeks you will start telling me how to market your home…. So listed at $750 and I suggested $699 it sits for a month and doesn’t sell. The price now slips to $689 and seller agrees finally to go to $699, but now what you originally suggested it to high and if you don’t do your home work and convince the seller it will just keep getting worse. That’s why some listings sit on the market forever.

The truth is I know how to market a property and get top dollar for it. I love what I do and if you let me, I will do it. But if I have to overprice a listing and deal with a seller who knows more than me, we are in trouble. I have to over come the sellers learning curve. So buyers come and sit there for hours loving the house and don’t write an offer and the seller wonders why. When I call I report they bought something else. A perfect buyer, lost.

So in a flat market it won’t sell and if the market then lowers…..

In a falling market it can really get sad. I suggest you list at $699,000. Why that price? Because I took my two months to thirty years of experience and three or four hours of my time to come up with that number. I know you are probably talking to other agents and if they are higher may get the listing. I also know if I get the listing and it is too high I will have to spend most of my time working you to get the price down and I don’t feel that should be my job ( I should price it right in the beginning.). Doing my job with marketing/other agents/solving problems.  So I come up with what I think is absolutely the highest possible number I can list and sell it for, really. And when I bring my comps and other proof and obvious experience, I am often told to list it about fifty to a hundred thousand dollars higher???? Guess what happens.

The good news is that sooner or later the learning curve works out, with a little patience and we get the deal done. I really love to see the smiles on people’s faces as they get it.

Your comments and questions are really appreciated. Please email me and I will try and do a good job for you. Promise.