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Seller Mastery Guides
Step 5: Oers and Negotiations

Win-Win Negotiation Tactics and Tools
Roger Higle
Seller Mastery
v1.1 2008 Keller Williams Realty, Inc.
Notices
While Keller Williams Realty, Inc. (KWRI) has taken due care in the preparation
of all course materials, we cannot guarantee their accuracy. KWRI makes no
warranties either expressed or implied with regard to the information and programs
presented in the course or in this manual.
Material excerpted from Te Millionaire Real Estate Agent and SHIFT: How Top Real
Estate Agents Tackle Tough Times appears courtesy of Te McGraw-Hill Companies.
Te Millionaire Real Estate Agent is copyright 20032004 Rellek Publishing
Partners Ltd. SHIFT: How Top Real Estate Agents Tackle Tough Times is copyright
2008 Rellek Publishing Partners Ltd. All rights reserved.
All other materials are copyright 2008 Keller Williams Realty, Inc.
Printed October 2008.
No part of this publication and its associated materials may be reproduced or
transmitted in any form or by any means without the prior written permission of
Keller Williams Realty, Inc.
Step 5: Offers and Negotiation
Table of Contents
WHERE YOU ARE TODAY .......................................................................................1
OVERVIEW...........................................................................................................3
THE OFFER PROCESS ............................................................................................5
RECEIVE THE OFFER .............................................................................................6
Receive Preliminary Call ...................................................................................6
Receive Written Oer .......................................................................................6
Tank the Buyers Agent ...................................................................................7
SUBMIT THE OFFER ..............................................................................................8
Revise Your CMA .............................................................................................8
Submit the Oer to Your Seller ........................................................................9
Moment of Truth: Accept, Counter, or Reject ................................................10
MULTIPLE OFFERS AND LOWBALL OFFERS .........................................................11
Multiple Oers...............................................................................................11
Lowball Oers ............................................................................................12
RESPOND TO THE OFFER .....................................................................................16
Accept ............................................................................................................16
Counter..........................................................................................................16
Reject, but Invite a New Oer ........................................................................17
Reject Outright ..............................................................................................17
NEGOTIATE .......................................................................................................18
Top Ten Negotiating Strategies .......................................................................18
Negotiation Review ........................................................................................22
Negotiation Review: Suggested Answers .........................................................24
Inspection and Financing ...............................................................................25
Contract Content Tips ...................................................................................27
Seller Mastery
VERIFY AND COMPLETE THE CONTRACT ................................................................30
MY ACTION PLAN ..............................................................................................32
ADDITIONAL RESOURCES .....................................................................................33
Further Reading .............................................................................................33
Further Study .................................................................................................33
Accountability Tools .......................................................................................33
NEXT UP ..........................................................................................................34
Step 5: Offers and Negotiations
v1.1 2008 Keller Williams Realty, Inc. 1
Where You Are Today
Although outstanding customer service needs to ow through the entire
relationship with your seller from day one, a steady hand is called for when an oer
is presented, and afterward.
Step 5: Oers and Negotiations zeroes in on the contract for sale process, paying
special attention to contract points and process steps that may well need to be
negotiated between your client and the buyerthrough you and the buyers agent.
Tis is another key juncture at which business is won and lost. Every seller wants
to win, and so does every buyer. You must be the master of the win-win solution.
Strategies and scripts in this guide are designed to help you get to win-win, and to a
closing that meets your clients expectations.
Before you get started on Step 5: Oers and Negotiations, test your knowledge on
what you read in Step 4: Servicing and Marketing.
Name as many of the nine tips for eective communication as you can. 1.
1.
2.
3.
4.
5.
6.
7.
8.
9.
What is the importance of the distinction between brand and targeted 2.
property marketing?
Seller Mastery
2 v1.1 2008 Keller Williams Realty, Inc.
What does accountability mean when applied to managing marketing 3.
budgets?
Twelve fundamental property marketing activities are mentioned in the 4.
Guide. How many can you name?
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
A n s w e r s :
B l o c k t i m e f o r c o m m u n i c a t i o n w i t h c u s t o m e r s ; l e a r n c o m m u n i c a t i o n 1 .
p r e f e r e n c e s ; m a t c h s t y l e ; a l w a y s u p d a t e ; b e p r o m p t ; n e v e r t a l k d o w n ; k e e p a l o g ;
d e c i s i o n m a k e r f o c u s ; g r e a t a t t i t u d e
B r a n d m a r k e t i n g f o c u s e s o n t e l l i n g y o u r u n i q u e s e l l i n g p r o p o s i t i o n a n d c r e a t i n g 2 .
a s e n s e o f g r o w i n g m a r k e t s h a r e t h r o u g h m e d i a e x p o s u r e ; p r o p e r t y s p e c i c
m a r k e t i n g p r o m o t e s t h e f e a t u r e s , b e n e t s a n d p r i c e o f s p e c i c p r o p e r t y t o a t a r g e t
s e l l e r p r o l e
I t m e a n s m e a s u r i n g a n d t r a c k i n g t o b e s u r e y o u r m a r k e t i n g p r o g r a m s a r e 3 .
p r o d u c i n g a r e t u r n o n i n v e s t m e n t t h a t m a k e s s e n s e f o r y o u r b u s i n e s s p l a n s
b o t t o m l i n e
C M A R e l o o k s ; M L S a n d K W L S ; S t a g i n g ; P r o p e r t y I m a g e s ; T o u r s ; O p e n H o u s e ; 4 .
N e i g h b o r h o o d n o t i c a t i o n s ; I V R ; F l y e r s ; H o m e M a g a z i n e s ; E m a i l B l a s t s ; B u y e r
F e e d b a c k
1. Lead Conversion

