Negotiations Part 3
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This document discusses negotiating objections from buyers and sellers in real estate transactions. It provides tips for responding to common objections in 3 or 4 categories: money/price, fear, distrust, and specific property features. For buyers, common objections are about house size, lack of desired features like a fence, disliking a room, or location. Sellers may object to a buyer's price. The document advises examining market data to show price reasonableness and explaining risks of waiting for a better offer or rejecting the current one. Overall it provides guidance on respectfully addressing concerns to try and move the negotiation forward.
Negotiations Part 3
- 2. ANSWERING OBJECTIONS Sometimes “no” really does mean “no,” but other times it can just mean “I’m not sure,” or “I’m worried.” Looking for the motive behind the “no” is a big part of successfully overcoming objections. Objections usually fall into three categories: Money. The need to make a profit or avoid a loss is a key motivator. Buyers might think a home is overpriced, while the sellers are convinced they could get a better offer. Fear. Buying or selling a home can be intense and stressful. People are often afraid to make a commitment and are wary of contractual relationships. Distrust. Clients often distrust salespeople. Buyers might think the salesperson didn't show them enough properties or was wasting their time on properties they can’t afford. Sellers may not believe that salespeople are placing their interests above the desire to close the sale quickly.
- 3. 7 BUYER OBJECTIONS: WHAT YOU SHOULD SAY Objection #1: The house is too small. Your response: You can’t make it bigger, so point out a benefit of size. “The room layout is so good that you get a sense of much more space than the square footage indicates.” Or “With energy costs so high, a slightly smaller home will mean lower heating and cooling bills.” Objection #2: This house doesn’t have a (fenced yard), and I told you I wanted a house with one. Your response: List all the features the house does have that were requested by the prospect. “You said you wanted a three-bedroom house in Hilldale with an established garden that is within walking distance of the elementary school. This house has all that; adding a fence will not be that difficult.” "When you hear an objection, smile," says sales trainer Tom Hopkins of Tom Hopkins International, Scottsdale, Ariz. "It means you're getting somewhere." Why would buyers care about a faulty water heater unless they were thinking of buying the house? Why would sellers quibble about a 30- or 60-day listing unless they were thinking of listing with you? Objection #3: I don’t like the (living room) in the house. Your response: Ask, "Why?" Then respond to the specific difficulty. For example, if the prospect doesn’t like the color of the room, say, “We could put a clause in the offer that it is contingent on the sellers repainting the room off-white before closing.” If the prospect doesn’t like the number of windows in the room, mention how easy it will be to place larger pieces of furniture in the open wall areas. Objection #4: I don’t like the location. Your response: You can’t change the location, but you can try to dispel the idea that it’s not desirable. “There are some great people on this street; your neighbor on the left is a teacher and the blue house is a young doctor and his family. The street has a great block party every year. Or point out that a house in this location is less expensive by a certain amount to one in the neighborhood the prospect requested.
- 4. WHAT TO DO WHEN THE SELLER SAYS 'NO' Review and update your comparable market analysis. Use this data to illustrate why the buyers’ price makes sense. Explain real prices. If a buyer pays $5,000 in lender points, a $145,000 sale price is actually $150,000. Explain the risk of waiting. The sellers might get a slightly higher offer in the next 60 days, but what if interest rates go up by then and there are fewer buyers in the market. Explain the risk of rejecting an offer. If the sellers are presented with an offer of $149,000 on their $150,000 house and they counter at $150,000, they are gambling $149,000 to gain $1,000. Emphasize the financial soundness of the buyers. Remind the sellers that a higher price means nothing if the deal doesn’t close. Resell the original offer. If the sellers won’t budge, wait two or three days and present the offer again.
- 5. ODD OF SELLING ABSORPTION RATE PRICING/DEMOGRAPHICS OF BUYERS FOR LISTINGS “There are only a certain number of houses that will sell in any market in any given period of time. Let’s see if your house will be one of them.”
- 6. ODDS OF SELLING: ABSORPTION RATE PRICING If 12 homes sold in the last 12 months in a given market that means that the market will absorb 1 house per month on average. If there are 10 homes currently on the market there is a 10 month supply. A 6 month supply is a balanced market, less is a sellers market and more is a buyers market. How to Calculate Absorption Rate: Find your search area, criteria, price range, target market segment, time for analysis The longer the time the better the overall average Shorter times give the latest trends Detailed searches give more accurate results How many closed transactions occurred in last 12/6/3 months? You find this in the MLS Houses not sides of transactions
- 7. ODD OF SELLING: ABSORPTION RATE PRICING Divide the total closed by the time period. # homes closed in the last 12 months # / 12 = # homes closing on average every month # homes closed in the last 6 months # / 6 = # per month on the last 6 months Determine how many houses for sale at this time? Divide the number of houses for sale by the average closed per month equals the number of months supply of houses
- 8. Our entire MLS SOLD: 12 months 9113 homes sold = 759 per month Our MLS ACTIVE: 2732/759 = 3.6 months inventory
- 9. ABSORPTION RATE MARKET TREND Criteria for search:_________________________________________________________________ Closed Transactions in Past: 12 Months 6 Months 3 Months Enter # of Closed Transactions ___________ ___________ ___________ Average Homes Sold Per Month ___________ ____________ ___________ Currently Active in MLS ___________ ___________ ___________ Month’s Supply of Houses ___________ ___________ ___________ As long as NO OTHER HOUSES ENTER THE MARKET!!
