Just like the Perfect Home Exercise, we have to be intentional about making an offer. Our #1 goal should be creating a win-win with the seller by presenting a winning offer that speaks to their motivations. Ultimately we need to push the seller’s hot buttons and get them to accept what we are presenting.

What are Hot Buttons?

These are the things that motivate and speaks to the seller. It’s always more than the bottom line price. A seller’s hot button can be for an obvious reason like having a vacant home that’s needing to sell. Or for not-so-obvious ones like the seller’s personality or way of being. We’ll get into it later.

Price vs. Value

In today’s market, there are tons pricing strategies. Some sellers will price their homes above market to see what they get. Others will price aggressively below market to get their home sold. This is why it’s important for us to determine the fair market value of the home before making an offer. From this space, the result of our comparison will imply how motivated the seller is to sell. And we’ll get an idea on what price it’s going to take to win the deal.

Determine Seller’s Motivation

During any home tour, we will observe how the property is maintained and any other indicators of how the seller lives there. This can give us a hint on the seller’s personality.

Do you see that the house is well-cared for and organized where everything is in their rightful places? This seller might be meticulous.

Is the house vacant and it looks like it hasn’t been lived in for quite a while? The refrigerator and closets are empty. And maybe there’s a huge stack of realtor cards in the kitchen. To me, it means the seller is motivated to sell. It means that their timeline is as quick as possible.

For example, when have happy hour with friends. We may have a friend that’s super chatty and energetic. Tons of fun, right? That’s who they are. That’s their way of being.

And how about when we’e going out on a trip. Having that one friend create the plan for everyone to follow. That personality is very different from the chatty person. 1) They are planners. 2) They think about it into the future. 3) They often like certainty by having a strategy or plan where they’re plugging along to execute that.

And so the same is true with the seller. There’s going to be a way of being for a seller and we want to use this information to create a winning offer that speaks to his motivations. Later I’ll share how my clients and I win the deal with this strategy.

Just Ask

After touring the home and discussing what we observe about the seller, I contact the listing agent to ask about the seller’s motivation. I typically ask the reason why the seller is moving, what closing timeframe they are working with, and the number of offers they have. I also tailor the conversation to what we are observing and what to discover.

Also if we ran into neighbors as we’re walking around the block. We talk to them and ask, “Hey, the house down the way that’s for sale. Do you know anything about it?” It’s a simple question and a lot of times that can help develop the winning offer that really speak to the seller.

Writing the Offer

Price is the #1 motivating factor for a seller. Next to that are the terms and conditions. However, the highest price doesn’t always win. Oftentimes it boils down to terms like Appraisal Gap Guarantees, Post-Closing Occupancy Agreements, or a waiver of certain inspection rights. And all of these have been winning strategies for buyers during the hot real estate market.

When the market stabilizes and homes take longer to sell, it’s a different story. Buyers can negotiate price and use terms and conditions for bigger discounts, or use the strength of borrower to create certainty for a seller. All based on what motivates the seller and pushing those hot buttons to get your offer accepted.

Getting the Offer Accepted

Price and terms depend on the pace of the deal. If there are multiple buyers competing for the same home it’s important to make a strong offer out of the gate. You will need to compete with price and terms that play into the seller’s motivation while gaining an edge on the other buyers in the hunt.

However, the rules change when you’re the only buyer negotiating with the seller. Getting an offer accepted requires everyone to work toward price and terms that all parties can agree upon. Meaning we have to get the deal done by submitting a strategic offer with price and terms that speak to the seller’s motivation. All of which fall within your expectations as the buyer.

Putting it All Together

Negotiating to get an offer accepted sets that tone from acceptance until closing. It’s super important to set the right expectations with the seller and maintaining a win-win atmosphere, while not compromising on your needs. Here are a few examples of how this happens:

Example #1

Here’s what we observed about the home and learned from what the listing agent shared about the seller. All of these were built into the offer strategy

• The house is vacant.
• Seller moved out of state.
• House listed for more than 90 days.
• Property is well maintained and cared for.
• After price reductions home is priced to sell.

In this example, the seller has to sell and has been attempting to do so for over 90 days. The seller is motivated and the MLS history would confirm this with multiple price reductions.

Since the property is well maintained and cared for, it’s fair to assume the seller was overconfident and listed above value but the market rejected their initial list price.

Below are the hot buttons I would push to win the deal:

• Certainty and strength of borrower. This deal will close.
• Quick inspection deadlines. Out in a week if the deal breaks.
• Limit inspection to health and safety items to drive for price.
• Uncertainty with the home value. Lower comps in the area.
• Offer below the next anticipated price reduction. > $10,000 off.

We are speaking to the seller’s motivation by creating certainty in the strength of borrower and offering quick inspection timelines. While limiting inspection items to health and safety to negotiate price and asking for a number in line with the next anticipated price reduction to get this home sold today vs. having to wait.

Example #2

Here’s a different scenario outlining what we observed and learned from the listing agent:

• Property had just been listed and priced below value.
• Home is well maintained and meticulously detailed.
• Seller is currently under contract on a new build home.
• New built is scheduled to be complete within 60 days.

In this example, we know the seller is currently under contract and waiting for their new home to be built. They face carrying 2 homes, a double move, or a lease-back scenario before they can move into their new home if this property doesn’t sell.

We also know time is of the essence since this property is listed below market value. An offer must be made immediately with terms that speak to the seller’s motivations. If this is the “The One”, it’s time to go!

• Write an offer immediately. Get the property under contract ASAP.
• Offer a fast seller acceptance and short inspection contingency.
• Offer a $0 leaseback for 60 days with a $1,000 security deposit.
• Close within 30 days so the seller has their proceeds in hand.
• Offer at list or $5,000 to $10,000 below, depending on buyer competition.

In this scenario, we are solving the seller’s concerns by creating certainty in many ways. They don’t have to double move and get their home sold within 30 days. Having proceeds from the sale in hand allows them to comfortably wait for their new build to complete.

I also want to point out the importance of the home being meticulously detailed. This reflects the seller’s way of being. Planning and preparation is a function of predictability or certainty. Observing this inside a home is worth speaking to and a valid hot button for a seller when negotiating and creating a win-win.

Negotiate to Win

Negotiating is not order taking and not a straightforward action as I have pointed out above. The days of a home seller having all the power are gone. Now more than ever, home buyers have the ability to negotiate and the art of putting together deals is back!

Next Week…

We did it! You’re officially under contract. What’s next? Let’s cover contingencies for under contract buyers. I’ll discuss the 3 most important deadlines in a typical real estate transaction (excluding cash deals). And guess what? Some may require negotiating. Thanks for tuning in!