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Facilitator Instructions Facilitator Instructions

Facilitator Instructions - PowerPoint Presentation

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Facilitator Instructions - PPT Presentation

Facilitator Instructions Have paper available for the first what would you do exercise Print copies of the following for each attendee your regional Escalation Clause the Negotiating Scenario slide 3 ID: 772906

escalation offer clause 000 offer escalation 000 clause buyers listing price negotiating house win agent seller buyer terms highest

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Facilitator InstructionsHave paper available for the first “what would you do” exercisePrint copies of the following for each attendeeyour regional Escalation Clause the Negotiating Scenario (slide #3 ) the Negotiating Planner (slide #2) Winning Strategies with Multiple Offers

Price Closing Date Down Payment AppliancesConcessionsOther Client’s Name: _______________________________Date: ___________Property Address: _____________________________________________ Components Buyers’ Sellers’ 1st Counter 2nd Counter Asking Price on Property is $ of Offer Terms Terms Date: _____ Date: _____ Negotiating Plan Worksheet

ComponentsSeller ProfileBuyer ProfilePrice$550,000 reduced from $589,000 5 days agoPrefers to stay below $550,000 but approved up to $575,000 Condition Fully renovated, move in condition, decks needs TLC, not much curb appealWants move-in condition, light cosmetic work ok but not preferredMotivationDownsizing, already bought in SC, here until house sellsApt too small, 2nd child soon, lease up in 45 daysTerms Tired of trying, wants to close and get down south before winter, but “won’t give away the house”Put in a few low offers, out bid, has no time to waste now. Needs a place to live soon!Market Conditions: Absorption rate in area is 4.5 Average DOM is 100 Comparable property sold price is $540,000 - $550,000

Strategies to Win Multiple Offer Situations

Your buyer found the home of their dreams after 5 weeks of searching and losing 2 homes/offersThe house was on the market 2 daysThe listing agent said there are 2 offers on the tableLooking for highest and best by tomorrow In today’s market…

Break into groups and discuss the scenario on the previous slide. Write your responses to the following questions to be shared as a groupHow can you position your offer to win the house?Do you create a negotiating strategy with your buyer? What would you do? Allow 5 minutes for this exercise

Causes anxiety for you and your clients Just want relief (want answers)You Want a Remedy! Being a Buyer’s Agent in a multiple offer situation is the real estate equivalent of having your finger caught in the car window!

Avoiding Negotiating TrapsSteps to Prepare for a smooth Negotiation ProcessPractice using the Negotiating PlanBenefit of using the Escalation Clause for all parties.Dialogue to Present the Escalation Clause & Overcome push backBenefit of presenting the Offer in Person

Avoid These Traps! Assume that your buyers are aware of the market conditions Forget to prep your buyers about what to expect from a multiple offer situation Push your buyers to include any terms or remove any contingencies that they are not comfortable with – you’re looking out for their best interestsDONTAvoid Negotiating Mistakes

Forget to get your GSM involved in making your buyers’ financial qualifications as strong as possible Underestimate the power of emotional impact on the sellers Give up or get frustrated or E motionalForget that its all about your buyers and their terms! DONT Avoid These Traps! Avoid Negotiating Mistakes

Your RemedyEducate your buyers about multiple offer situations and what it will take to secure the home of their dreamsConduct your research on the sellers and the neighborhood Find out the terms and conditions that are important to the sellers and advise your buyers accordinglyDO Prepare to Negotiate

Your Remedy cont’d. Work with your GSM to make your buyers appear financially strong Coach your buyers to write a note to create an emotional connection with the sellersUse all of the resources available to you including the Price Trend Analysis, Escalation Clause, and your reputation to appeal to the sellers and the listing agentD OPrepare to Negotiate

Your Remedy cont’d. Let buyers understand what can go wrong, the sellers can do whatever they want . Remind your buyers to stay calm and try to be patientNot let emotions from other parties effect your negotiating strategyDO Prepare to Negotiate

Prepare Your Buyer for a Bidding War At your First Meeting Set your buyer’s expectations about the process Educate your buyer about the current market conditions Use the Enhanced PTA, local Absorption Rates and Escalation ClauseRemind them of the ferocity of the competition they’re facing and the reality of rising prices

What does HIGHEST mean? What does BEST mean?Why do we say HIGHEST and BEST when we negotiate on a property?

