Negotiations

By Larry Schottenstein on December 13, 2011

I find it odd how real estate agents will take a negotiating position they can’t defend. They are basically making up a reason. I feel this weakens their ability to negotiate for their client. I had a property listed at $259,000, which was below market and a good deal at list. My investor/seller paid cash and wasn’t highly motivated and the house was all updated. A buyer makes a silly offer of $238,000. This weakens their position from the begining because they aren’t exterting any pressure and are simply guessing. Worse, the listing agent is making up reasons for the offer which she can’t really defend or back up.

For example, the biggest negative with the home is being adjacent to a busier street, which is why it was value priced. The buyers agent used this as a reason for her offer. This is hollow because you are either willing to live in the house or not and saving another $10,000 or so won’t make the issue go away or be worth it.

Instead of going back and forth we countered at our bottom line price of $250,000. The buyer comes back at $247,500 and says “This is the highest they can go because they want to put 20% down and they only have 20% of $247,500″. First of all I don’t believe it and think they are just making it up. But I called their bluff and said “There is no reason to drop the price by $2,500. Instead we will give you 20% of $2,500 which equals $500. All you need is another $500 down payment on the extra $2,500 on the purchase price.” The buyers agent tried to portray this as a $2,500 problem but it really was a $500 issue and for $500 I was willing to contribute it and be done with the deal. They ended up agreeing and we are in contract.

The lesson is when negotiating a real estate deal don’t make up a silly reason for your actions. If you are making an offer that can’t be defended then your agent is just better off saying “My client instructed me to write this up and they can be somewhat difficult to deal with.” This is something the other agent can wrap their hands around and it will make for a smoother negotiations.