Capture

Connect
Close Appointment
2. Prelisting

Research CMA and
Prep Packet

Prepare Body and
Mindset
3. Listing
Consultation

The Front Door

The Walk-through
The Kitchen Table
The Close
4. Servicing and
Marketing

Listing Service Systems

Marketing Systems
5. Offers and
Negotiations

Receive Offers and
Negotiate
6. Contract to Close

Complete Contract
to Closing

Touch Follow-Up
7. Postclose
Systems

Touch Systems
Client for Life

The Seller
Service Cycle
You
Are
Here!
Te Seller Service Cycle
Seller Mastery
Overview
Tis step, and guide that goes with it, is placed at what feels like a logical place in
the Seller Service Cycle. Of course, any discussion of negotiation overlaps with
other parts of the processlike the Contract to Close step, where inspections,
incentives, and more may be negotiated with the buyer. Negotiations can happen in
the appointment setting and listing consultation steps too. In this guide, the focus
is on negotiations that complete the execution of a contract for sale.
Also, your negotiation skills may be tested in earlier phases of the listing cyclelike
in the appointment-setting phase, or in the listing consultation, when sellers may
have demands about nancial details or service terms that need to be settled before
the relationship can continue.
As with appointment setting, the CMA, and the listing consultation, there is a
corresponding video for this step, Oers and Negotiations. Tis particular video is
the only one shared between the Seller Mastery and Buyer Mastery courses. Te
reason: it includes multiple dimensions of the contract negotiationthe discussions
between buyers and sellers agents, but also the parallel conversations that happen
between the agents and their respective clients.
Be sure to watch iteither before reading further, or after youve nished this
guide. You may want to do both!
KWConnect
Te Oer Process
Your hard work on the marketing and preparation of the home has nally paid
oyouve got an oer! Now what do you do?
Lets talk through the delicate process of helping the seller and buyer come together
to achieve a win-win deal and get the home sold. Your role is to keep the process
moving, to make sure your client gets all the information you receive as quickly as
possible, and to seek a win-win deal for both your sellers and the buyers.
Here are the rst steps youll encounter. Teyll result in either a dealor no deal.
Like receiving a signed listing agreement, getting a signed contract for sale is surely
a moment of truth.
Seller Mastery
Receive the Oer
Receive Preliminary Call
Buyers agents often call the listing agent before they present an oer to make sure
that you are still accepting oers. Tis call is great practice for buyers agents and a
moment you can also use to:
Start relationship building with the buyers agent
Uncover information about the buyer that may be helpful to your seller as
negotiations progress
Head o potentially unreasonable oers by coaching the buyers agent
about where your clients are coming from. For example you can say, Im
delighted to hear an oer is coming and I know my sellers will be too. Can you
tell me whether it will be a full-price oer? Id like to prepare my clients mindset
so we can move ahead quickly with you on any reply they decide to make. Or,
Its great to know your oer is coming. When will we be receiving it? Teres been
a lot of activity and interest in the property lately.
Receive Written Oer
Always get your oers in writing. In some states, oers are legally required to
be in writing, whether by email, fax, or original copy. Regardless of the legality
in your location, you should make it a practice to require written oers in your
business. Verbal oers are more prone to misinterpretation and misremembering.
In addition, agent Terese Anderson, Orlando, Florida, points out that written
negotiations are less emotionally charged than verbal ones. Its easier to negotiate
whats in writing than when things are said verballyyou can step away from it a
lot more easily.
Some agents prefer to deliver oers by hand, but fax and email oers are
increasingly becoming the norm. Te critical thing is to be sure you have a
veriable, printable record of the time and date that the oer was sentand the
transmission time and date for any subsequent counters.
Tank the Buyers Agent
Its a good business practice to call the agent to thank the buyers for the oer.
When you thank the agent, let the buyers know that the sellers will review it and
respond soon.
Commit, as accurately as possible, to the day and time your sellers will respond
to the oer. If there are logistical reasons (seller traveling, on vacation, out of
touch) that impact their ability to reply, let the other agent know right now! Most
contracts include a provision for the buyer to state a specic reply deadline. In
many states, the sellers failure to comply can jeopardize or cancel the entire oer.
Be careful.
Courtesy and good communications from the start are relationship-building
opportunities that will likely serve you well when the going gets tougherduring
negotiations.
Seller Mastery
Submit the Oer
An oer, once physically received in writing from the buyers agent, must be
submitted to your client with all due speed. Before you do that, however, there is
one other critical step to take. With all the prework you did in the prelisting CMA
phase, this can happen fast, but its very important.
Revise Your CMA
Before you present the oer to your clients, revise the CMA for them so that
you and the sellers can review the homes current position in the market. Tis
information will help your clients decide whether or not it would be too risky to
attempt a counter, and what sort of numbers they want to use if they do counter.
Marlene Rakow, an agent and Team Leader in Columbia, Tennessee, points out that
the sellers have to consider more than just price. Te buyers may want the sellers
to pay for inspections or closing costs, for example. To give her clients some clarity,
Marlene says, I try to prepare something that puts the entire dollar amount down
just the way the contract stands, with the asking price, whatever concessions are
being asked, even the repair amount. I do all those things so that my sellers can
actually look at the cold, hard gures to see where theyre going to be if they accept
that price, or if we need to adjust it a little bit.
Revisiting My CMA
Make note of issues you can avoid, and help your seller in the
process, by revising your CMA before bringing them the oer.
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Submit the Oer to Your Seller
In the worst case, dismissing an oer out of hand can put you at risk of a lawsuit.
Its always smart to submit the oer to the seller as quickly as possible. Some state
contracts actually have some kind of pursue with all due speed or speed is of the
essence language built in. Linda Paolino, Marco Island, Florida, explains, I dont
want to dillydallyif I get the oer at eight in the morning, I will be with my
seller at nine that same morning, if possible. Im not going to wait until the next
daythe buyer could nd another house and withdraw the oer. So I want to go
back and forth as quickly as I can to make the deal come to fruition.
Truth
Always submit all oers to your seller. Never reject an oer
without consulting with your sellers rst.
Always be enthusiastic and nonjudgmental. Remember that the rst oer you
receive is usually the best one you will see. For this reason, its wise to try to work
with that rst oer. Set the stage for making that rst oer work by submitting it
with the mindset that you can make it work. Dont tell your clients that you think
its a disappointing oer. After all:
You want them to enter the di cult negotiations phase with as much 1.
enthusiasm and positive outlook as possible.
Your clients may be surprisingly pleased to get the oer, so dont give them 2.
the idea that they should be dissatised.
Some top agents carry this principle even furtherthey not only try to work with
the initial oer, but they discourage their clients from countering if the oer is at
all reasonable. Dianna Kokoszka, president of MAPS at Keller Williams Realty
International, has a script that she uses on her clients: If you were going to go to
Vegas, would you place a $250,000 bet in hopes of gaining an extra $5,000? Or would
you just walk on past the gambling casino? Because thats what youre talking about.
Youre talking about losing $250,000 on the spin of a wheel that theyll say yes. Now
Im not trying to work for the buyer; I work for you. And my job is to tell you the truth.
Tat is what you want, isnt it?
Truth
Above all, a good agent focuses on being calm and professional.
You can even use your calmness as a safety valve for your clients. Te Parrish Team
always makes sure they let their clients give vent to their emotions. Chip Parrish,
who heads his team in Columbus, Ohio, recommends, Give them the courtesy
to get mad if they need to get mad, or scream for happiness, or be oended, or
whateverjust stay out of their way for a second.
Seller Mastery
