Negotiating From a Strong Point, What Your Agent Needs To Know
An agent called me on Saturday and said she was bringing me an offer on one of my listings, she warned me that it was low, but that she thought it was good..."considering"
Considering what? Was my comeback... This is a lovely four bedroom home in an awesome community built by one of the better builders and across from the community pool. Her response was that the fourth bedroom had been made into more of a study area (my clients were empty nesters and needed a study more, they did minor modifications to enlarge the door, but left a small closet in the room) and it wasn't a "true" fourth bedroom.
I told her that we would take a look at the offer and get back to her. The offer came in 20K lower than the asking price. I was already armed and dangerous with information. I, of course, presented the offer to my client. My client had recently received a report from me detailing sales in the neighborhood and price per square foot with a notation where her house fit into the scheme of things. We together discussed the fact that her $91/per square foot was a median for the neighborhood and that we felt it was definately worth it. I cautioned my seller not to allow emotions to get in the way.
In calling the other agent back I was able to tell her that 34 homes had sold in the neighborhood since Jan. 1, 2006 and of those only 3 had sold for the price per square foot she was offering ($82) or below. I mentioned that three bedroom homes, if that was the concern, had sold robustly in the area as well, with no resulting hit on the price per square foot. After discussing each house that had sold in the neighborhood I was able to my discussion off with the fact that, of her five current listings, none were listed at the $82 per square foot level or less and that they weren't built by as desirable a builder, or in as desirable a neighborhood.
Finally she stated that they were just looking for a deal....
Let's talk negotiating for a moment here....
All agents should know their clients strenghts and your opponents weaknesses. A far greater weakness for my client is the fact that we are at the slow time of the year, not the lack of a fourth bedroom. The agent should study each strength that you have and ensure that you are using it for all it's worth. Diminish each weakness you have as best you can. One listing I have has a small living room on the first floor. We've rearranged the furniture to maximize the look of the floorplan and really made the upstairs gameroom a showpiece because it has all the room that the living room lacks.
Agents shouldn't bluff. It would have been far better for this agent to simply have stated, "it's a slow time of year and we we know it's low, but were hoping they were agreeable". I've had much success with this in the past. Simply admitting that the buyer isn't motivated to move unless the price is right has made more than one of my buyers an excellent deal. This point of negotiation is the ultimate trump card! As many convincing arguments that you might come up with if the buyer has the upper ground and isn't in love with the house, then the buyer has the upper hand. Trying to bluff instead risks insulting the other agent and the seller.
Your agent should know the statistics for the area and how to use them to your advantage. Are sales down in the area? Are foreclosures up? Are there a glut of homes for sale in the neighborhood? Any of these statistics can make a believer out of a seller. Point them out to the sellers agent and make sure that they know their clients weaknesses.
With a listing, the agent should know how to counter each weakness. Being able to say "yes, foreclosures are up in the area, but those were in the 300-400K value homes", is much better than stumbling when someone brings it up. Know your own weaknesses and plan counter arguments before the fact.
In short, ensure that your agent does the research, and, like a good chess game, they should plan their moves accordingly. It can save clients thousands of dollars!!