Every buyer is different. And every buyer has different needs, wants, and expectations when it comes to purchasing real estate.
So when it’s time to write an offer, it is very important to craft a strategy that addresses each client’s individual preferences.
The first question I ask the buyer before beginning is this:
“Is it more important to you that you get this house or that you get a great deal?”
The reason that I start with this question is that I am putting the buyer on notice that I will respect their wishes regarding the offer, but there may be consequences resulting from “going for broke.”
Because if they really want the house, the first offer must be strong enough to deter the seller from seeking additional offers from competing buyers. Sellers will generally negotiate in good faith with reasonable offers in an effort to quickly achieve a mutually acceptable agreement.
But if the buyer truly wants to “get a deal,” then I make them immediately aware that they are risking losing the house to another buyer. The important thing is to let the buyer know that they probably won’t be able to “steal” the house and it may be very difficult to repair any burned bridges.
I have seen many buyers lose great houses that are tremendous bargains for less that a $50 per month difference in the mortgage payment. In many cases they wind up settling for less later on or they give up their home search completely.
And it’s sad to see a lost opportunity, and to ponder on what might have been.
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Very well said Richard. I think in today's market we have to evaluate buyers' motive before we present an offer so we know how to successfully help them reach their goal whether is with this house or the next.
Richard- I totally agree with you.... and I loved the way you phrased it ..... Have a great day. Gay
Eileen...
And there are plenty of "next" houses available! Thanks so much.
Gay...
I really do ask that question first, because it's the best way that I have found to gauge the buyer's intentions! Thanks.
I love that question Richard. I may steal borrow that, if you have no objection. (Suggested for feature)
Good question and direct.
People do not think long term when making an offer.
I wonder how many actually say I wish we had gotten that other house. Lost for as you say $ 50 a month
Enjoy the day
Absolutely. This is something I focus on early on. My buyers have the benefit of comps, market state, etc. to make informed decisions.
If they begin looking with questions, "how much will they take?", or "I'm looking for a deal", we're going to write but not for long. If the buyer doesn't "get it" soon, they need another agent.
I like this strategy. Greed is something that can kill a deal quickly. I have had many buyers lose out for this very reason.
Gabe...
Of course you may! That;s why we;re here. Thanks my friend.
Don...
That one question really cuts to the chase! Thanks so much.
Lenn...
Sometimes it takes a lost deal to make the point, although I wish that it didn't. Thanks so much.
Reminding buyer that the sale price is the selling price. Or higher is key too. Maine waterfront often has multiple offers, the place goes for more than the mls listing figure. Not every seller has to sell, needs a new kidney or is being foreclosed on. Most have no mortgage where I live and will sell if they get this fair price, or will wait, can wait.
We just had an agent and buyer make a hostile bid on a listing only on the market for 4 days. They might have gotten something if the agent hadn't come across so completely rude and insensitive. Finding up up front what a buyer wants is important.
I have seen buyers who insist on both and even after getting the house that they wanted, and would have no other are still unhappy because they also wanted to steal it away. But, your question is also one of my first questions.
Paula...
And they are very disappointed when they don't get the house. Go figure. Thanks for the comment.
Andrew...
A good property will generate multiple offers, and listing agents often give us a "heads=up" but for some reason many buyers thinks it's a ruse to get them to offer more ... and then someone else gets the house. Thanks so much.
Richard, your blogs are so helpful, especially to those of us still learning the business...thanks!
Richard - you said “Is it more important to you that you get this house or that you get a great deal?”
What an excellent way to enter into an important discussion. And to understand the buyer's motivation. I suspect some are surprised at being asked and perhaps don't have a good response. Which is pretty telling in itself.
I ask a similarly-themed question but I like YOUR's far better. Into the memory bank's it goes.
Jeff
I think it's critical to have this type of conversation prior to making the offer. Find out what the buyer's expectations are, and prepare them for several scenarios of possible responses. I hate surprises.
Richard...that is a great question to ask & with some buyers I need to do that right up front & I'll put that in my toolbox for next time...many thanks
Richard, I agree with your strategy and approach. The one thing I might add is that the strategy is different if the house has been on the market 2 days vs. 6 months.
