How to Deal with Clients Who Want to Make Lowball Offers

The last couple of weeks, we shared some great ideas on working with Sellers who have unrealistic expectations. Keeping in that same vein of unrealistic expectations, I noticed Inman News carried a great article about a similar problem we all run into from time to time on the opposite side of the equation: the Buyer who insists on making low ball offers! Here is Ted Wiggin’s piece, edited a bit for brevity:

“The home was perfect for the agent’s client.

Listed at $389,000, the property was close to her top choice school (where she wanted her son to attend). And with the lowest price-per-square foot in the area, it could only be described as a bargain. There was just one problem: The client only wanted to offer what the seller would likely see as a lowball number — $30,000 less than the asking price.

“I feel bad for her, as she is probably going to lose on her near-perfect home by thinking she can lowball these sellers,” said the agent, who was able to persuade the buyer to submit a higher offer — albeit one that he still considers insufficient — on the home. Clients like this pose a frequent challenge to real estate agents, but not one that’s insurmountable.

Here are 10 ways to handle buyers who aren’t willing to cough up enough to lock down a home.

1. Tell the buyer it’s not a buyer’s market

Housing inventory remains anemic, and multiple-offer situations are par for the course in many markets. Given that reality, agents can argue against lowball offers by emphasizing that the cards are stacked against buyers, some agents said in the Facebook group Lead Gen Scripts and Objections.

“Is this not a home that you and your family would enjoy? Yes? Then let’s place a reasonable offer that would get your family into this home,” Tom Olsewski, a Winchester, California-based Realtor, will tell buyers after explaining that today’s market favors sellers, not buyers.

2. Cite data

Presenting a market’s list-to-sales price ratio can be a great way to show buyers that an offer doesn’t stand up to scrutiny. “Right now, in this neighborhood, homes are selling for an average of 99.3 percent (or whatever the neighborhood average [is]) of the list price,” Nolensville, Tennessee-based Realtor Rob Foglia advises telling buyers who want to make flimsy offers.

“Coming in at $30,000 below list, we are 15 percent below,” he said, referring to a hypothetical case where an agent could cite a list-to-sales price ratio to argue against an offer.

3. Put the buyer in the seller’s shoes

Encouraging a buyer to empathize with a seller is another way to strengthen a weak offer. Sean Carpenter, a Columbus, Ohio-based Realtor, asks some buyers a straightforward question: “If you were the seller, would you accept this offer?”

If a buyer answers “no,” he highlights the contrast between this acknowledgement and the buyer’s offer.

“So that I understand correctly, you wouldn’t even accept your own offer? So do you still want to submit an offer of [the unrealistic offer]?” Carpenter said he might tell a buyer in the Facebook group Inman Coast to Coast.

4. ‘I don’t think this is the right home for you’

This one-liner may cut to the heart of the issue: It conveys that, if buyers truly want a home, they will simply need to offer more. End of story. “It’s a play on the whole scarcity tactic,” said Jay Lieberman, an Agoura Hills, California-based agent.

Winchester, Massachusetts-based Realtor Lissa Deminie argues that a buyer simply hasn’t found the right home yet if he or she insists on a flimsy offer.

“When they do [find the right home], they will pay the right price rather than lose it,” she said.

5. ‘You have to trust me’ 

If a buyer pushes back when told an offer is unrealistically low, agents should consider emphasizing the importance of trust in a client-agent relationship, some agents say.

“I flat-out asked them if they trusted me to advise them on not just ‘searching for’ and ‘bidding on’ but closing on a home that was suitable for them,” Teresa Keeler said about some buyers she was able to persuade to make more competitive offers. The question helps Keeler, a Souderton, Pennsylvania-based agent, uncover buyers’ hangups, which often stem from fear or bad experiences with past agents, she said. By talking through these issues, Keeler says she can win the confidence of some clients.”

Well, there you have the first 5 ways to deal with clients making lowball offers. Next week, the other 5 approaches to helping your clients achieve their goals!

David M. Hassler

VP, Professional Development

The Reticular Activator

A couple years ago, my car expired unexpectedly after 107,000 miles and I decided to consider that ultimate practical vehicle, a Subaru Outback. As soon as I started to think about them, Outbacks seemed to appear EVERYWHERE! They even showed up in nearly every driveway in my neighborhood. Who knew—was it magic? Of course, we’ve all experienced this phenomenon, and I had just tuned my interest and attention so that I actually noticed all the Subi’s that had been there all along.

Thank you, Reticular Activator!

Whether it’s a new pair of boots, a new laptop, or a vacation to India, our brain heightens our awareness of things we are considering and we suddenly discover that nearly everyone we meet has just returned from New Delhi with a new pair of cobra-skin boots and the latest MacBook Air!

So, what’s this have to do with Real Estate? Enter Brian Buffini and Peak Producers.

