Vail real estate column: Negotiating: The heart of the real estate deal
If buyers and sellers are wondering why they need a real estate agent, then it is for his or her negotiation skills; look for one who can demonstrate his or her skills instead of being fearful the deal will buckle and fall through. What makes up a skilled professional is an ability to close a deal from a first conversation with the other party and an ability to find an agreement on the terms, as well as create a happy client the day after closing. The most skillful agent will never narrow negotiations down to just one issue (the price) because this allows for one winner and one loser versus both winning.
Prior to negotiating, the Realtor should establish criteria by asking the right questions to uncover the primary objectives and goals of the buyer and seller, i.e., financial needs, potential future relocation, cash needed to close, closing date, persons living in the home, kids, physical additions needed to the property and more.
Win-win contract negotiation strategies
• The Nibbler: A buyer may “nibble” to obtain most of what he or she is asking for by making the seller feel cheap. As the name explains, the buyer nibbles a bite here and a bite there — slowly getting everything he or she desires from the seller.
Example: The buyer is purchasing a $2 million home and asks for a new roof, stating to the seller’s agent and seller, “Oh, come on — I am purchasing a $2 million home from you, what does a new roof cost?” One by one, the requests come in, nibbling away at the seller’s profit.
Seller remedy: Do not allow this. Sometimes sellers are eager to liquidate the property and will meet the added conditions to complete the transaction. Stand your ground and be willing to walk away in your mind, and your confidence will win most every time. If the buyer gets one large request granted, then he will forgo the small stuff but will need to be told “no” to end the nibbling cycle.
• The Hurdler: A buyer uses a “hurdle” strategy when the buyer expresses details about a difficulty he or she is facing that will keep him or her from purchasing the home in question and throws the problem into the hands of the seller or listing agent to fix.
Example: The buyer is purchasing a $2 million home and does not have quite enough money for a down payment, a personal issue is holding up the deal or the buyer does not qualify for that price at all. The buyer may have a “liquidity event.”
Seller remedy: Say no and hold your ground. In this scenario, the buyer’s challenges are passed on to the listing agent or seller and can be eliminated by standing firm and working through the challenges one by one. Financing, personal issues, commissions, roadblocks and delays are all examples of issues that make this “hot potato” scenario become the seller’s problem. Address the issue directly and logically, and hand the challenge back to the person responsible for it.
• The Good Cop and Bad Cop: Where the agent is the good guy in the relationship and the seller is the bad guy, or vice versa. Hiring a real estate agent is a way to protect buyers’ and sellers’ interests, as well as to provide a buffer from possible confrontations during negotiations.
Example: The buyer is purchasing a $2 million home and has a running list of requests for the seller. The agent is accommodating, declaring the deal can be worked out, but every request seems to be vetoed by the seller, only to be countered again. This tactic exhausts the buyer and his or her efforts, and he or she begin to withdraw.
Seller remedy: The success of this negotiating tactic is to allow the buyer to get one or two of his or her requests through. If the buyer feels he or she’s not moving forward in any way, this tactic will truly sabotage the deal. However, done correctly, the buyer will feel as though someone is on his or her side, that he or she is making progress.
In the end, having a broker who is skilled, patient and prepared to walk away from the wrong deal is the right choice. Look for a Realtor who has years of experience and results. They are seasoned and usually are not in it solely for the commission. Negotiating is what drives them, and they thrive on the best deal. The best negotiators are worth their fees and generally net you the highest payday.
Tye Stockton is global real estate advisor for The Stockton Group and LIV Sotheby’s International Realty.