Offers and Negotiations Creating an offer Protecting the buyer’s interests Working toward a purchase contract Presenting an offer to a seller Handling multiple offers Negotiation know-how Strategies for buyer or seller markets In this chapter 133

6-2 Creating an Offer Price of similar properties Property condition Length of time on the market Supply and demand Seller’s motivation Terms Commercial and investment return on investment and future income stream 133

6-3 Prepare the Buyer Explain the process and facts Verbal promises are not enforceable Avoid negotiations fever Offer becomes a binding contract when seller accepts If sellers or buyers reject an offer, they cannot change their mind later Revoking an offers is a VERY serious step 134

6-4 Protect the Buyer’s Interests Provide a sample form Have approved protective clauses available Be selective! Do not engage in the unauthorized practice of law - Changes to the boiler plate contract should be reviewed by an attorney Base selection of clauses on circumstances and property the buyer selects 134

6-5 Skill Builder Tip Most common contingencies - Satisfactory home inspection - Attorney review - Approval of financing - Sale of a current home 135

6-6 Working Toward a Purchase Contract Client is the decision-maker Buyer’s rep provides info and advice Don’t decide what’s “best” for client Present offer in the best light Prepare for counteroffers Plan a multiple-offer strategy 136

6-7 Presenting the Offer Create a friendly atmosphere The seller's rep has the right to be present The buyer's agent presents the offer Stress the positive Leave The seller's rep has the right to participate in the counter-offer to the buyer 136

6-8 Other Offers Pending? Doesn’t have to be a hot market for a seller to receive multiple offers The buyer must ask and the seller must consent to divulging other offers Sellers do not have to consider offers in the order received or accept the highest bid Do not panic or withdraw an offer 139

6-9 Handling Multiple Offers Individual Presentation - Each contract is presented to the seller. - The content of the offers is not shared with anyone but the principals Group Presentation - All of the offers are presented at the same time with all of the representatives present - The contents are shared with everyone. - Note: Buyers should be notified if this method is used. Some buyers may not want their information shared with others 139

6-10 If You Cannot be Present Try to present the offer in person Add a provision to the contract May not be in best interests of client 140

6-11 Negotiation “Know-How” Step 1: Assess the buyer’s position Step 2: Identify objectives Step 3: Plan a strategy Step 4: Review the big picture Step 5: Follow through 141

6-12 Assessing a Negotiating Position General market conditions Property selection Buyer’s financial strength Seller’s situation Four Factors 141

6-13 Buyer’s Objectives Identify the buyer's primary objective: - Price? - Any changes in circumstances? - Willing to walk away? If so, when and why? - How important is the ceiling fan? Concentrate on the areas of difference 144

6-14 Plan a Negotiating Strategy Review strengths and weaknesses Identify initial offering price and terms Identify as ultimate acceptable price and terms Hot sellers market? Make the initial offer the first offer The next most successful option is the compromise 145

6-15 Assess the Big Picture Use a framework of logical, rational thinking Review factors that may impact the negotiations—listing price, terms, and other information Provide an up-to-date CMA Review the buyer's needs, wants, and level of affordability based on your notes 145

6-16 Skill Builder Tip: Negotiations 1. Be prepared 2. Present a united front 3. Don’t let personal opinions cloud judgment 4. Plan concessions in advance 5. Don’t bog down on minor points 6. Get all the decision makers together 7. Avoid distractions 8. Don’t share info unnecessarily 9. Just keep quiet 10. Goal is agreement, not grinding other into the ground 146

6-17 Follow-Through Be ready to implement the rest of your negotiating strategy when the seller makes a counteroffer. Most concessions are made at the end of negotiations Keep it professional 146