Negotiating to win for your clients
I’m here today to talk about one of the most difficult negotiations during a home purchase contract - the repairs. In this video, I’ll share the 3 different points of view that your Realtor needs to manage, and my 2 secrets to help everyone feel like they won in the negotiation of home repairs.
Lets start with a bit of context. In Arizona, the standard is that after entering into a contract to Buy or Sell a home, the Buyer has 10 days to inspect the property. Before the end of the 10 days, the Buyer can cancel the contract or ask the Seller to make repairs to the home. If the Seller doesn’t want to make the repairs, there is a process and timeline where the Buyer can cancel with no penalty. - Meaning they get their deposit back.
I’ve learned in my years of Real Estate, that the inspection period is what can really make or break a deal. The buyer hires an inspector that knows nothing about the property to go in and find all the flaws. Broken, not up to code, old, non standard, all the ugly stuff. And the result can be Really SCARY to a buyer. And to the Seller, they will almost always argue why things are ok the way they are, or they will have some explanation, and tell you its never been a problem for them, or the inspector doesn’t know what they are talking about. If they say the inspector has it wrong.. sometimes an explanation helps eliminate concerns - but in most cases there are repair items that need to be addressed.
As a Realtor - is our job to understand all 3 points of view.
The Inspector - who positions themselves as the authority.
The Seller - That thinks none of the issues are a big deal
The Buyer -who’s terrified the house might become a money pit (remember that movie?)
So these 3 very different opinions will probably never come to an agreement. But then how do we help our clients? There are 2 secrets to negotiating the best outcome for your clients.
First - Start with the why. This is a common term in Real Estate, to start with your why. Its what drives you, its what drives you client, and the Buyer/Seller on the other side. So find out not only what they want, but why.
Here’s an example of a deal, that if we had not considered what they wanted and WHY - it would have cancelled. But instead it closed. Happy Buyer & Happy Seller.
In this example, we had Buyers and Sellers that are principal based. They think things should be a certain way, and thats how we need to mold the negations. Into the way they believe things should be.
Buyer: There is a belly in the sewer line, and the pool fence isn’t up to code. I’m paying good money for this home and I need to know that it won’t flood with sewage, and my kids will be safe in the backyard.
Seller: Ok, I see the sewer issue, I’ll pay for that. But I’m not modifying the pool fence because you have kids. We like the design of the pool fence and aren’t paying to change it.
Buyer: How can you sell a house with a safety hazard. If you said the pool was fenced, it should be done properly. This is misleading, I didn't know the fence wasn’t to code.
…and you can see how we can go down the dark hole of arguments… instead, heres how we worked it out.
Lets restart:
Buyer: There is a belly in the sewer line, and the pool fence isn’t up to code. Im paying good money for this home and I need to know that it wont flood with sewage, and my kids will be safe in the backyard.
Seller: Ok, I see the sewer issue, I’ll pay for that. But I’m not modifying the pool fence because you have kids. We like the design and aren’t paying to change it.
Insert Secret #1:
Aways present the repairs request in a way to fit how your clients think things should be.
Buyers Realtor: Buyer is adamant that safety hazards need to be addressed.
Sellers Realtor : So lets do this - Since the estimated costs of the sewer and pool fence are about the same, what if you present it to the Buyers that the Seller will cover 1/2 the costs of both?
Buyers Realtor: … (discusses with the Buyer).. Can the Sellers provide $1K more in credit?
Sellers Realtor - yes. Done deal.
And it closes. Happy Buyer, Happy Seller. Both had their voice heard and felt they received what was due to them.
So this is an example, Buyers wanted Sellers to take accountability for the fixes. Sellers had in mind a “walk away” price, and the total cost of repairs fit within that price. So win-win. Sellers got the net price they wanted, Buyers received credits to feel like the Seller was contributing a fair share to the items they though were important. If we focused on the pool fence, this would have been a contract cancelation. I did say there were 2 secrets.. but I only specified one.
The second secret? When you list a property, have the Sellers think about the bottom line. It gives them something to reflect against when considering an offer under list price, or the cost of repairs. For the Buyer, the bottom line may be total move in cost - and if they don’t have funds for repairs, a minimum safety level.
Either way, the 2nd Secret - is to get your client to know for them, at what point is it worth starting over with a new House or a New Buyer? That clarity can really help to keep focus on what really maters, and not get stuck on principals. Its worked for me in negotiations of multi million dollar corporate contracts, Real Estate, and buying handicrafts on Mexican beach vacations... Know what you are willing to do, and stick to that. Help your clients focus on the end goal, not the emotions. Help them win where it matters to them!
Odessa Keilman is Real Estate Mentor with the Agent First group at eXp Realty. To find learn more about partnering with Odessa and her mentorship program, contact us here