By Michel Friedman
Here is a sample phone conversation between listing agent (LA) and buyer agent (BA).
BA: Hi John, I have good news for you. My buyer wants to put an offer on your 123 Main St.
LA: That’s great, let’s make a deal. I can really use the commission.
BA: My buyer will pay $800,000. I believe it is a good price.
LA: But Jim, you know the property is listed for $900,000. My seller will not accept $800,000. No way!
BA: You know John, the property has been on the market for 90 days and is vacant. Your seller should grab the $800,000 and run.
LA: If you can not bring at least $875,000, you are wasting your time and mine.
BA: Let me talk to my buyer. (BA calls his buyer and tells him he has to come up with more money.)
BA: Hi again John. My buyer says $850,000. That is his final.
LA: Let me ask my seller. (LA phones seller.)
LA: Sorry Jim, seller insists on $875,000.
BA: I will talk to my buyer. (BA calls his buyer.)
BA: John! We have a deal. Let’s meet and celebrate.
Two hours later:
BA: John, sorry but my buyer is backing out.
Unfortunately I see too many similar cases in my practice. Are we watching too many real estate TV programs about California practices and applying them here? Is everybody aware of all the illegal issues in the above example?
Legality aside, do you present in person or do you prefer to send and accept offers by fax?
I advocate what I always practiced myself, which is presenting offers in person both as a listing agent and as one representing the buyer.
When you are the listing agent, notify the seller as soon as you are being notified of a registered offer and ask to meet the seller to present the offer. Invite the buyer agent to come to the meeting with the seller and present the offer. Then the listing agent and the seller can ask probing questions such as:
1. Is this a starting offer or is this the maximum the buyer will pay?
2. How important is the closing date?
3. Why is there a condition on financing? Has the buyer been pre-approved?
4. Why is the offer price lower than the asking price? What did they base this offer price on?
Even though the buyer agent has their fiduciary obligations to their client (the buyer), they sometimes “volunteer” information that is to the advantage of the seller. This mostly happens face-to-face.
When the issue of price comes up (in the event that the listed property is overpriced), the BA may pull out comparables that are the same comparables that the LA showed the seller when he listed that property. (The seller then insisted on a higher list price even though the LA told them that all agents are working from the same database and that buyers are asking their agents what they should pay and agents will pull out those same comparables.) Now, the LA has proven to the seller that all agents DO work from the same database and will base their offer on those stats.
In many cases the BA is just being so engaging with the seller at the presentation and so convincing in their arguments that they actually make the SA’s job easier.
Many times the BA would have their client waiting outside the house where the presentation takes place or at a coffee shop across the street. The sign-backs happen fast and a deal is made in minimal amount of time.
When you are a BA and you are presenting in person, bring comparables to the seller’s table to justify the buyer’s offer price. I would always ask the seller questions about flexibility in price, flexibility in closing dates, reason for selling (to try and dig for level of motivation). It’s true that I do not always get my answers but I would not miss an opportunity to ask if I can. I have the opportunity to “connect” with the seller, which will help with his decision to sell to my client.
When you are a BA and you are faxing in an offer, it is the LA’s duty to notify the seller of the arrival of an offer. The seller’s natural response is to ask: How much?
My question is: If an offer comes in at full price, is it a good offer? The answer is: not necessarily. It depends on the rest of the terms as well as schedule A. However, the seller may not have the patience or will to listen to the rest of the offer and just react to the price, thus in many cases “killing” a good offer that could have ended up with an acceptable price after proper presentation and sign-backs.
Present offers in person and with the presence of the buyer agent. It will make the sale easier and faster with a better ratio of success and will eliminate any legal issues of what “presenting” means.
Remember that a verbal offer (or counter offer) may not be worth the paper it is (not) written on.
Michel Friedman is president and broker of record of Orange Square Realty, a fast-growing brokerage in Toronto, and the creator and trainer of Star Agent, an advanced real estate selling techniques course. www.orangesquarerealty.com