At the same time, make sure you dont add to their emotions. Let them express
themselves, let them know that their feelings are reasonable and understandable,
and then move on.
Moment of Truth: Accept, Counter, or Reject
Once theyve received an oer, your sellers are at a moment of trutha crossroads
in the listing process. Tey have to choose whether to accept, counter, or reject the
oer.
Top agents counsel that you remind them they should either accept or counter, not
reject. You have already primed them for this strategy in the course of your listing
consultation, and you should remind them now. Te longer a house sits on the
market, the less it usually sells for, so unless youre in a really brisk sellers market,
they cant really aord to waste a potential buyer.
Together with your clients, take a deep breath and look around. Help them
assess the market and their position so they can decide what path to take on the
negotiating crossroads. Ten use your expertise and negotiating ability to make that
path as protable for them as possible.
Your clients should always perceive that you are working toward a win-win solution
that allows them to move forward with their lives.
Keep them in the game. Remind them that there can be no deal without a reply
from them. Unless they are swamped with multiple oers, the theory and best
practice at this point is nd out what can be negotiated.
Countering is particularly risky in a buyers market, when the buyers have many
other homes of comparable value to choose from.
When Ben Floyd, Edmond, Oklahoma, is facing a buyers market or a long average
DOM, he uses a dierent strategy to remind his sellers of the economic risks of
countering. He points out that there is a real possibility that their home will sit
for another month or more, and he asks them what their monthly payment on
the house is. Ten, Ben subtracts their monthly payment from the dierence. Tis
shows how much the sellers would be coming down from their asking price with
this oer versus how much less they would net after a months delay. Often, the
dierence is negligible, and the sellers will decide that its in their best interest to
accept the oer. Heres an example:
Listing Price: $230,000
Oer: $228,000
Dierence: $2,000
Monthly Rate: $1,500
Real Dierence: $500
Multiple Oers and
Lowball Oers
Tere are some situations that arise during the oer period that require special
handling. Te two most common are receiving multiple oers and receiving lowball
oers.
Multiple Oers
If youre lucky enough to receive multiple oers, you have the chance to get your
sellers a much higher price for their home, possibly even above the asking price.
First, you should let all the potential buyers agents know that there are multiple
oers, and suggest that they submit their highest bid. Ask them to present their
oers by a certain date, and let them know when your sellers will respond.
Remember, too, that the seller shouldnt necessarily choose the highest bidother
aspects, such as repairs, move-in date, and closing-cost issues, may be involved.
Help your sellers analyze all aspects of the deal to choose the oer that is best for
them.
While this is the sort of situation agents dream about, it is important to remember
that there can be ethical pitfalls. Te best way to avoid bad feelings, broken deals,
and litigation is to be as forthright as possible.
Dont let your personal benet aect which oer you encourage your client to take.
Steven Gutstein, a top agent in Andover, Massachusetts, advises, Always comply
with the licensing rules in your state and with the NAR Code of Ethics. You
should always disclose all relevant facts to your client everything that you know.
For example, if agent X is representing a buyer who makes an oer on your sellers
house, and you encourage the sellers to accept that oer even though it wasnt
the best among multiple oers, you may be guilty of a breach of your duciary
duty to your seller. Always explain all options to your client and let them decide!
Otherwise, you may be acting unethically and breaching your contractual duty to
your client.
Seller Mastery
O
ne of the potential and unanticipated pitfalls for the seller, when
working with an oer or multiple oers, where the oered price
exceeds the list price, is that the house may not appraise for the
higher sales price. Consequently, the buyer may not get their nancing and
opt out of the transaction. Steve Gutstein suggests that, with the prior
consent of your seller, you may be able to add a clause in the
contract that says: Tis sale is NOT subject to termination for
failure to obtain nancing based on the appraisal, so long as the
property appraises for at least the list price. After all-we did not
advertise that the house was worth more than asking and the buyer
should bear some responsibility for bidding the price up. If we
advertised that house at $500,000, and the winning bid was
$530,000, it only has to appraise for $500,000 to prevent the buyer
from opting out under the nancing contingency clause. Te buyers
may simply need to come to the closing with more cash.
Some local and state real estate boards have prescribed some very clear guidelines,
and even paperwork, surrounding the multiple oer situation. Be sure you know
your local rules of the road for handling these potentially sensitive situations.
Lowball Oers
Low oers can be tricky because they often result in one or both parties becoming
oended and obstinate. Everyone has ownership in the oer, so it is easy for the
people involved to feel personally attacked and defensive. Te homeowners can get
mad because they feel insulted. Te other agent will get oended if you let them
know how your clients reacted. And the buyers may well be oended if they feel
they made a good faith oer or if they cant aord to spend more. And those bad
feelings can make the contract-to-close process di cultif the deal goes forward at
all.
Truth
A low oer is just an invitation to negotiate.
All this anger and angst can be a real waste of everyones time and energy because
most low oers can be negotiated higher. In fact, what clients often dont realize is
that a low oer is simply an invitation to negotiate.
So when you are in this situation, summon your professionalism and be poised
to act with all the courtesy, warmth, and composure you can mustertoward all
parties.
I dont care how
low the offer is.
As long as you can
remain neutral
and the voice of
reason between
all the parties, it
makes it so much
easier. I have heard
so many stories
about negotiations
becoming
adversarial. In
my world, there
is absolutely no
reason for that
whatsoever.
Jixxiiii Baixis,
Ariaxra, Gioicia
Here are some things to keep in mind:
Counsel Your Clients
Many agents tell their clients, Dont be mad at the buyer who made an oerbe
mad at all the people who have looked at your home and didnt bother to make
an oer. Leigh Gillig, an agent at Spring Hill, Tennessee, likes to help her clients
reframe the issueshe helps them see that the buyers arent insulting the house;
theyre just trying to save money. Lets think for a second. If you were looking to buy
a house right now, would you oer full price? You would do the same thing these buyers
did because you want to see what you can get.
Leigh says that her clients usually admit, Tats right, Leigh, wed do the same
thing. Once shes taken the anger out of the situation, she can guide her clients to
work on a counteroer and bring the selling price closer to the asking price.
Communicate with the Other Agent
Top agents seek cooperation and explore all avenues to get a transaction done on
terms that are acceptable to their client. If, as a listing agent, you receive a lowball
oernever dismiss it out of hand unless your client has instructed you to do so.
Instead, Steve Gutstein suggests the following initial response to the buyers agent:
Recognizing that you have submitted an oer that is $50,000 o our asking price, lets
see if we can work together and nd common ground to make this thing work. Are you
okay with that? Tis suggests a willingness to work as professionals to get the deal
done without suggesting that you would compromise your clients position. It
opens the door for negotiation.
Steve says: I am letting the buyer know that we are not insulted and we are willing
to discuss options. Never let your ego or your wallet interfere with your duciary
duties. Perhaps, in the end, the buyer will pay full price, so why kill the possibility
for a deal. Tat is in the best interest of your client.
Sometimes a direct approach can help you understand the buyers position a
little better. Steve Schlueter, a top agent and owner in Round Rock, Texas, uses
a technique he calls the inch to prod the buyers agent into being a little more
forthcoming. First he thanks the agent for the oer. Ten he says to the buyers
agent: I am really a little concerned. I have really pushed the Seller on the price, and I
am just concerned that she is going to have a hard time with this oer. Can you tell me
what you are looking at that justies $10,000 below what we already believe is a great
value?
Steve deliberately lets the buyers agent see his misgivings about the oer. Te key,
