Listen today's topic.
Pretty cool one.
Today's topic is about negotiations and how they can benefit you, your client and of course
everybody else involved.
Let's get something straight here before we move any further.
You're getting a career, the real estate career that's going to be 100% commission based.
I hope you understand what that means.
Commission based meaning, you're not gonna get paid by the hour.
You're solely gonna paid on what you close.
So you want to hear "Close, record, done, caput, over and out."
You have to follow through the process.
Well first of all you gotta open, follow the process, then close the deal.
To put something into an escrow, to get it started, you gotta first of all come to an
agreement with somebody.
And that might be where the negotiations start.
Now where does most negotiations typically start?
Let's talk about negotiations in general.
What is negotiation?
What is negotiating in general?
Negotiation is actually the act of discussing an issue between two or more parties with
competing interests, with an aim of coming to an agreement.
Now we got two parties, both of them are competing for something yet both want to come to an
agreement.
And that's tough.
Now typically in real estate when you first wanna get tied up in a binding contract, you
gotta negotiate what?
You gotta come to an agreement on what?
Let's try it.
The sale price of the house, right?
The price of the house.
That's just the beginning.
Now when it comes to negotiations, a lot of buyers of course wanna get the house for the
least price possible.
I'm mean it's a no brainer.
Everybody wants to get something for nothing.
The least amount possible.
Give me the best deal out there.
Well that's kinda hard to do because most people who understand negotiations, understand
that it has to be equal, balanced, has to be reasonable.
Key word here is reasonable for both sides.
So what a deal when you have two reasonable people coming together?
Of course we wanna come to a, yeah, a reasonable agreement.
Hope you understand how that works.
So that being said, when you hear somebody, one of your buddies or a friend or a family
member say, "Hey I gotta great deal.
I got the best negotiator, the best agent who negotiated.
I got $100,000.00 off of my house."
That was pure luck because the most reasonable person wouldn't give you a $100,000.00 discount
on a property that's worth a lot more.
Right?
When it comes to negotiations, let's get this straight.
It's a reasonable compromise.
Are you with me?
It's a reasonable compromise.
So typically it starts out with the sales price.
You got a buyer who's excited, "Yeah, I'm just going make an offer on a house."
Cause you got $1,000,000.00 house and they wanna make an offer on it.
Now you think making an offer of 800,000 on a $1,000,000.00 house is reasonable?
Is that gonna be a good starting negotiating tactic?
They wanted to come in with $800,000.00 as their opening bid.
Is that a reasonable start?
Is that a good way to start off the negotiations?
Of course not.
And that's where the negotiations break down.
Because what can happen there is very simple.
You could insult the seller who'll say, "You know what, get outta here.
Don't even want to bother with you again."
Now of course we have to determine what kind of market we're in, right?
So it gets kind of confusing, it can get complicated but let's just go with the scenario that we
have at our hands today.
What kind of market are we in today?
Yeah we have a seller's market.
We have a seller's market in today's economy.
You present an offer to somebody and you wanted 20% discounts?
$1,000,000.00 down a 100,000?
Chances are the seller's gonna say, "Go to hell."
And that's the last thing the buyer wants right?
If the buyer's dying for this house?
Why in heaven's name would you request a 20% discount?
Horrible negotiation tactic.
"Hey, let's dole ball them, maybe they'll meet us in the middle at 900,000?"
Let's think about the market again.
It's a seller's market.
What are the chances of them giving you a 10% discount?
Slim to none.
Think about the real estate market.
Now negotiations get confusing.
They can get complicating but I want you to understand, let's keep it on the surface,
right?
Let's just keep it on the surface.
Alright so now let's assume they accepted your offer at $1,000,000.00.
You wizened up, alright you gave them a full price offer.
And you know what that is right?
A full price offer.
You gave them what they asked for.
You opened escrow, you're in legal and binding contracts.
Now that's just the beginning.
Now most people splatter it all over Facebook, "Yeah, yeah opened an escrow."
It's like saying, "Yeah, yeah I showed up for work."
You're just starting the day.
You have yet to close the deal.
You have yet to earn your money.
That makes sense.
