By Ross Wilson
“Aspire rather to be a hero than merely appear one.” Baltasar Gracian
In this sixth column of the offer negotiation series, let’s continue with the strategy for the counter-offer. Before proceeding, for continuity purposes, you might wish to review the last column.
If the buyer agent readily agrees to the initial verbal counter-offer proposal of the primary price and closing date, make the changes on the offer and proceed to the initialling and signing in a methodical manner. The buyer agent can double-check the changes and initials.
The buyer agent may not oppose your seller’s primary terms, however, for a couple of reasons. They either believe their client will accept them, lack sufficient skill and experience to effectively handle the situation (they’re just order-takers) or they don’t care about getting the best terms for their client.
If you suspect a lack of skill, to hopefully prevent a further counter-counter offer from the buyer and to save everyone a lot of time and effort, here’s what you can do. Prior to making the changes on the offer, suggest the buyer agent call their client to seek verbal approval of the proposed terms. On the other hand, if your gut instinct tells you the terms may be acceptable to the buyer, be quiet and proceed with the formal sign-back.
If the buyer agent is an experienced negotiator, they may attempt to convince your seller to counter at a lower price or with a closing date more acceptable to their buyer. If they sufficiently press the issue, keeping in mind the concept of give and take, with a nod from your seller, you can agree to counter at your seller’s secondary price, closing date or both.
Chances are you’ll have just made a sale. The buyer’s agent will often enthusiastically agree to present a counter-offer to their buyer with the lower secondary price and/or closing date because they believe they’ve successfully negotiated better terms for their client. They return to their buyer in the belief that they successfully convinced the seller to cave – and that they’ll be perceived as a hero. They can boast that, in exchange for negotiating the price down from your seller’s primary amount, they saved them some money or got their preferred closing date. The agent’s enthusiastic energy usually generates acceptance.
If the buyer refuses to accept the secondary price, maybe your seller’s expectations are unrealistic – or the buyer’s are. Your seller may need guidance to objectively re-evaluate their property. If the market fails to give them their dream price, they mustn’t blame you. If the market disagrees with their lofty and patently subjective estimate of value, they must accept that the market doesn’t lie. They may have to adjust their expectations and reduce the asking price – or prepare themselves for no sale.
When all else fails, maybe that buyer wasn’t meant to be the next owner of your seller’s house. Unless it’s a strong seller’s market, making unreasonable demands usually proves disastrous. The same holds true for the opposite case in a buyer’s market. During normal balanced conditions, however, it’s give and take by both sides, like a gentle waltz. The key word is not to demand, but to negotiate. A successfully negotiated APS is usually a balanced one, a fair exchange scenario. In practice, unless duress or competitiveness due to market conditions is involved, a seller rarely gets exactly what they want, nor does a buyer usually obtain their perfect terms. Having said this, seller markets make very happy sellers and buyer markets the opposite.
This series on the offer presentation continues next month. Stay tuned for more on what can happen next, and how to effectively deal with it.