however, is that he does it in a courteous and nonconfrontational way. He gets
great results from this approach.
He says, You know what they tell me sometimes? Well, my client just felt like
they needed to try a little lower to see. So Im learning that the lowball oer was
just a starting place for them.
Seller Mastery
C
indy Dickerman, an agent and owner in Exton, Pennsylvania subtly
investigates the buyers nancial situation when she calls their agent
to thank him or her. She says, Wow, you know, you did just a great
job writing this contract, and I really appreciate the time you took to show
the house and write the contract. But it looks like its based on the
preapproval, and given the oer, it kind of looks like they really cant
aord this house or this area. I do have another house listed over on
123 Main Street and its priced at $269,900maybe you should go
show them that. And the buyers agent will say, Oh, no, they can
aord it. So Ive just gured out that they just wrote the oer low to
see what would happenand the agent just tipped their hand and
didnt realize it.
Remember that where direct questions wont work, asking questions
indirectly often allows you to nd out what you need to know.
Negotiate Low Offers
If you and your client decide to counter a lowball oer, balance the risk of losing
the buyer with your clients need for a fair price. Consider your competition and
the buyers chances of getting as good a deal as you are oering them elsewhere.
When an oer is very low, bear in mind that the buyers, or their agent, may have
limited negotiation experience. Brad Reeser, Edmond, Oklahoma, is a veteran
listing agent. Brad points out that many buyers experience is limited to the
occasional car purchase.
As a result, he says, they have a tendency to try to be tough at rst and then cave
in. For this reason, his strategy is to counter at close to full pricea counter thats
not a rejection, but certainly isnt showing any of your hand. Normally, when
you get a low oer, thats what theyre hunting for. When dealing with relocation
companies in particular, Brad has found that the countering process often takes
several steps, but by the end of the negotiations, the contract price is often very
close to his clients target price.
Accept Your Clients Decision and Remain Calm
All the good advice in the world wont convince some sellers to accept or counter
a lowball oer. To stay sane and professional, agents need to detach themselves
from the outcome as much as possible. Your goal is to give the sellers the necessary
information to make a sound decision. Jennifer Barnes of Atlanta, Georgia, notes,
While the clients thought processes may not always be clear and concise and well
thought out, if you think theyre crazy for not selling it, dont say it. Youre never
going to persuade them if you insult them.
Te decision ultimately rests with them. When Dianna Kokoszka knows that her
clients are making a risky decision, she asks them to recognize the fact in writing.
You know what? I could be wrong, Ive been wrong before, Im not perfect, I just want
you to initial this note that says Ive warned you what might happen.
Dianna says its not so much a legal move as a psychological move that prevents her
clients from blaming her and impresses upon them the gravity of their decision.
Seller Mastery
Respond to the Oer
Your client has three options in how they respond to an oer:
Accept 1.
Counter 2.
Reject, but invite a new oer 3.
Accept
If your clients decide to accept the oer, they should sign the contract and you
should return it to the buyers agent immediately. Standard purchase contract forms
almost always include a due haste provision of some kind, and its both your job
and wise advice to heed that language. Deals can be lost simply because an agent
did not get back to someone with good news.
Counter
If they do not accept, hopefully your clients will decide to counter the oer theyve
received. If they do, you should write the changes onto the contract document and
have the sellers initial each change, as well as sign the contract itself. Te contract
will not be valid until the buyers have initialed each change as well. Note that a
single changed number can often have a cascading eect that results in many other
numbers changingeach changed number needs to be initialed, not merely the
original change or the nal gure.
In some states, there is a particular place on the contract to indicate whether it is
accepted, countered, or declined. For contracts that lack this element, its smart to
write a cover letter that summarizes any changes youve made.
Steven Gutstein oers the following caution about counter-oers: All too
often, in an eort to save time, counters are verbal. In the end and as quickly as
possible, they must be reduced to a writing to protect all parties and preserve the
legal sanctity of the transaction. Always keep accurate and timely notes for each
transaction as proof of the timing and accuracy of all relevant events. Tis will
better protect you should you face legal action or arbitration such as for procuring
cause.
Once we get
a contract, we
have something
to negotiate. If we
dont get one, we
have nothing to
negotiate.
Bon Axiiis
Cuaxriii\, Viicixia
Reject, but Invite a New Oer
Your sellers also have the option to decline the oer, but invite a new oer. Tis is
less commonand more riskythan countering, but may appeal to clients who
are uncomfortable putting their signature on a counteroer. Formally rejecting
an oer while verbally inviting a better one is a tactic that can work. It sends a
rm message on your clients price position while not closing the door to more
conversation.
Reject Outright
In consultation with your sellers, you may conclude that one of the multiple oers,
or a lowball oer, is simply not worth further consideration. In a multiple oer
situation, one or more of the multiple oers may simply be priced too far below the
others, or have closing time requirements, or other terms, that just dont work for
your seller. If you have one or more other multiples that dont have these problems,
you may choose to recommend declining to negotiate them further. You should
simply reject these oers and communicate directly with the buyers agent that
your purpose is not to invite a new oer. Write a cover note to this eect and send
it back with the unsigned contract. Even then, you may get another oer from the
same buyerone oer your sellers can work with.
Seller Mastery
Negotiate
Top Ten Negotiating Strategies
Whether your clients accept or counter the oer, you will almost certainly end up
conducting some negotiations, either before or after the inspections, or both. Here
are strategies you can employ to make sure your clients get what they need.
1. Always be courteous and professional, even if no one else is.
A key factor in the process is the relationship between agents. In the research for
this project, nearly every Mega Agent who was interviewed on the negotiation
process emphasized the importance of courteous, professional relations between
agents.
At the same time, agents talk about how often their colleagues fail to meet this
standard of polite professionalism. Angry, egotistical negotiators are less likely
to accomplish their goals, less likely to close deals, and very often develop a bad
reputation among the agent community that they have to work in.
Dianna Kokoszka says that she has worked with many agents who felt like they had
to have the last word. She asks, Is there anything else you think I should be aware
of? And when they nish venting, she tells them, Okay, thank you. Kokoszka
advises, Dont argue. Dont have to get the last word. Youre a businessperson. Act
like you would expect an employee of Nordstrom to act.
Your professional demeanor has benets beyond helping to secure this particular
deal. Leigh Gillig says, I treat other Realtors like they are prospective clients.
I want them, to love showing my listings. I am very nice to them. I am very
professional with them and they know that when they bring a contract to one of
Leigh Gilligs listings, theyre going to be tickled that I am on the other end of the
deal.
T
op agent and owner Rick Hale of Atlanta, Georgia, sees his good
relationship with the other agent not only as a way to serve his clients
needs, but also as a good recruiting tool. He says, I always make a
point of complimenting them on a great job in front of their clients and make
sure that their client knows that they really fought hard for them and
that Im respectful of how they do their business. And that alone
pays huge dividends. Plus, its a good recruiting tool down the road
because they really appreciate how you do your business, and theyre
more intrigued by what were doing and how were dierent. Hales
professionalism helps him grow his business in more ways than one.
2. Detach yourself from the outcome.
Lets face it, the big outcome has a paycheck attached, so its natural for an agent to
be concerned that things go well at every step of the negotiation and contract-to-
close portions of the transaction.
