Purchasing property, especially a home, can be a very emotional experience. As a buyer agent, it is your job to be the voice of reason, the buffer, and sometimes the peacemaker. While many transactions are completed with a minimum of negotiations, others are fraught with haggling over price, repairs, timelines, etc. You have the power to set expectations and to take all the back-and-forth negotiation in stride. A few reassuring words can mean the difference between a smooth transaction and a traumatizing one. Here are some tips on how to make the real estate transaction process as smooth as possible for you and your buyer clients.
Making an offer
Constructing a real estate offer is an art. It is a careful balance between price, terms, contingencies, and timeframe. In order to reach an acceptable agreement with the most favorable terms, make sure your buyers are aware of the market and the most important factors when constructing an offer. Factors to consider include:
- Comparable properties
- Number of days on market
- Closing dates
- Requests to sellers to pay closing costs
- Timeliness and types of inspections
- Financing
- Property insurance
- Repairs (if any)
To ensure that this initial stage of the real estate transaction goes well, it’s important to submit the offer in a timely manner. While there may or may not be a definitive time limit in each state (such as 24 hours), it is in everyone’s best interest to submit the offer as soon as possible.
Competing with other buyers
Competing offers can make for an exciting, stressful, and anxious time for the buyer. If your buyers become aware of a competing offer, ask them to think about the value of this property to them. They may want to revise their offer to be their highest and best offer. They should keep in mind that price is only one factor in the seller’s decision. Other terms, such as closing dates and concessions, may play powerful roles in the strengths of competing offers.
Regardless of the strengths and weaknesses of the competing offers, the seller can only negotiate one offer at a time until there is a binding contract. There can be situations in a strong sellers’ market where more than one offer is received at the same time. In these stressful situations, buyers may take comfort in knowing that they’ve put forth their strongest offer.
What if you have two clients interested in the same property?
It is entirely possible that you may have two different buyer clients interested in the same property. This puts you in a difficult position. While both clients are due fiduciary/statutory duties, you may not give preference to one client over another. In this case, you may not give price or strategy advice, and you may not advocate for either client. Information must be kept confidential, and it should be disclosed to both buyers that you are representing two buyers interested in the same property. If you do not feel comfortable in this role, you may ask a buyer if they would like to be referred to another agent.
Negotiating counter offers
If the seller does not find the initial offer acceptable (e.g., because they feel the offer price is too low, too many repairs or inspections are requested, etc.), they may come back with a counteroffer. Make sure you prepare the buyers for this possibility. They may be surprised by a counteroffer. However, at this point, they can choose to:
- Accept the counteroffer
- Counter the counteroffer
- Reject the counteroffer and walk away from the property
If the buyers decide to write up another offer (the second counteroffer in this case), they are rejecting the seller’s counteroffer. This means the seller then has the opportunity to:
- Accept the counteroffer
- Counter the counteroffer
- Reject the counteroffer and walk away from the buyers
This can be confusing, but it is essential to know which party is obligated to the purchase and sales agreement and when. Sellers can only negotiate with one buyer at a time. Buyers can only negotiate with one seller at a time (unless they wish to own more than one property!).
Completing the final steps of the real estate transaction
Whew! Acceptance! Finally, under contract. Does that mean your work is done? Nope. You still need to make sure the buyers are on track. Before you can reach the final destination of closing the deal, you must work to keep the following time-sensitive tasks in order:
- Financing
- Inspections
- Availability of property insurance
- Appraisal
- Title search
- And, finally, closing procedures
Navigating the choppy waters of a real estate purchase is not easy. There are many important factors to consider, deadlines to meet, and terms to negotiate. A good licensee is one who is knowledgeable and competent, an effective communicator and negotiator, and one with a full understanding of how to conduct a real estate transaction. Become the best agent you can be with Colibri Real Estate School.