Have a great day!
Betsy
What a great phrase Richard! I'm also tucking that away to use - sure puts things into perspective very clearly - for the buyers and for us!
The biggest problem today is that so many buyers watch all these so called "guru's" on midnight TV. By the time they get to us they're just convinced that they already know the best answers ands strategies to achieve their goals. When in fact they really should be listening to us for guidance. Then we have to spend lots of time re-educating them on the realities of life.
Great job with this one Richard. Having this conversation with your buyers while writing the offer can save them a lot of heartache in the long run.
That is an excellent suggestion - simply ask the buyer what their motivation to buy is. We often look at seller's motivations, but ignore what the buyer is after, and end up with everyone being frustrated.
But as someone else said, most buyers will probably answer "Both."
Richard - well put points! Not long ago on an appointment with a younger buyer and his mom we were looking at a home newly listed at around $110,000. The mom was excited about the house and asked me "Do you think they'll take $80,000?" I knew I was in trouble right then! reblogging!
Margaret is right, so many people who will say they want the house of the dreams at the price of their dreams. Asking which is "more important" at the beginning might straighten out the thinking, at least a little. Good idea to call it the "buyer's strategy"
Motivation of the buyer is crucial to the way we write a PA. It makes a difference as to what info I go over with the buyers.
Great Blog Post. I find that after a buyer loses 1 house because of trying to get that deal, it validates everything I told them and then they are more open to listening to my advice.....Funny how buyers act like children:)
Richard~I know when I first was licensed, I thought it was my job to get every buyer a 'killer deal'. Then I learned to listen to my clients. I still want to see them get the best deal possible, but I also know that I need to work for them in accomplishing their objectives. If they want a particular home, it's my job to help them get it!
Richard ~ I'll hang on to this one if you don't mind. Great tips & approach. Thanks for sharing it!
Excellent points Richard. Often buyers will lose out on their ideal home because they find it too early in the process. Thinking they will all be like that one they low ball and press too much.
Wow that is either a really red roof in that picture or my color blindness is showing. Bright!
Richard, I do like how you put that. Great way to lay it right out on the table!
(writing it down....)
Definately a good strategy to use with buyers because they really dont think about all this when they are making offers.
Great post. Yes this definitely happens too often. I like the way you handle it!
Great post. You really do need to bring that up with your buyers. I find that figuring out the difference in mortgage payments can really help with peoples decisions.
Definitely going to use that question for future buyers. It is a simple question that reveals so much about the buyer's motives. Thanks for an excellent post.
Great post! You are absolutely correct. I am working with a buyer/friend now and this is exactly what I have been telling him.
Very good post, Richard.
I love that question you ask your buyers! Great phrasing.
I ask my buyers "If I come back and tell you someone else got the house, will you say OH WELL FIND ME ANOTHER ONE or will you cry?"
Richard, I'm dealing with this issue right now. Unfortunately, the buyer wants a great deal on a house that is perfect for them but the seller isn't budging. Alas, they will probably lose the house.
Excellent points. You must know where you want to end up. Besides, getting a good deal is better than losing a great deal!
Some buyers are just focused on getting a house at "their" price, and could care less about the small amount extra on the mortgage payment. They just want to win in the negotiation so they can tout how they negotiated such a great deal
Richard, I think that question "“Is it more important to you that you get this house or that you get a great deal?” should become part of any buyer's interview, as it will definitely dictate the direction they go in. With so many buyers approaching the process with no real thought of what they want, this could definitely get them started thinking of their goals in the first place.
Buyers can tend to become fixated on "how much they got off the asking price" - rather than recognizing a good fair deal is beneficial to everyone and especially themselves in the long run. Finding that perfect home isn't always easy and I wouldn't let a few dollars a month more stand in the way of myself and my dream home.
Great way to pose the question.
However, it also is a good way for me to evaluate the buyer. if the answer is "a great deal", that can be fine. Now if the answer is really "the deal of the century", then I need to consider if this relationship is one I can commit to.