Detachment is an acquired skill that will pay dividends over the long haul. When
you watch the accompanying Oers and Negotiations video, youll see two top
agents role model this detachment.
3. Focus on your clients goals.
Te best way to avoid the problem of being too attached to the outcome is to focus
instead on what your clients needs are. Russell Rhodes, a leading listing agent in
Phoenix, Arizona, uses that strategy. What I found is if I start getting my emotions
and all that other stu into it, then it becomes more about me and the other agent
and whos going to win. And the reality is that you win by accomplishing what
your client wants, not what I want. And so I just really try to remove myself from
it, so its less of a contest between me and the other agent. What Im trying to do is
to stay focused on what my client wants.
Russells advice echoes statements youll read and hear throughout this course
always make it about your client, the seller, not about you and your opinions or
concerns. Yes, theyre paying you for your input, but at the end of the day, its about
their property, their money, and their familynot your commission!
4. Gather as much information as possible.
Truth
Negotiations are often decided by who knows more about what
the other side wants.
Te more you know about the buyers true motivations and nancial situation, the
better you can serve your clients. In fact, its fundamental to negotiations. Try to
nd out as much about the buyers as possible. Steven Gutstein recommends, You
have to get a picture of what is important to the other side. If you can do that,
then you have a framework to help you move forward, and you know what you can
give them to get what you want. As a result, negotiations are often decided by who
knows more about what the other side wants.
KWConnect
Seller Mastery
C
hristi Davidson is a veteran agent in Austin, Texas, with a banking
background. She gures out as much as she can about the buyers
agents as well as the buyers. I would say the two main values I oer
my customers are my negotiation skills and my relationship with other
realtors. Te inspection period is when you lose most of your contracts, and I
do not lose contracts. And its because I nd out who Im working
with. How does this Realtor work? How do their buyers work?
And I nd all that stu out through the contract process, whether
the other realtor knows they are disclosing it or not, I am nding
it out. Whats most important? Who is the decision maker? What
does the husband care about? What does the wife care about?
Davidson uses the information she gathers to make sure that
everyone wins. Te payo is that buyers agents are more willing to
work with her listings because they know that she does right by
the buyers as well as her sellers. As Davidson says, Tis tactic of gathering
information and using it fairly is absolutely huge.
Gary Gentry, an Austin, Texas, Mega Agent, and leader of a team, works hard with
his group to make sure everyone who communicates with buyers agents has a script
in mind to learn as much as possible about the motivations of the buyer, and the
buyers agent. Being a good duciary means working harder at negotiation than a
lot of agents do, Gary relates. We have a set of probing questions we always ask
them. If they are good agents, theyll know what not to tell us. Ethically, we should
not seek an unfair advantage, but on the other hand, our clients are entitled to base
their negotiations on the best information we can get about what the other party is
thinking and feeling.
5. Give away as little information as possible.
By the same token, you need to be careful about discussing your clients needs
or motivations with the buyers agent, as that could give them the tools to drive
a harder bargain. Steve Schlueter asks his sellers to refer all questions that could
have bearing on the deal to him. If the buyers ask, How soon can you guys be
out of here? How exible are you on time? he counsels his sellers to say, Yeah,
we are pretty exible, but why dont you take that up with Steve, my Realtor;
he is probably the person you should talk to about that. Schlueter explains the
risks: Lets say we have an oer that comes in $10,000 low. What would we risk
if we give them too much information? Tey are going to sense our urgency and
motivation and try to leverage it to their own benet. So the less information we
give them, the better o we are.
6. Explain where your clients come from.
On the other hand, sometimes explaining your clients situation can help the
buyers to be a little more reasonable when the negotiations have reached a sticking
point. Before you disclose anything, check with your clients about what they are
comfortable sharing. With their permission, you can explain to the buyers that the
sellers arent willing to leave a particular chandelier behind because they bought
it on their honeymoon in Venice, or that they cant vacate the house until May
because their daughter is staying with them during her pregnancy. Some agents like
to write a note to the buyers to help them understand the situation. Patty Ancona is
a thirty-year agent based in Barrington, Illinois. She says, If I can write an upbeat
letter representing the seller and myself with all the facts in a nice way, making their
Realtor look good and not putting them down in any way, then I have a better
chance of getting what my sellers want.
Agents often disagree on which practice is betterplaying it close to the vest, or
appealing to the other partys understanding. In many cases, the approach an agent
prefers depends on his or her personality. Figure out which style you can use more
naturally. Whichever choice you make, remember always to act in your clients best
interests.
7. Allow your client to be wrong with dignity.
You should never blame your clients or bad-mouth them to the buyers agent.
Dianna Kokoszka suggests, Even if your clients are upset or being quite di cult,
you never say, My clients are di cult, to the other agent. You always allow your
clients to have dignity and you treat them with respect. Tat doesnt mean the
client is always right; it just means you let them be wrong with dignity.
8. Keep a concession in reserve.
Hold on to a negotiation point such as a particular repair, an appliance or xture
to be included, an oer to pay certain closing costs, etc., that the buyers want but
the sellers dont care about. When the buyers negotiate for this item, your seller
can give it up without a pang, then use that concession to bargain for whatever the
seller truly wants.
The person who
has the most to lose
in a negotiation is
always the loser.
Suox Koxoszxa
Dixvii, Coioiaio
Seller Mastery
9. Keep the process going.
Sometimes you can keep things going by having a pep talk with the other agent.
When the buyers agent tells Bob Andrews of Chantilly, Virginia, that the deal just
isnt going to work, Bob replies, Agent to agent. What is it going to take to make
this work? Bob has more than twenty years experience as an agent, and other prior
sales background too. Hes always amazed at how much information he can reap
from this approach. Most of the time they will tell me their clients whole story
and where their come from is. And then Im not looking for a situation to take
advantage of someone, but Im looking for opportunities to make it work. You
know, What is the win? Maybe I can get them to come up a little bit, or I can get
my sellers to come down a little bit, and we can still make it work and keep it alive.
Sometimes its not to be, but youd be amazed at how many times you can make it
work by just asking the right questions.
10. Always look for a win-win deal.
Te best and most productive deals are the ones that are fair to all parties. Linda
Paolino says, Te buyer shouldnt have to lose too much, and neither should the
seller. So we always go in for a win-win situation. Win-win deals lead to
More satised clients
More repeat business and referrals
A better reputation for your use in your ongoing prospecting and marketing
Better relationships with other agents in your marketplace that may produce
more good results for your clients in future deals
Negotiation Review
How Both Sides Tink
Stop now to view a video on KWConnect called Seller/Buyer
Mastery: Oers and Negotiations. In the video, which relates to
both courses, youll have a chance to watch two agents:
Negotiate contract terms and conditions with one 1.
another on their clients behalf
Negotiate with their own clients to develop strategies 2.
and responses to the other sides position
Take a win-win approach 3.
KWConnect
Buyer vs. Seller Contract Concerns
Complete this table with your best take on typical major
concerns in these categories of the parties to a contract. Tink
about and jot down what you believe to be the primary point
of view (POV), the issues or concerns of each partyeach
step of the way.
Contract Element Buyer POV/Concern Seller POV/Concern
Price
Terms (Dollars)
Terms (Time)
Inspection
Postinspection Requests
Financing Status
Walk-Trough
Closing Statement
Signing Meeting
Possession/Occupancy

