Monday was St. Patrick’s Day. You’d think I’d be out having copious amounts of green beer with friends, but alas I was actually in bed at 10:00pm, just drifting off to dreamland. My cell phone rang, and it was some very good friends of mine who live in Orlando so I grabbed it. They are moving to North Carolina, and have their home listed with a “Top 1%” agent in Orlando through their relocation company. They called me with a dilemma.
Them: “The house is listed at $440,000. We’ve been on the market 2 weeks. The house 2 streets over that is the same model as ours just sold for $445,000, but ours backs up to a busier road. We are pretty well priced within the neighborhood comparable sales. We initially got a lowball offer from these buyers who were financing for $395,000. We declined it. Now those same buyers are back with a new pre-approval letter and an offer of $420,000. Also we got a cash offer today for $420,000. We want to go with the cash offer because we aren’t very confident in the financed offer, but we feel its worth a little more than $420,000 and don’t want to leave money on the table. What should we do?”
Me: “So the nearest comp sold for $445,000. What did your Realtor say about the offers?”
Them: “She said think it over and sleep on it. She gave us no advice whatsoever on potentially countering. We were hoping she’d be more of a shark when it came to negotiations. We’re pretty livid actually.”
Me: (thinking aloud) “Hmm… Well in a cash offer there is no appraisal required so you can’t fall back on that if you counter high, so this is tricky…. ”
Them: “Oh, yes, by the way we have an appraisal at $441,000. We were thinking we might counter $10,000 higher than they offered. We would really be happy at $430,000 in case issues arise during inspections that we have to pay for, so that if we end up around $425,000 net. But we also really don’t want to lose this cash buyer.”
Me: “Well why didn’t you say so about the existing appraisal! Even though one is not required for a cash sale, the fact that you have one is huge and works in your favor since you have a multiple-offer situation. So the house has been listed for 2 weeks at $440,000 and since the market is very hot right now, and you didn’t get any close to asking offers the first week (as is happening a lot right now), I’d say the true market value isn’t quite $441,000 as the appraisal suggests or buyers would have offered that right out of the gate. I think your idea of $430,000 is probably right on the money – and buyers will usually offer a little lower than they are willing to pay anyway at first. What if you had your agent go back to them and very nicely thank them for the offer, and tell them that you do have multiple offers on the table. Have her explain that you do have an existing appraisal at $441,000, and their offer of $420,000 was very kind but the appraised value is $21,000 higher and that you would be willing to meet them halfway at $430,000?”
Them: “Sounds reasonable.”
The next day I got a phone call from my friends in Orlando.
Them: “Our Realtor HATES us now, because we had to tell HER how to do her job and what to say, but she did it, and it worked! Counter accepted!”
Moral of the Story: Who you hire as your Realtor MATTERS. You want someone who has proven strong negotiation skills, not someone who puts their tail between their legs when a lower offer comes in.
How do you know which Realtor is a good negotiator and willing to stand up to help save your equity?
1. Ask to see their list-to-sell price ratios. (If they don’t know what this is, NEXT!) This means if a home is listed at $1,000,000, and sells for $960,000 – their list-to-sell ratio is 96% – which is not bad. Much lower than that, and you have to wonder if the agent says to their Seller when they get an offer “Oh just sleep on it!” or do they do their research and come up with a counteroffer strategy?
2. Ask to see their sales over the last 12 months. Note how many they have listed, and how close to asking they sold.
3. Ask them how they would handle it if a lower offer came in but you didn’t want to lose the buyer?
I am the kind of real estate agent that loves to buy cars because I love to negotiate, and I always get my way. Most of the slimy car salesmen don’t even see me coming. Armed with car sales comparables from various other dealerships, I approach car buying the same way I approach real estate, I lay out the facts and usually the other side crumbles to my will. So when you are ready to sell your home, call the best Realtor/negotiator in town – or you could be leaving money on the table!