Real Estate Negotiation – Competitive, Savvy, Win-Win = Success!
Earlier this summer, I was helping a repeat client and good friend, house hunt. He was renting and had decided that he’d rather be paying HIS mortgage than his landlord’s. My client has some prior experience in real estate before, but his mortgage history was scarred by events of 2009-2011… A foreclosure after he was laid off and the newly built townhouse he had purchased was difficult to sell in a declining market, with excess inventory and builder competition. You know the story because it was a very common one at that time.
For those of you who don’t know, when you have a foreclosure in your recent history, a 30 year fixed mortgage (conventional) with a minimum 5% down, is not an option. You are permitted to get a new mortgage after 3 years of the foreclosure, but your options are limited. FHA (minimum 3.5% down but higher closing costs etc) was his only option, despite having more than enough down payment for a conventional loan.
FHA loans are just fine… Except when you are competing with other offers, then they are a tough sell and require real estate negotiation expertise. As a buyer’s agent, I am tasked with convincing the seller that the buyer is just as qualified as the competitive bids and his risk of terminating the deal is no higher. No, that’s not true! I am actually tasked with convincing the seller that my buyer is LOWER risk and MORE qualified. I love a challenge!
The buyer and I spent many a weekday afternoon shopping mid-century modern homes in Arvada. He needed a place that was perfect for his work-from-home lifestyle, safe and fun for his 2 cats and convenient for him to get to Denver on the weekends using public transportation. At any given time there seemed to be 4-5 houses for sale. We could rule out 3 of them based on condition and location alone and most weeks we submitted an offer on “the one” that fitted his needs the best.
Arvada is booming, FYI! We ran into other agents and clients sharing our showing window constantly and feedback from listing agents following rejected offers told us that we could expect a minimum of 6-8 competitive offers each time we sought to get a contract accepted.
I’m not going to go into the details here because that compromises the “edge” I bring to my clients real estate negotiation, but needless to say I was gathering tips and tricks from every one of my buyers successful and rejected offers, also from experience on the other side of the table. My listings were all receiving multiple offers and I was noting all the tips and tricks that other agents were using to stand out for the crowd or wow the seller. Then I was incorporating all of what I learned into every offer I wrote for my FHA buyer.
In June my buyer informed me that he had not renewed his lease, which expired in late July. He assured me that he had every faith that I would get him into a new place and he would not end up homeless. He told me the management company of his current residence has already showed and leased it to someone else.
I’m not going to lie to you; this was a serious situation and I was feeling like maybe he had too much faith in me!!!
Then came the house that changed everything. We – us and the other 5 agents with buyers in tow – shuffled through a well maintained home on a quiet cul-de-sac in the perfect “bike to the new light rail” location. Downstairs, an office space lay in wait for him. Outside a cute back yard that had been diligently tended, spoke to him and he began to see his cats frolicking there. It was move-in ready, with potential for improvement later and the price was right for offering a bit higher… As you do in this market.
In went our offer and supporting documentation (part of good real estate negotiation) and we waited patiently for reply.
The night that listing agent called me to say that the sellers connected with my buyer and his offer, was a highlight of the year for me. I have many buyers and most are in price points well above this one, but all that means nothing compared to making a call to a friend who has unconditionally trusted me to find the right house, for the right price, despite the obvious challenges in a very competitive market, with a deadline looming.
Here is how the transaction played out. Everyone went the extra mile for each other. It wasn’t just smooth… It was generous, caring and an experience that will forever change my perspective. At no time did I feel we had “sides” of the transaction. Every milestone along the way was a team effort. There were no demands, just offers of help, offers of compromise. The lender got the deal done WEEKS ahead of time, with no drama. The sellers, who had asked for longer possession, came back and gave early possession to facilitate my buyer’s end of lease predicament.
At closing the buyer found out that there had been 15 offers on his house. FIFTEEN! My FHA buyer, needing an FHA appraisal (it’s more complicated than a regular one and involves an inspection) won a massive bidding war…And he wasn’t the highest priced offer either! We had won with a timeline, a strategy and the real estate negotiation expertise to compete effectively. (Plus I had thrown a pinch of salt over my shoulder, crossed my fingers and made a wish upon a star!)
It brought tears to my eyes the day he called to thank me. Still does.
It couldn’t have happened to a more deserving, faithful guy. I’m so grateful for my life, my clients, the experiences that rock my world and restore my faith in humanity, I can’t even begin to tell you.