One of the most exciting things that can happen to a professional salesperson is to get a call from a homeowner who wants to talk to you about selling their home. Believe it or not, it’s at that very moment that the negotiation begins between the seller and a buyer yet to be found. In most instances the negotiation begins when the buyer prospect arrives, and that’s just too late. This blog is about sealing the sale before the buyer has even looked at the property.
Before the Buyer Appears: Seller Negotiations
1. Ask Pre-Listing Questions. Waiting until you do the listing presentation to ask these is much too late. Without knowing the seller’s motivations in advance, it’s difficult to do an over-the-top, knock-their-socks-off presentation (which every agent should do). Pre-listing questions are usually asked during the first contact over the phone. These are in no particular order:
- Tell me why you’re selling.
- What concerns you the most about this move? If they need to move fast, you can use this to negotiate with a buyer who wants a deal and is willing to close quickly, leading to a Win/Win situation.
- Do you have any repairs that need to be made before you sell? The seller may respond that they’re not going to fix anything and want to sell it as-is. The negotiation then turns to a “what-if” situation. You need to know the answer to this: “So if the buyer offered you $xx,xxx dollars less than the asking price but agreed to buy it as-is, would you be willing to do that?”
- Do you have a timeline for moving? They may answer, “Yes, we’d like to stay in the home for 60 days after closing to prepare to move. We will pay rent.” In this case, a buyer who’s not in a hurry to move because they don’t have a home ready to occupy may make an offer for a lesser amount and give the seller the option to rent after the sale.
- Are you ok with your mortgage? If the seller reports that they’ve missed a payment, the transaction may very well change from a conventional listing to a short sale listing.
- Has the home been on the market for sale within the last 12 months?
- What price do you have in mind? How did you arrive at that number? They may respond that they went to a website that estimated the sales price at $xxx,xxx and it insulted them. This is an opportunity! Online prices are estimates and are usually wrong, so immediately go to the property and give the seller a more realistic price. You can do this from the curb by using MLS comparable properties and your brain. Be a hero! You don’t need to do a formal presentation to give the seller a price, so be fast and make a friend.
- What would be the perfect move? This is where you learn major motivations that you can potentially use later when negotiating a less-than-acceptable offer.
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October is business planning month for real estate agents: I’m asked more questions and teach more business planning seminars in October than in any other month. That’s why I’ve timed this blog “What Every Agent Should Know about a SEP IRA, Social Security, and Your Nut to Crack” to hit your inboxes now. I’d like to draw attention to some critical decisions that many small business owners and independent contractors need to consider when putting together a business plan so they can provide for their retirement years—or at least those years beyond their mid-60’s.
SEP IRA: Simplified Employee Pension (SEP) is a program created by the federal government that allows independent contractors (most real estate agents) to contribute up to 25% of their W2—or up to approximately $50,000—into an individual retirement account (IRA) which will be sheltered from taxes until a certain future date. Yes, the amount that is contributed is sheltered from taxes and can be placed in an interest-bearing account. How can you lose? You lose by not having a SEP or individual 401K account that you fund every year of your business life. Inform yourself on the benefits here:http://tinyurl.com/o3p6fkt. If you’re lucky, you’ll live to be old, but you don’t have to be broke and old!
Social Security: This is much more than chump change. Social Security benefits have the reputation of being minimal because many individuals take them as soon as they’re eligible, which can be a huge mistake. If a person applies for their benefits at age 62, their benefits are reduced by about 25%—plus there are restrictions on how much they can earn from being employed without losing some of the benefits. However, if a person waits until full retirement age to take their SS benefits, they can earn unlimited wages without any penalty. You can find more explanation here: http://www.ssa.gov/retire2/estimator.htm.
Monthly Nut to Crack: In other words, how much income Read the rest of this entry »
NAR Research Reveals 45% of Buyers Go to Open Houses – 2013 Profile of Home Buyers and Sellers, National Association of REALTORS® (Pg. 47) Even before the first computer was invented and before there was an Internet, Open Houses were a major source of real estate information for neighbors and members of the general public looking for a house to buy. Open Houses have also always been a major source of prospects for agents who knew how to conduct them properly. Some of the most boring Sundays I spent as a salesperson were spent in Open Houses when few or no visitors showed up—but there were many, many more days when I found more prospects than I could have ever imagined. Look at the numbers: if a person did 20 Open Houses a year and averaged only 2 visitors (very low) per event, that would equal 40 leads. If you sold only 50% of the houses you held open, it would be more than the average agent sells in a year (and sometimes two years). If I had to limit my methods of prospecting, I’d definitely include Open Houses on the short list, especially since so many prospects find a house on the Internet and then look for an agent at the Open House. Good fishermen spend their time fishing where the fish are, and good real estate agents spend their time working where the buyers are!
Tips to Make Your Next Open House Sizzle
1. Promote online. Consumers have gone wild about everything online…and that’s how they find Open Houses. Just Google “ open houses” and you’ll see a long list of them, including those listed by Zillow, Trulia, and realtor.com. Open Houses are more than a sign in the yard and an arrow sign on the corner; promote your Open Houses online and create a traffic jam in the neighborhood.
2. Install a sign rider the Monday before. Sounds basic, I know, but if you put an Read the rest of this entry »