In real estate, negotiating is an art – knowing when to move the bid, when to accept, what tone to take and what attitude to have. It requires confidence. It requires a full understanding of the process. But something that many agents do not consider as they sit down to the negotiating table is that there is one more requirement: a client who is completely prepared for what’s to come.
Client preparation is something @properties broker Erin Mandel has always taken seriously. In a market like Chicago’s – where inventory levels are currently too low to satisfy demand and prime lot availability is too low to fill the gaps – it has never been more important than it is now.
“Getting your client ready for a negotiation is all about setting expectations, but in our market, there is no one plan of attack,” Mandel says. “Every deal is different.”
Prepping a Buyer
On the buyer side, it’s all about explaining the supply and demand environment of the current market, Mandel explains. In Chicago, low inventory levels have made multiple-offer situations commonplace, and that has been a key prepping point for her.
“I tell the buyer that the price is likely set, and that we may see a multitude of offers for the same property,” she says. “I set the expectation that if the buyer is not prepared to pay list price or go into a bidding situation, it may not be the right house for them, or the right time for them to be buying.”
Working with Sellers
With seller clients, Mandel is sometimes put in a more complicated situation, because prepping the client could mean advising them to take a lower offer.
It’s not that her clients will lose out. Rather, Mandel wants them to evaluate buyers and their offers as a complete package, instead of a single number.
“When an offer comes in, I tell my clients we need to look at the meat of the deal: how much earnest money there is; whether the lender is local; when are they looking to close; how strong is the overall buyer,” she explains. “All those pieces considered could be the difference between a smooth or hectic transaction.”
Cash is not Necessarily King
Mandel also coaches her clients to be particularly wary of all-cash offers.
“Cash is not always king, in my opinion,” she says. “Many times when people have a lender involved, they have much more skin in the game, and there is more accountability – which is important in a quick market like this, where you see buyers paying over list price.”
Ultimately, whether buying or selling a home, the process is highly emotional for the client, and Mandel considers it her job to eliminate their stress. So while she makes sure her clients know what to expect going into a negotiation, she mostly wants to make sure they’re an observer, not an active participant.
That does not mean she’s against a first-time buyer, say, sending a letter to a seller to help butter them up a bit. But for the most part, she says, the client hired a broker for a reason.