We all know the key to long term success in our business is through relationships with folks—our sphere of influence—who can give us referrals to others who may be considering buying or selling. It’s our goal through all our calls, notes, popby’s, and great service to keep their Reticular Activator alert to thinking about real estate and their favorite Broker.

Brian Buffini, in his Peak Producer training, talks about the Reticular Activator and how he uses this awareness with current clients to get three—yes, THREE—referrals from each of them during the period of their active buying/selling process! Again, who knew? Buffini makes the point that, of course that current client is far more immersed in real estate than the average person, and is probably chatting about it with friends, family, neighbors, co-workers, and pals at the gym, ad infinitum. Our current clients’ Reticular Activator for real estate is on high alert. 

Thus, Buffini tells us that we can help our current clients a wee bit by more finely tuning their Reticular Activator since no doubt in all their chatting about the process, they will surely meet other people who might be considering buying or selling, right? Buffini suggest that we REMIND our current clients to think about helping us by being aware in their conversations (that Reticular Activator) and proactively getting someone’s name or giving out our information when appropriate, ie, giving us a referral.

How three? Buffini suggests we should have three separate phases of great client satisfaction during our active buy/sell process, and that with each one, our client is highly likely to be happy to do their best to help us in our business by thinking about referring someone. 

First, as we begin the process and have maybe done a first buyer tour or a first open house, we’ve impressed our new client with our expertise, our proactive communication, and of course our charm, so that’s the time to remind them they can help us with a referral.

Second, once we have an accepted purchase agreement, usually our clients are again delighted and excited, so we can once more remind them how they can help us with a referral.

Finally, of course, as we walk out after the closing and thank them with a gift of wine or chocolates or flowers, a third time we can remind them how much we appreciate their trust in us and their referrals of great folks like them.

Since our goal is to serve our clients so they are delighted with our excellent service, that little tweak to their Reticular Activator should yield a referral or two, if not more!

Thank you, Reticular Activator!

David M. Hassler
VP, Professional Development

The Elephant in the Room Part 2: Five Tips for Working with Unrealistic Sellers

Last week we shared the first two of the “Five Tips for Working with Unrealistic Sellers” from a great article from the RISMEDIA Weekly Business Builder. As a quick reminder, those first two tips were: 1. Understand where they’re coming from and 2. Have the difficult financial conversation. Here are the last three tips for dealing with that elephant in the room:

3. Explaining the 10 days or 10 showings rule
If other properties around them are selling quickly (within days of listing) theirs will too — if it’s priced realistically. If their listing has been on the market for 10 days with no showings and no offers, it’s time to drop the price. Explain to them that the bulk of showings will take place in the first 3-4 weeks of it being listed. If they wait too long to drop the price, their property will be presumed to be overpriced by other agents and buyers, and not be shown.

Build the price-reduction process into your contract, so you don’t have to go back and convince your sellers to lower their price. Remind clients that this is not personal, but practical. If you explain this process during your first meeting, you’ll save yourself a lot of future headaches. The first meeting is when clients are typically more open to hearing how things work, and what they can expect from you.

4. Show-and-Tell
When a client wants to list for $350,000, and you know the house won’t sell for more than $210,000, invite your seller to go on a home tour with you. Show them what a $350,000 home looks like. Most people can’t imagine a $140,000 difference, but when they see that a $350,000 property is bigger, nicer and more luxurious overall, it sells your client on a reduction without you risking offending or angering them. You’re just showing them what a real $350,000 home looks like.

5. Create a buyer feedback system
The results of this buyer survey will go directly to both you and your seller. That way, the seller gets feedback about price directly from buyers. They’ll realize it’s not just you thinking the price is too high, but the market does too. Not only will the emails give you a reason to approach your seller, but they may also even initiate the “Maybe we should lower the price” conversation you both need to have.

In the beginning, it’s not an easy process, but the more you do it, the more comfortable it becomes for both you and your seller. As you approach the midpoint of the year, it’s time to reflect back on your 2016 goals. How many properties do you plan to sell this year? To make sure you’re meeting your goal, it’s important to connect with the right consumers. Position yourself in front of buyers and sellers who are actively searching for properties in your local area.

Thanks again, RISMEDIA for some excellent tips to keep in mind for when we encounter our first—or next—elephant!

David M. Hassler

VP, Professional Development

The Elephant in the Room: Five Tips for Working with Unrealistic Sellers

That headline from the RISMEDIA Weekly Business Builder online recently caught my attention since we all have had our trials with that kind of Seller! Here are the first two Tips from the article:

There’s nothing more frustrating as an agent than putting a lot of time, research and effort into a listing, only to have the seller insist on overpricing the home.

Before you can get a seller to agree to a realistic selling price, you have to understand why they insist on overpricing their home in the first place. Try to see this process of selling their home, their largest financial asset, as they do. To do this, you need to establish trust and confidence, set good boundaries, understand their fears, and show them the reality of the market. Here are five tips to help you handle the “elephant in the room” and work through these tricky situations.