What is the HIGHEST Price for all parties? Is it the highest purchase price?OR Is it flexible based on other terms of the agreement?

Closing DateInspectionsItems Included Contingencies Shorter Length of time until fully executed contract Type of Loan – FHA vs Conventional Down Payment Source of Pre-approvalWhat are the BEST Terms for all parties?

Think Like The SellerYour offer needs to be as appealing to the Seller as possible. Here are five basic factors Sellers consider when evaluating offers:Net ProceedsDesirable TermsBuyer’s Financial QualificationsMinimal ContingenciesSubjective Factors But how do you know which factors the Seller is most concerned with?Win-Win Strategy

Thinking like the Seller is only half the job. Gathering information from the listing agent will enable you to make the appropriate recommendations to your buyers. What questions might you ask the listing agent ? How would you start the conversation?Win-Win Strategy

Build Rapport with listing AgentWHY? Makes negotiating easier Set the tone for a win-winYou both want to sell the house…“Let’s work together to get the job done”“Thanks for letting me show your listing at ____, what a great listing! My buyers are considering an offer, but I just have a few questions …”Win-Win Strategy

Don’t show your hand immediately Ask something about the property like…“Do you know where the property lines are? They are considering putting up a fence.”“Are the sellers leaving the ___ (shed, swing set)” “Does the school bus pick up on this street or in front of the house?”“Do you know of any upcoming assessments?” (Condo)

Uncover Seller’s ConcernsHave you had a lot of showings? Are there existing offers on the property?Have the sellers already rejected any offers?If so, were they close to asking price?Have they already purchased another home or are they looking for flexibility in closing? Are there any specific terms or conditions they would find attractive? Win-Win Strategy

“When are You and the Sellers available for me to present the offer?”What do you think the response will be?“Thank you, I’d love to meet with you at my seller’s house” OR “I’m just too busy to meet with you, just email me the paperwork”What other objections have you heard?Win-Win Strategy Close for the Meeting!

Don’t give up!Expect the push back and be prepared for it!

“I understand, but my buyer asked that I meet with you and the seller personally, in fact they signed an addendum requesting it. My buyers are on standby and have an inspector on speed dial! We could settle this tonight and order inspection tomorrow morning, ok?”Offer to meet with him/her and have a conference call with the seller.Offer to go to Listing Broker’s office to present in person to Listing Agent.Have your Broker call the Listing Broker. Would you try this?

Make Your Offer Stand OutHow do you write a strong offer? What does it contain?

5 Factors that produce a “good offer” to the SellerNet Proceeds Desirable Terms Buyer’s Financial QualificationsMinimal ContingenciesSubjective Factors

Write a Winning OfferNet Proceeds Highest sale price Assistance on closing costs to seller Buyer pays transfer taxBuyer pays Certificate of Occupancy InspectionBuyer will pay for seller’s mandatory testing (well water test)

Closing DateWhat items are included in the saleCondition of property (as is)How quickly can contracts get fully executed Cash Write a Winning Offer Seller’s Desirable Terms

Buyer’s Financial QualificationsAmount of Initial (good faith) DepositAmount of Down PaymentPre Qualification available with initial offerWell Respected lender Less than 30 day Mortgage Commitment No appraisal contingency No mortgage contingencyWrite a Winning Offer

Buyer doesn’t have to sell firstWaive InspectionComplete inspection but no obligation for seller to repair below a certain dollar amount“Vacant/estate/distressed” house – ok if personal objects are left behindRemove Mortgage ContingencyBuyer willing to close open permits Write a Winning Offer Minimal Contingencies

Offer seamless transaction using Weichert Gold ServicesEmotional connection with buyersLetter from buyers about their desire to raise their family in the houseAllow seller to rent back after closing Write a Winning Offer Subjective Factors

What’s your plan?A Negotiating Plan will allow you to create 3 separate counter offers which will enable you to negotiate quicker, come to a meeting of the minds and take your Buyers to contract in record time.

