Real Estate Negotiations in the 21st Century
Friday Nov 29th, 2019
In today’s day and age, I feel we rely a bit too much on electronic communication, whether by text or email. Don’t get me wrong, email and text are extremely convenient and efficient methods of communication and both definitely have their advantages. My concern as it relates to real estate (or in many businesses for that matter) is how dependent we have become on electronic communication on a daily basis.
I feel that sometimes the conveniences of email can sometimes work to our detriment. I had an interesting situation with a fellow colleague last week, which made me reflect on this a bit further.
When I started in real estate over fifteen years ago, all offers were negotiated between agents by phone or in person. Now, it seems there are many agents that would prefer to negotiate offers by email or by SMS messaging.
Last week, I was representing a purchaser looking to buy a house in the east-end of Toronto. Offers on this house were scheduled to be reviewed on Tuesday evening at the listing brokerage office. In speaking with the seller’s agent, she asked each agent to come forward with their best offer and also encouraged agents to present the offer in person at their office.
I instructed my client to get a bank draft for the deposit that night. We reviewed sales in the neighbourhood and we devised an offer strategy dependent on how many offers would eventually be registered.
We found out an hour before presentations, that six offers had been registered and would be submitted that night. Given the features of the home, its location and its listing price, six offers were not entirely unexpected.
When I arrived at the listing brokerage that night, the listing agent informed me that 5 offers had already been received by email and we were the only party who was going to present their offer in person to the seller. No other agent had made plans to attend, no other buyer was going to also be there to support their offer submission – no one was willing to negotiate in person!
I was shocked to learn this as I believe there is a significant strategic advantage to presenting your offer in person. Firstly, you get to meet the seller and their agent and get the opportunity to discuss the benefits of your offer face-to-face. Secondly, you get the opportunity to “sell” your client to the seller directly and let them know what they love about their home. I find this incredibly beneficial when negotiating a transaction. Lastly, when you present in person you get immediate feedback. You have the opportunity to answer any questions the other party may have, including the ability to address any concerns of the seller on the spot, as well as being able to “read the room”. This is advantageous, as I find I notice cues about our offer that might indicate where we stand in the process.
That night, I had a very nice exchange with the seller and proceeded to tell them about how my client would make the ideal owner for this new home. We spoke about our offer and then proceeded to show them the bank draft that was in my possession to be provided as the deposit. Should the seller accept our offer with our bank draft in hand, the offer would be firm and binding. Submitting the deposit (via bank draft or certified cheque) with the offer is a powerful negotiating tool – one that often gets missed when negotiating over email.
After I presented my offer, the listing agent had a discussion with the seller and then came back to me and said: “You are not the highest offer, but my client really feels that your client is the perfect buyer for her home. Can you ask your client if she would be willing to move up the closing date?”
I relayed the information to my client and we discussed the merits of changing the closing date and agreed to their (minor) request. Offer accepted!
Once our offer was finalized, the listing agent was very clear that the reason they accepted our offer (and not the higher priced email offer), was because we were here in person to present our offer and that I was prepared with the bank draft in hand.
The important lesson here is that technology makes it so easy to communicate with others quickly and efficiently, however it can never replace the human element. Sometimes the “old fashioned” way might actually be the better way!
To helping you make remarkable real estate decisions,
Alex and Elaine.