Caroline Ashe Your Source in Augusta, GA Real Estate March 11th, 2008
I am a big believer in learning, both to help me excel in my career and offer something extra for my clients to benefit from. This past February, I traveled to Columbia, SC for 3 days in class training to earn an Accredited Buyers Representative designation (ABR). I am still waiting on the necessary paperwork approval for the designation, but I passed both tests with flying colors (100% on each, woo-hoo!!) and obtained a wealth of knowledge and new ideas. I am pretty sure I could write a novel on what I learned. I’d like to share a couple of course highlights.
The course provided me with new home buying negotiation strategies. As you probably know, this is a really great time to be a home buyer. There is a lot of inventory and some really great deals out there to be had. The hard part is getting them.
The key point to a successful home-buying strategy is to not allow yourself to become emotionally attached to any one property. You have to know ‘when to say when’, and walk away. Have a couple of ‘back-up’ properties that you could be equally happy purchasing. After viewing the available homes in your desired area and price range, discuss with your real estate professional your top three house picks. Decide on a potential purchase offer package for each home. Make sure that the negotiation terms are workable. If you make the terms of each potential contract too outrageous, then you will not have much chance of getting an acceptance by any of your home sellers. A vital element is to make sure your real estate professional provides you with a Competitive Market Analysis (CMA) of the homes you like. You don’t want to offer anything more than fair market value, no matter what the listing price is. The CMAs give you the ability to make informed decisions, backed with hard numbers, when developing a potential offer package for each home. Make sure you know what is – and is not – important to you about each home, and when thinking through the offers, remember to try to throw the seller at least a bone or two.
Start with your number one pick, and make your offer. If your offer is declined, or you receive an unpalatable counter, review your data. Do you want to counter-the-counter? Or move on to house #2? Above all, be willing to walk away if you have to! If your agent can deliver your offer to a seller, and be able to say, “This is it, take it or leave it” you’ve just significantly tipped the hand in your favor.
I have already had the opportunity to use this negotiation tactic successfully with a client. We were able to build immediate equity into their home purchase. With 3 solid homes to choose from, we were able to score an accepted contract on the first home at well under the listing price.
The winning hand in that negotiation? We made it clear we were willing to walk away if we did not get what we wanted. It’s simple, but boy does it work.
The class had a lot of discussion about buyer brokerage agreements. From the point of view of a home buyer, signing a buyer brokerage agreement to become a client of an agent seems like a risky tactic. If a home buyer hates their real estate professional and they are not doing their job, how in the world are they going to get out of the agreement? The answer is easy – Fire the agent. As a client they have hired a real estate agent to perform a job, and if they fail to complete the job, fire them.
The challenge for any real estate agent is convincing a home buyer of the value of a buyer brokerage agreement. In my class we learned about a Pledge of Performance to Buyer Clients. This is a tool I’ve wholeheartedly embraced- it’s value is it’s simplicity.
The Pledge of Performance is is a contract I’ve been offering to my clients. Should I fail to adequately complete the real estate services that they required from me, they can sign my pledge, return it to my broker, and officially terminate our agreement.
This is not intended as a way for home buyers to circumvent paying a real estate agent, or deciding that your mother’s friend’s great nephew who just started in real estate should get the commission instead. This is a tool to help my home buyers understand what my responsibilities are to them. It also makes it easier for them to sign the buyer brokerage with me when I sign a pledge back to my home buyer. Now both buyer and agent are both bound to each other under agreements of performance.
Other great things I learned in class: great tools for home buyers to keep information during the house hunt in one place, tips to help buyers avoid some pitfalls in home buying, new techniques to locating that house you are hoping for, and the list goes on. If you would like to see what other services I can provide you as a buyer client, or know more about what I learned in my class, feel free to drop me a line. Oh, I will also keep you posted when I officially get my ABR designation!