The agent’s role in negotiations

How things go may depend on you.

by Chris Heagerty   We all have experienced the disappointment of an "almost deal." Buyer, seller, and agents walk away frustrated when the contract is not consummated. Good negotiations, though, start well before the actual contract. As agents, we have great influence in how we shape the expectations of the buyer and seller. This influence should start at the time we list and when we first begin to work with a buyer.

A seller should be prepared for an offer less than list. His agent should deliver regular market updates on new competitive properties plus what has gone under contract and closed since he listed. This seller then can grasp an offer in the context of how his market has changed. A seller should be armed with an understanding of the real costs associated with staying on the market: family stress and/or separation, additional maintenance and utilities, double house payments, escalating cost of a new purchase, etc. The best starting point for negotiation is a seller who is prepared and realistic.

A buyer who is armed with a market analysis naturally will not over-offer. However, under-offering can be just as damaging to the negotiation. The agent should openly discuss negotiation strategies, the market, and seller priorities. Buyers with false or unrealistic expectations make poor negotiators.

Successful negotiations have common threads on which agents can exert great influence:

• Control emotions: Counsel against getting insulted with a low offer or a low counter. It is natural for sellers to want to make as much as possible and the buyer to pay as little as possible.
• Aim for a good deal: Each party should feel like he won and got a good deal in the end.
• Show movement: Counter offers need to show movement by each party. This demonstrates a willingness to deal.
• Understand priorities: Ask about the priorities of the other side. Counters then can focus on the higher priorities. Less weighty items can be used to compromise.
• Quantify problems: Repairs or concessions should have a dollar value on them and not be left open ended.
• Isolate major issues: Go for agreement on minor points to get the negotiation to be just one item away. Then all energies can be focused on the final obstacle.
• Avoid contingencies: Contingencies present uncertainty and hurt other concessions. If you ask for a contingency, then don’t expect major concessions anywhere else. If the buyer must sell first, then he shouldn’t slash the list price.
• Earnest means serious: Since earnest money is applied at closing, don’t scrimp on the earnest money when you write the offer. Sizable earnest money demonstrates serious interest at very little cost to the buyer.
• Don’t "nickel and dime": Once a buyer or seller feels every penny is being squeezed out of him, he will be less likely to compromise on major items. Negotiation goodwill can be used up on petty items.
• Reduce to writing: Make sure what you want is put in writing. Count on nothing that is negotiated verbally.
• Offer good counsel: Our clients depend on us to tell them if they are out of line or their demands are unrealistic.
• Focus on needs: A buyer or seller whose needs are met is not compelled to take a position from which he cannot back away. This alleviates the need to save face during negotiation.

Chris Heagerty, CRB, CRP, GRI, is general manager, independent contractor business line for eRealty.com. E-mail her at cheagerty@eRealty.com.

Photo © Artville.

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