Seller Mastery
Negotiation Review: Suggested Answers
You just wrote down your thoughts about negotiation issues that can arise for the
buyer or seller in the basic steps of a contract-to-close process.
Te same chart is repeated below with suggested answers and comments collected
from top agents.
Compare this list to your own, and remember what you saw role modeled by the
negotiating agents in the video.
What have you added to your awareness of contract negotiations?
Contract Element Buyers POV/Concern Sellers POV/Concern
Price Did I oer enough to get a reply? If
accepted, will I feel good about the value Ill
receive with ownership? Will the property
appraise?
Will the price I nally receive allow me to
meet my goals for net proceeds, and my
plans for those proceeds? Will the property
appraise?
Terms (Dollars) Have I met any and all nancial
requirements for presenting a winning oer
(amount of earnest money, for example)?
Do the terms oered show me that this is a
serious oer?
Terms (Time) Have I accommodated any and all personal
time requirements for moving, or other
personal logistics? If Ive learned the seller
has urgent timing needs, have I sought to
accommodate them as well?
Same as Buyer.
Inspection Have I made clear what my repair issues are;
have I left room for any negotiation in my
game plan?
Can I agree to any reasonable requests and
still achieve my net nancial goals?
Postinspection
Requests
If any arise, have I made them clear to my
agent and done so promptly?
Same as Buyer.
Financing Status Are my agent and I taking full responsibility
to make sure my underwriting approvals
happen, and that my loan funds in a timely
manner?
Is my agent monitoring the underwriting
and funding of the buyers loan with my
best interests in mind?
Walk-Trough Is the home in agreed-upon condition, per
the contract?
Same as Buyer.
Closing Statement
Are the details of the preliminary HUD-1
complete, satisfactory, and accurate?
Same as Buyer.
Signing Meeting Are the nal HUD-1 details complete,
satisfactory, and accurate?
Same as Buyer.
Possession/
Occupancy
Has my agent asked for everything we know
to be relevant? Has the seller cooperated in
providing all necessary access keys, security
devices, gate and other codes, and manuals
covering appliances and other systems?
Have I turned over all needed access keys,
security devices, gate and other codes, and
manuals covering appliances and other
systems to the buyer?
Did you notice how often buyer and seller concerns track closely with one another?
Tis is what makes win-win solutions so doable for agents with the right mindset.
What Win-Win Negotiations Do:
Produce successful contracts that close, delighting buyers and sellers. 1.
Earn commissions for you; your hard work pays o when both sides are 2.
capable of giving and act it out in the negotiations.
Earn clients for life and future referrals that will help your business grow 3.
out into the future. As Gene Rivers pointed out earlier in the course, for
agents committed to mastery and to being in business for the long haul,
the referral is more important than the check.
Inspection and Financing
Teres plenty to learn with every aspect of a contract negotiation. Here are some
ideas that have the potential to smooth out critical places in the process where the
road can get rough, and where the contract is most at risk.
Preinspection Gives Sellers the Upper Hand
More and more agents seem to be embracing the idea of preinspection and
advocating it to their listing clients. Among other things, a preinspection report can
be an all-importantstress reducer.
Te idea is simple and straightforward. Instead of waiting with baited breath for the
results of a buyers structural, environmental, and other inspections, why not have
them done yourselfahead of time. Here are some of the benets to your client:
Know the issues: 1. Learn what may be wrong that needsxingand get it
done before the home goes on the market.
Know the costs: 2. Teres enough anxiety to go around in most deals
anyway! Take some of the stress out of the nancialunknownsthat
always accompany receiving a buyers inspection report. Either learn the
cost you may have to incur (depending on negotiations), OR choose to
incur the cost now and be done with it.
Add marketing power: 3. Add to the real and perceived value of your sellers
home by proudly displaying a copy of your positive inspection reports in
the home-marketing materials and in the home information book left in
the home for buyers to peruse.
Seller Mastery
Who Attends the Inspections?
Many agents are nding that, contrary to traditional practice, inspections
particularly the primary structural and systems inspectionare events that both
sets of clients should attend. From the sellers perspective, at a minimum, the seller
can assist the inspector in gaining access to key areas he/she might not otherwise be
able to get to.
One might argue, What they cant see wont hurt me, but thats a awed
argument. Inspectors like to display their conscientious conduct for all to see. Its
good for business. Tey are likely to react negatively to things they wonder about
but cannot see, or at least point out unknowns in their review.
Most inspectors paperwork carries disclaimer language that describes the limits
of what they can report. But even an inspectors verbal comment to their buyer
customer or the buyers agent during the inspection can lead to negatives for your
seller.
Being there can help more than it can hurt.
Read Financing Solutions: Improve Your Negotiating Power
Tats a long headline, but its a great message. Elsewhere in the course, weve
referred to this excellent guide as a resource for buyers and sellers.
Armed with the right information, sellers can be in a great position to help buyers
qualify to buy at all, or to buy with better terms than they might have otherwise
without seller assistance.
Sellers have choices when it comes to making their property more nancially
attractive. Tey can buy down interest rates, oer private nancing, and take
advantage of other national and local programs to attract buyers.
An Agents Guide to Financing Solutions was created by Keller Williams with David
Reed, a top mortgage broker and lending expert who has been published nationally
and appeared on radio and TV around the United States discussing home
nancing.
Get a copy, read it, and keep it handy as a reference guide for your business.
Contract Content Tips
Now that youve watched the KWConnect video Buyer/Seller Mastery: Oers and
Negotiations, take a minute to consider some important details about the content of
a sales contract.
Remember that all these essentials and details have the potential to become
negotiated items in the contract process.