Let’s Look at a Sample Negotiating Plan Price Closing Date Down Payment AppliancesConcessions Other Conditions Initial Offer 1st Counter 2nd Counter 3rd Counter$360,000 ASAP3%W / D / R (per listing)$3,000 toward closing costsInspection – As Is $362,000 ASAP 3% W / D / R (per listing) No Money towards costs Inspection – As Is $ 352,000 60 days 5% W / D / R/custom blinds/generator/TV wall mounts None Inspection $ 345,000 60 days $17,250 (5%) W / D / R/custom blinds/generator/TV wall mounts 3% to closing costs Inspection Asking Price on Property is $ 360,000

Break into groups of 3-4Your facilitator will hand out a seller and buyer scenario Based on this information, you will work with your buyers to create a negotiation strategy. Be prepared to share your plan with the group.Let’s Create a Negotiating Plan Hand out blank planners, allow 10 minutes for groups to create a plan

What if your Offer isn’t Accepted

Negotiating a Counter Offer Communicate to Buyers right away Assess Buyers’ emotional responseIsolate major objectionsPut a positive spin on the offerReconnect the Buyers to the houseAdvise or close the Buyers on next step

“I’d probably pay about 5% more than the asking price if it meant I could get that house.” If you have a buyer with this attitude, you should be using… Attitudes are Changing

The Escalation ClauseEscalation Clause

What is an Escalation Clause? “An Escalation Clause is simple language we include in your offer that allows you to make predetermined bid increments over all of the other bids up to your maximum purchase price.” Escalation Clause

How do you Present it to your buyers?Escalation Clause Distribute copies of the Escalation Clause

Let’s Meet the Carters Your client, the Carters, are interested in a house that is listed for $600,000. The Carters told you that is the exact home they’ve been looking for.- You understand there is a bid in on the house but you want to see that the Carters get the house they want at a fair price.

How the Escalation Clause is Applied - The Carters said they are willing to pay up to $650,000 for that house.- They have agreed to automatically increase their bid by $10,000 until they reach their $650,000 maximum to remain in contention for the house.

How the Escalation Clause is Applied List Price: $600,000 Most they would pay for house: $650,000 Initial offer from another buyer: $600,000 Carter’s automatic increased offer: $610,000 Buyer’s new offer: $620,000 Carter’s automatic increased offer: $630,000 The Carter’s offer of $630,000 was accepted!

How the Escalation Clause is Applied The Carters were willing to go up to $650,000 if they had to, but they didn’t need to go that high. However, without an Escalation Clause in place to put in their automatic bid, they may have been out-bid on the house they love. This is an example of how the Escalation Clause helps people get the house they want without having to pay their highest agreed upon price.

Let’s talk about the Listing Agent first, how would you REACT as the Listing AgentWhat Concerns do you think the Seller’s might have? What are some things that the Seller’s might like about an offer with an Escalation Clause? Think about how your seller’s would react if we educated them so they understood the magic behind the Escalation ClauseHow will the Seller react to the Buyer’s Escalation Clause?

Break into groups of 3 – each group will have a Buyer’s Agent, a Listing Agent and an ObserverPractice presenting the Escalation Clause to the listing agent with an assigned objection from the next slideThe Observer will take notes and share the dialogue with the group afterwardsChange roles and practice again after group discussion. We will have 3 rounds of practice.Present the Escalation Clause Let’s Practice

Seller wants highest and best – no escalation clause. 2. No playing with small increases, just give me your highest and best3. My office doesn’t accept or honor that clause.4. Its not fair to the other brokers5. I don’t know how to present it, keep it simple.6. “An escalation clause is NOT highest and best”7. The seller won’t understand what this isOBJECTIONS FROM LISTING AGENT Possible Listing Agent Objections

Easier to understand Face to face? It’s the human touch that makes the difference! Present The Escalation Clause in Person

Why are we suggesting that you make offers in person? Why don’t we do it consistently? Listing Associates: Why is it in your best interest to have the Buyer Agent present?Making Offers in Person

Here’s to your offer outwitting and outplaying the competition!