An agent client of ours recently found themselves in this situation with their buyer:
Buyer is qualified to $390,000 and makes two offers on two different properties within a few days.
First offer on listing #1 is $350,000 on a $455,000 listing, hoping to get the seller to come down (listing agent encouraged all offers due to divorce situation, home’s been on for quite some time).
Seller #1 counters at $445,000.
Buyer then makes $360,000 offer on listing #2, which is listed at $395,000 and been on the market for about a week. A little more than a full day goes by, more like 30 hours, and seller #2 counters at $385,000.
Your buyer tells you to call back right away, counter at $370,000, and says to tell the listing agent that they have an offer in on another property, all the while telling you they don’t want to lose this second listing.
What would you do?
I took an unscientific poll of about 10 agents. All of them said they would call the listing agent and try to get the deal done quickly, expecting a counter of $375-$380K and doing their best to get the buyer up.
You could do that, and maybe get lucky. The problem with that is there are two things at play here: 1. what to do in negotiations, in general, and 2. what to do in this particular negotiation based on the data you have.
As I recently stated in my Tips For Successful Negotiating blog posts, in general, the quicker one party call’s back the other party, the more leverage the other party has. They will perceive the quick counter as attachment to the deal. And, in this particular case, they would be totally correct.
You see, specifically to this agent’s situation, the buyer’s negotiation and motivation were totally at odds with each other. The buyer stated he wanted the house badly, and wanted his agent to immediately counter back. However, at the same time, the buyer wanted the counter to be $15,000 less than the seller’s counter, and also have his agent pump their chest about having an offer in on another property.
Think of the message the buyer is sending to the seller. The immediate call back shows attachment. The mentioning of the other offer is supposed to show the buyer is not attached, but actually would end up having the opposite effect. The seller would undoubtedly think it’s a ploy. You’re mentioning this other offer to either show me you’re not attached, or to get me to come down quickly so I don’t lose you…yet you’re the one who called me back immediately.
Now, let’s add in the fact that the last counter from the seller took almost a day and a half…and the buyer said he doesn’t want to lose this property (to other potential buyers). So, if the seller counters again, or heck, even decides to accept at that price, it’ll likely take another day and a half before they call back.
Do you see how the buyer is mixed up? He’s trying to play big-time negotiator but he’s extremely attached to the outcome. It’s like he’s playing poker and doesn’t realize his opponents have seen his hole cards.
Now, I don’t advocate telling either party what to do, that’s not being a negotiator, that’s getting involved in the deal. God forbid you tell a buyer/seller to do something and it blows up in their face, kiss the client goodbye. Or, worse yet, your client takes your advice and then learns of someone who got a better deal in a similar situation in the near future. At that point, you might be up for a lawsuit and/or loss of license.
However, in this case, it is pretty obvious that what the client wants, and what the client is saying are diametrically opposed to each other, so some guidance is warranted. Even so, I’m wouldn’t tell the client what to do. Start by asking questions.
“Mr. Buyer, I understand what you want me to do, and can I ask you a question?”
“What’s more important to you, getting the house at $370,000 or getting the house?”
You’re answer will tell you what’s next. Obviously, if they want the house at the price, then do what they told you to do. You could suggest that you wait a couple hours before you call back with the counter. You could also explain that mentioning the other offer will probably have an adverse affect, but it’s still up to them (the buyer).
However, if they answer that it’s more important for them to get the house, then you can explain all of your concerns and ask them to make their decision based on the concerns.
In this case, the buyer heard the agent’s concerns and upped their counter considerably, agreeing not to mention the first offer. At the time of this posting, the buyer and seller had come to a verbal agreement.
The key was the agent was listening to the client, and heard their motivation.
If you want to practice what to say and how to say it, please visit our website at www.yourethedifference.com and look into our telecourses, coaching and the Role Play Connection, or call us at 609-601-1296.