We Learn From Our Clients: The Art of Negotiations!

A great part of this job is the ability to learn from our clients.
Our last education involved the art of negotiations. The ironic thing is that as much experience as my client had in sales negotiations ultimately the deal fell through.
We received an offer from the buyer’s agent. This buyer had been in the home numerous times but had a very difficult time making a decision on whether to put an offer on the home or another property. After a lot of assistance from her family, agent, and financial planner the buyer placed an offer on the home. We were $50,000 apart 89% of asking price.
We can safely say that 95+% of our negotiations involve a counteroffer from the seller, and one possibly two additional counteroffers from the buyer to settle on the price. Our seller had planned on that strategy.
Before we presented the counteroffer the seller asked me for my opinion. This is where I “choked”. I gave a two minute speech discussing everything except my immediate opinion on the counteroffer. Finally I composed myself. I told the buyer that we represent him and wanted the best offer as possible. However based on the fact that we have the most re sales in this neighborhood, and know the local market, I said I would take the offer. Obviously he did not agree.
The counteroffer was submitted. The buyer declined the offer and would not go above her original asking price. I took the email response from the buyer’s agent and forwarded it to my seller. We were so far apart that I assumed the offer was dead.
This is where I made mistakes.
• I assumed the offer was completely dead. (We were $25,000 apart)
• I emailed the buyer’s agent response and did not follow up immediately with a phone call
• My buyer expressed his disappointment in the fact that the buyer would not negotiate.
• My buyer wanted to meet in person to discuss further options. I did not pursue that.
• I did not know my buyer’s selling ultimate goal. (Actually he had told me his goal but later the immediate goal had changed)
My seller called me. I thought he was going to fire me.
Instead he gave me some feedback, a lot of criticism, and advice on how to handle negotiations in the future. I thanked him. He then told me he had a different goal and to offer a price $10000 over the buyer’s original offer price. That was a solid counteroffer.
We presented the new and improved counteroffer with a great sense of optimism.
The buyer would not budge off of her original offer and the deal died!
Items we told our seller after this event.
• We have buyers who put in an offer and do not want to negotiate. To them it is all business and they will move on to the next property.
• This is a buyer’s market. You gamble when you are priced too high and make a counteroffer that is still too high!
• Based on the appreciation of properties in the South (1.8% according to NAR) was this deal worth losing for $10,000? Actually we had it down to $5000 apart with some concessions. A year from now your net on the home will be about the same (appreciation minus operating cost)
• We have lost offers in the past from buyers who would not continue to negotiate. We lost one sale over $9000 three years ago! This $600,000 home is currently being rented and is worth around $450,000.
• We are in the trenches on a daily basis. We give you our pricing opinion on your home based on lots of research and experience. We know the market!
• We cannot change the market!

In the end we learned how to better respond to our clients. We hope that our clients will listen to us as well. We are the ones in the trenches!