- 10. HOW TO CALCULATE THE ODDS OF YOUR HOUSE SELLING To calculate the Odds of Your House Selling you must research your MLS to find the following: Determine your search area, price range, target market segment, and time for analysis Six months is a perfect search time. Longer search times give incorrect data because houses drop off the market and return with a different agent and MLS number How many closed sales occurred in the last 6 months?
- 11. HOW TO CALCULATE THE ODDS OF YOUR HOUSE SELLING Determine the total number of homes that entered the market for sale in the last 6 months including the current actives. This would include homes that were listed in the last 6 months and have expired, withdrawn, pending and closed Include the current listings no matter when they were listed. Divide the number closed by the number of listings that were placed on the market.
- 12. ODDS OF YOUR HOUSE SELLING: EXAMPLE 1. Search MLS for all sold homes in the school district between $250,000 - $275,000 in the last 6 months. 2. 53 were closed in the last 6 months 3. 128 entered the MLS and were sold, expired, wi thdrawn or still on the market 4. 53 divided by 128 = 41% of the homes that ente red the market sold!
- 13. ACTUAL MLS EXAMPLE Zone 400, between $275-$350 = 69 sold last 6 months Set MLS criteria, go to advanced features and enter listing date: 94
- 14. ODDS OF SELLING EXAMPLE Zone 400, between $275-$350 = 69 sold last 6 months Set MLS criteria, go to advanced features and enter listing date: 94 69/94 = .734 or 73% chance of selling (homes that entered the market that actually sold) Powerful Data
- 15. ABSORPTION RATE POSITIONING Seller: _________________________________________________________________ Address: _______________________________________________________________ Property Description: ____________________________________________________ Profile Buyer for this property: _____________________________________________ Step #1: Define the “Playing Field” through “Profile Buyer’s Eyes” – Using RPR –Area, neighborhood, zip code, price range, lakefront, schools, etc.
- 16. RPR: REAL ESTATE PROPERTY RESOURCE Fed data from MLS FREE Access at www.narrpr.com : Fundamentals of RPR Let’s take a look: Buyer demographics, evaluating RVM (Realtor Valuation Model) http://www.narrpr.com/neighborhoods/ks/andover/67002/52001800- summary.aspx Create a report: https://www.youtube.com/watch?v=c5BTq0QCPyo
- 17. ABSORPTION RATE POSITIONING Step #2: Sold properties in the past 12 months: _______ Step #3: Sales rate (absorption rate) per month: _______ Step #4: Number of properties currently for sale: _______ (+ your house!) = ________ Step #5: At current sales rate, time required to sell all of current properties: ____months
- 18. ABSORPTION RATE POSITIONING Step #6: Odds of Selling within 30 Days through “Profile Buyer’s Eyes” ____ (Monthly sales rate #3) ÷ ____ (properties for sale # 4) = _____% Odds of Selling in 30 Days Step #7: Positioning your property vs. the competition through “Profile Buyer’s Eyes”: Condition: ___________________________________ Rating: (1-10)_________ Location: ____________________________________Rating: (1-10)_________ Size (Home site and house): _____________________Rating: (1-10)_________ Features/Amenities: ___________________________Rating: (1-10)_________ Price: _______________________________________Rating: (1-10)_________
- 19. ABSORPTION RATE POSITIONING Step #8: Market positioning through “Profile Buyer’s Eyes” 100% Odds of Selling within 30 Days = Position your house in the Top ______ 100% Odds of Selling within 60 Days = Position your house in the Top ______ 100% Odds of Selling within 90 Days = Position your house in the Top ______ As long as no other houses change their price and no new houses enter the market!
- 20. THE POND
- 21. POWER QUESTIONS By what date do you need to move? By what date do you want to have your house under a sales contract? Do you know how long it will take to go from Contract to Closing? Based on the Absorption Rate, how long could it take to sell your house? Based on the Absorption Rate, where do you think we should position your house? Do you think that positioning will get you where you want to go on time? What position in the market will it take to get you where you want to go on time? If your house doesn’t sell in the time frame you have described to me, what is you plan B?
- 22. NEXT WEEK The Offer Prospects Into Buyers Prepare to Present Presentation Strategies Elements of a Standout Offer Contingency Clauses How to Handle Multiple Offers Q&A: Listing Agent's Duties For Fun: https://www.youtube.com/watch?v=jrkRr-2OZsw