Most contracts received from a multiple listing service (MLS) member agent these
days will come to you on a Contract for Sale form (its name may vary from one
location to another). Tis contract form is usually one that has been created by
your states Board of Realtors, working in cooperation with MLSs and local boards
where you sell. It will typically capture all the essentials and force the buyer and
your customer to complete, sign, and initial certain specic lines only.
Essentials
1. Include Two Clauses
Gary Keller says that agents should always make sure every contract contains two
conditions:
Te circumstances under which the contract will 1. become active (or in eect)
What the buyers must do over the course of the specied contract period 2.
for the contract to remain valid
Te rst condition gives you freedom to accept other oers, should they come
along up until the contract is delivered.
Te second condition keeps the contract from staying active indenitely. Without
these two conditions, a buyer could conceivably wait six months, then sign the
contract and sue you for having sold the house to someone else in the interim.
With these clauses, you make sure you have maximum freedom to maneuver and
explore other oers.
2. Make Haste
Once your sellers have responded and signed, return the contract documents as
promptly as possible. Te preferred method nowadays is to scan in the signed
contract and email it as a PDF le. Tis approach preserves legibility (unlike a fax)
and speed (unlike mail), while minimizing costs (unlike delivery services).
Seller Mastery
3. Watch Out For ...
Here are some more vital things to look for immediately. When you receive a
contract from a buyers agent, before you present it to your sellers, make sure it
contains:
Te oered price, earnest money, and down paymentand preferably a.
a copy of the earnest money check that will be provided on acceptance
Terms of nancing, or cash payment b.
Key time lines or deadlines regarding oer response, appraisers visits, c.
inspections, and replies to any repair requests
Te proposed date of closing d.
Te name of the title and/or escrow company handling the transaction e.
funds and title search
Descriptions of any attached or other accessory items that the buyer f.
wants included in the sale price
4. Pending Taking Backups
Remember, too, that when the sellers sign a contract, they should specify that
they are either pending or pending taking backups. You almost always want to
choose pending taking backups, since the possibility of other oers can become a
strong negotiating tool as well as a safety net.
Details
Be sure to examine the specics of the contract. Tese include
What items will convey or be included in the sale of the home
Appliances
Fixtures
Drapes
Garden art, etc.
Contingencies that would invalidate the contract if they were not met
Funding the buyers loan
Appraising for the contract price
Favorable inspection
Repair work
Particular lending or closing costs that will be covered by each party
Service providers requested by the parties
Title
Escrow, etc.
Signatures and initials in ALL the designated locations on every page
Protect the Buyer
A conscientious listing agent will also include contingencies that protect the
buyermaking sure that all sides get a square deal. For example, Gene Rivers,
Mega Agent from Tallahassee, Florida, recommends that the seller write in a
contingency covering the loans interest rate. He says, A really good contract says
the buyer will be qualied within ten days by a local bank at a prevailing rate
instead of just saying a buyer will receive a loan qualication. Say a buyer goes in
to buy the house, the bank says, Well, with your credit I can get you a loan, but
youre not A paper. Youre actually C paper. So its got to be 10 percent interest and
I can only do it for ten years. Well under that simple language in the contract he
can get a loan, so hes got to buy the house and take the 10 percent loan. Tat is
not a win-win. Youre forcing someone into something untenable just because you
can. But if the contract is properly written, the buyer wouldnt be forced to take
the ridiculous loan and buy the house. You need to make sure that all parties are
treated fairly.
Sloppy Language
Be sure to check the contract for sloppy language. If the buyer wants the seller to
perform repairs or work, make sure they spell out exactly what kind of work. For
example, if the buyer wants the seller to install a fence, they need to specify what
kind of fence; otherwise, the seller may interpret that to mean a 3-foot chicken wire
fence, when the buyer wanted a 6-foot privacy fence.
If your state allows an option period, make sure that the number of days requested
is reasonableabout ten days is normal.
You absolutely
need to make sure
you nail down
whatever the
parties believe
theyre signing. You
want clarity.
Gixi Riviis
Taiiauassii, Fioiiia
Seller Mastery
Verify and Complete the
Contract
Youve made it! Your seller and the buyer have nally agreed to the terms of the sale.
You need to review the contract for completeness. Celeste Dylla, an Austin, Texas,
agent who reviews many contracts every week, knows what common things to
watch for.
Initialed price changes. 1.
She says a common omission is initials next to every price change. Your
contract will have a sales price section that looks something like this:
Sales Price
Cash portion of Sales Price payable by buyer at
closing
$10,000
Sum of all nancing described below (excluding
any loan funding fee or mortgage insurance
premium)
$215,000
Sales Price (Sum of A and B) $225,000
When there is a change on one of these lines, it changes the numbers on the
other lines. Initials of the buyer and seller are required next to each change,
not just the sales price on the last line.
Veried addresses. 2.
Verify the buyers and sellers addresses are accurate and are their addresses
rather than an address for their agent. Celeste recalls an unfortunate
incident that was the result of the buyers agent listing her Market Center
address rather than the buyers home address. Te listing agent delivered a
required HOA document to the buyers address on the contract (the Market
Center). Te HOA document did not make it to the listing agents hands
and, therefore, the buyer did not get it. Having not received the HOA
document, the buyer wanted out of the contract. Te seller refused, saying
the document was delivered to the buyers address listed in the contract.
Clearly, the buyers agent was negligent in creating a barrier to getting an
important document to the customer and in not checking to see that all
addenda items were resolved. Dont let anything similar happen to your
clients! Check once, check twice, and what the heck, check a third time!
$
1
5
,0
0
0