1. Understand where they’re coming from
Selling a house is easy. Selling a home is hard. Homes are where memories are made, where families grew up, and where emotional, difficult, irreplaceably precious things happen. Sellers who overprice their homes are usually including the emotional value of the property to the appraised, physical value. When you understand this, you can begin to separate the emotional value from the physical value and help your clients do the same.

Begin by asking them what they think their home is worth before you share your valuation of it. Don’t react to their response, but do ask them how they arrived at this price. Did they get an appraisal? From whom? Can they show you the appraisal in writing? Be curious, not defensive, about their process. The more you understand how they arrived at this value, the easier it will be to counter their findings. It’s always better to ask them to explain their process than to counter it with reasons why it’s not realistic or appropriate. Asking the right questions will help them come to this realization faster.

Once they’ve shared their price, they’ll want to know what you think the house is worth. This is the time to show them your process — when they’re asking for your numbers.” Gary Wise of Goodlife Realty in Austin Texas gave the advice, “Never tell a seller ‘this is what your home is worth.’  Instead, say something like ‘The Market is willing to accept $280,000 for your home given all of this data.’” You can then supply your clients with your customized CMA report that shows how you’ve factored the value of their home. The key is to show the seller that you have all the data and not just an internet guess at what their home is worth.

2. Have the difficult financial conversation
Sellers are often ashamed or embarrassed to admit they need the money from a higher-priced valuation sale. It’s easier, in their minds, to ask for $10,000 more from the sale of the house than to raise that some other way. Maybe they lost an income, got laid off or are having financial difficulties they simply don’t want to share with you. Maybe they owe more on the home than it’s worth. This “elephant in the room,” is what is keeping you from convincing them to lower their price. They believe they need a certain amount to make it worth their while to sell their most feasible chance at financial rescue.

Have they recently sold or traded cars or other big-ticket items, claiming they’re downsizing? Do they talk about getting a condo or a “smaller home” after selling this one? If so, finances, not reality, may be the issue here. If they are experiencing financial difficulties, address the problem head on. Say, “You know, some of my clients set a high price on their homes, hoping to pay off other bills. It’s a great strategy when the housing market is different. However, it can backfire and leave the house unsold, maybe even ending up in foreclosure. I don’t know what your financial situation is, but I see this often, so I need to ask you so we can strategize.”

Wow, what a couple of great strategies to keep in mind! Next week, we’ll cover the RISMEDIA article’s last three tips for dealing with those unreasonable Sellers.

David M. Hassler

VP, Professional Development

That Nasty Eleven-letter Word

Most of the time, we hate to say it aloud, especially in mixed company. It’s a word that can strike fear into the heart of agents with huge SOI’s, or weaken the knees of agents with years of repeat clients and consistent referrals. Shhhhhh!

But if we want to optimize our business and not miss opportunities, maybe it’s time we spoke the profane aloud:

PROSPECTING

There, I said it. Hopefully, the kids aren’t reading this!

Yes, basic prospecting, that element of Real Estate 101 we tend to put on the back burner—or totally forget—when the market is strong and we are getting a decent flow of referrals and repeat business. But we all know that generating leads is what makes our business grow, and our marketing program is only part of the formula. While most of us now have our own websites and a program of email drip campaigns and direct mail, those marketing tools can’t take the place of a proactive prospecting plan and working that plan consistently. Remember, Big Rocks First!

Of course, a major goal of our prospecting plan is to contact those targeted folks we don’t know yet, and to convert them to clients and members of our sphere so they can help us generate more leads and more clients and more referrals. Yes, we’re prospecting when we hold an open house or contact those members of our Sphere and remind them how much we value their referrals, but one of the most lucrative targets for prospecting is also one of the toughest, and one we often tend to avoid! FSBO’s and Expired’s, remember, are folks who already WANT to sell their house, so potentially a fairly quick trip to the closing table IF we can develop a successful plan for converting these prospects into clients.

While the Peak Producers approach focuses more on long term relationship building in order to optimize our stream of repeat business and referrals, we want to make sure our coaching and training programs also cover the more basic—and for many, more difficult—cold calling techniques and prospecting tools that can help you generate more business.

So, we invited Lisa Treadwell, who joined our Indy Metro office this year, to share with us some of the old fashioned prospecting tips and techniques she has successfully used in converting those FSBO’s and Expired’s to closings. Lisa initially built her business with a great system of techniques, systems, and scripts that has led to a successful ten-year career. Lisa presented her class on “Winning with Expired Listings” at this week’s Wednesday Wake Up training session and everyone took away some great tips and enthusiasm to give it a try.

If you missed the class, remember you can still watch the video at our BHHS Indiana YouTube channel—along with all our other recorded training sessions. The link to our YouTube channel is at the BHHS Lead REsource Dashboard under the “Quick Links” section.

Don’t miss this opportunity to get some great insights into one of our business’s more challenging—yet potentially highly rewarding—strategies and get ready to turn up your business!

David M. Hassler

VP, Professional Development