Don't celebrate until you close the deal, in my opinion.
What are you celebrating showing up to work?
You get excited when you're done and get outta there, right?
So let's close the deal first.
Now within the day ... Within that escrow period, within that transaction process, there's
a lot more stuff going on.
And remember that as a real estate agent, we talked about this five minutes ago, you
don't get a dime until we close the deal.
So that being said, so rocking and rolling, every day is a step in the horse race.
Right?
But a bump, but a bump, but a bump, but a bump.
And the whole idea is to finish the race.
So we getting closer and closer to the finish line.
We're almost there and there's a moment where there's a few things wrong with the home.
Oh, oh your buyer has a home inspection.
There's some items in the house that need some attention.
There's some problems with the house.
Roof is leaking.
The inspector says, "The foundation is cracked."
Boom.
Push pause on this deal.
Does the buyer wanna continue with this escrow that has a leaky roof and a cracked foundation?
Maybe, maybe not.
But here's where you as a realtor come in.
It's time to negotiate.
Should the buyer, they can say, "Hey, you know what it would be a great idea if we ask
the seller."
"Hey seller give us a $50,000.00 discount to repair the foundation and the roof."
Who knows what the right amount is?
That's where you and the other agent have to come together, use your negotiating abilities
and put something reasonable on the table.
You know, there's also ways of asking, "Hey seller if you don't give me $50,000.00 I'm
walking."
This is from us as the buyer.
"Hey, seller if you don't give me $50,000.00 discount, I'm walking away from this deal."
Is that a good way to negotiate?
Is that a good way to keep this together?
Is that a good way to get to the payday?
Of course not.
How bout this tactic?
"Mr. Seller ..." Of course these are the agents talking to each other, but you're gonna put
it in writing.
"Seller we found issues.
Our inspector found issues with the roof.
How much are you willing to contribute to repair the roof?"
It almost gives them the sense of, "Wow, they're allowing us to help them."
And all you have to do is come up with the number.
I mean just to let them be participating in resolving the issue.
Many people who are right behind buyer number one, who are ready to take the house just
as it is.
If buyer number one doesn't want the house?
You'll have buyer number two right behind them, in today's market.
So when it comes to negotiating, we outta ask ourselves, "Who has the edge to begin
with?"
Whoever has the edge in the market, in this case it would be the seller's, typically has
the most control in the negotiations.
Got it?
Because typically in today's market, the sellers have buyer number one, buyer number two and
buyer number three waiting for this home.
So all these things you have to consider.
All these variables are goodwill to all consider before even going to the negotiation tables.
Hey you guys want some good advice?
Do this, before going into the negotiation table?
Try to get as much as information as you can from the other side.
Try to get as much as you can from the other team.
How soon do they have to be outta there?
You might wanna ask them that.
Would that help out the buyer with making the offer?
You bet.
How motivated is the seller?
Are there any other offers on this house?
If there are no other offers on this house, isn't that something good for the buyer?
True it is.
If there's other offers on the house, you think the buyers are gonna come in with a
20% discount?
Of course not.
If there aren't other buyers on this house?
There are no other offers on this house, you think the buyer might come down a little bit?
Probably.
But again it's all based on the motivation of the seller.
The seller's got to get the hell outta his house cause he got his wife waiting for him
in Hawaii and he's living in California.
And she's been there for one month and he can't stand another day without her?
How high is that motivation?
Is he willing to take a cut?
Probably, if he misses her.
Right?
Hope this helps your negotiations.
Oh my God.
It's the glue to keeping everything together.
Once you open?
Run the process.
Then close the deal.
Then you can celebrate.
Please remember this.
Getting an offer accepted is just the beginning.
Doesn't mean you're guaranteed your commission after 30 to 45 days.
There's a whole bunch of negotiations that can occur during that transaction period.
Got it?
Good.
Listen hope you enjoyed this video blog.
We'll have one for you next week.
Hope you're learning something.
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Listen it's always a pleasure being a friend of you.
Do yourself a favor, go get what you want.
Which in this case is a good, solid real estate career.
So the more information you got in you, what's gonna happen will be that much better.