-
A
J
F
$
2
1
0
,0
0
0

-
A
J
F
Signed receipt for the option money and/or earnest money. 3.
Tis is a signature that is separate from the portion of the contract that
states the option fee amount and duration of the option period. In addition
to those pieces of information, you need verication that the money was
received and when. A signature by either the seller or the sellers agent is
acceptable.
Copies of the sellers disclosure, and any other disclosures. 4.
Although it is poor practice, buyers are sometimes in situations where they
sign a contract before seeing the sellers disclosure. Te disclosure form may
reveal information that could aect what your customer is willing to pay for
a house. Te same may be true of environmental or other disclosures. Its
essential to get these disclosures together and keep copies with the contract.
Copies of the contract itself. 5.
Copy of the contract, including
All pages of the contract, initialed
Any needed nancial documentation or checks to escrow
Any and all addenda
Any and all inspection reports
Buyers inspection reply documentation of any requests
Be sure your client has a copy of the entire contract theyve signed, 6.
including all:
Pages of the contract
Copies of any nancial documentation or checks to escrow
Counters
Addenda
Inspection reports
Buyer inspection notice or reply (approval or additional requests)
Seller Mastery
My Action Plan
Dont put away this training guide without developing a plan to put what you have
learned into action! Review the key challenges listed below and assess your current
ability to meet each challenge on a scale of 15.
1 = I have no experience with this.
2 = I am not very good at this.
3 = I am pretty good at this.
4 = I am condent with this.
5 = I am an expert at this.
For any rating of 3 or below, write down the action steps you will take to increase
your understanding, build your skills, develop your condence, see greater results,
and take home more money! (Be sure you prioritize your actions. Keep in mind
that the dollar-productive activities are the ones you want to perfect before any
others.)
Challenge Rating Action Steps
My negotiation skills 1.
are strong. I have a basis
for comparison with top
negotiators.
I am working with an 2.
accomplished negotiator
who is coaching me and
holding me accountable
for skill improvement.
I am reviewing with a 3.
mentor or coach specic,
negotiated solutions
that provided a learning
experience for me.
I am seeking out 4.
independent negotiation
skill training sessions from
recommended sources.
Additional Resources
Further Reading
Communication
Fierce Conversations by Susan Scott
Journal of Marketing Teory and Practice, Volume 13, Issue 3, Summer 2005
article: Salesperson Empathy and Listening: Impact on Relationship Outcomes
Sales
Te Art of Selling by Tom Hopkins
Further Study
KWConnect
Negotiation with Dianna Kokoszka (Parts 1 and 2)
Accountability Tools
MAPS Coaching Programs
Converting Buyers to Dollars
Language of Sales
Scripts and Dialogues
Seller Mastery
Next Up
Your Progress Done
Introduction
Step 1: Lead Conversion
Step 2: Prelisting
Step 3: Listing Consultation
Step 4: Servicing and Marketing
Step 5: Oers and Negotiations
Steps 6 and 7: Contract to Close and Postclose Systems
Putting Mastery to Work
Read
this
next!

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