Buying a home can be a stressful endeavor for homebuyers, homeowners, and real estate professionals alike. It is likely one of the biggest financial moves for both parties, and as a real estate professional, you need to make sure things go smoothly.
While you can do many things to ease the process, you will often find that your clients are not making things easier. Unfortunately, many real estate professionals have to rely on bad negotiation tactics to make their real estate clients happy in the current markets.
The client may encourage you to use such tactics more often than not, which can be a problem. While they may work on extremely rare occasions, they are mostly futile, and you end up with unhappy clients, broken deals, no commissions, and sometimes loss of potential business.
Hence, we have identified some of these real estate tactics to avoid. You will likely encounter them many times in your career, and we will guide you on why they are bad and how you can avoid them.
Real Estate Tactics to Avoid
Negotiations are where tactics make the biggest difference, and here, we will focus on some of the most common ones to avoid. It would be best if you avoided them at all times, especially in a seller’s market, where plenty of offers are on the table.
Lowball Offers
Lowball home buying offers are much lower than the ongoing market rate and are not reasonable offers by any real estate professional’s or homeowner’s standards. Often real estate professionals cave in due to pressure from their clients and agree to make lowball offers.
This seems to be a common trend, especially among new and inexperienced real estate professionals. The assumption is that starting low will somehow convince the seller to give up their home for a very favorable price.
What many people don’t realize is that this tactic rarely works. In a stable market, where home prices are public knowledge, this real estate tactic has a very high potential to come off as an insult. And that’s just the tip of the iceberg.
While it may hurt someone’s feelings, the real issue is that it will hurt your credibility. There are only two conclusions sellers and their agents will come to when you make lowball offers.
They either think you don’t understand the market and the home’s value, or they think you are trying to scam them with an inferior deal. In either case, you lose your credibility, and you instantly become someone they will never want to deal with.
On the off-chance that the seller is a frequent real estate investor, you just lost a ton of potential business. Regardless of who they are, every seller has a minimum selling price in mind, and your offers do not matter until you can reach that target price.
You will never successfully lower their target price by starting at an extremely low number. Instead of buckling under pressure, explain to your clients how lowball offers will not help them strike a deal; if anything, they will lose their position for future negotiations.
If your client is interested in the property, they will understand this and won’t want to jeopardize a deal. As their agent, you are legally bound to present their offers, and convincing them is your only way out.
In extreme cases, if you feel the client is severely unreasonable or their lowball offers may create problems for your career, it is better to let them go respectfully.
Requesting Add-Ons
Finding a perfect home within budget is rare. If you find one for your clients, they will likely feel tempted to ask for more than just the home. This is especially common among new homebuyers, who find themselves falling in love with a home quite early in their search.
They may feel entitled to appliances or furniture as an add-on to their deal, or they may feel that the wall art should stay in place because it “goes well with the home.”
This can be quite risky, and it is something you should avoid at all times because it can sour an already favorable deal on a home that your clients love.
Sellers are easily offended when you ask for add-ons, especially if they are aware you are getting a reasonable deal as it is. The home could just be staged, and even if it’s not, they would rather keep or sell their stuff than give it to your clients.
Instead, a better, more respectable tactic would be to ask if your clients can buy the house add-ons they want. This will not only preserve your deal but likely flatter the sellers. If your clients truly want the add-ons, they shouldn’t mind paying for it because they already got the home within their budget.
Home Inspections as a Renegotiation Tool
It is not uncommon for clients to get cold feet about their offers and start looking for flaws that they can then use to leverage a better deal.
Most house inspection reports will always show you some basic issues that don’t always fall on the seller to repair. Unless it’s a major issue, like with the home’s plumbing, foundation, or circuitry, there is no cause for concern.
If your clients demand every minor issue be addressed or if they want to negotiate a better deal because of them, you should advise them otherwise. Such tactics may easily cause the seller to back out of the deal and look elsewhere.
Of course, sellers normally cannot terminate the deal just because they feel unhappy. However, if your clients cannot reach an agreement with a seller, both parties can decide to call it off. You will have to find another home for them.
In times like these, it is always best to remind your clients how much time and money they have already invested in this home they like and how much more effort it will take to find another one like it. Tell them that it is better to let the minor things go because the alternative is not worth it.
If your clients are new homebuyers and do not fully understand that minor issues are not red flags, you should take the time to explain to them the difference between common minor and major issues with homes. It will be well worth your time.
Conclusion
You will be surprised how many times the mentioned negotiation tactics are used in the real estate industry. Whether a real estate professional uses them intentionally or their clients force upon them, these tactics are always bad and rarely give the desired result.
This is why it is best always to avoid them, and if your clients insist, you should explain the repercussions and how it will most certainly end poorly. Your loyalty is to your clients, but this does not mean that they should disregard reason.
If you handle the situation correctly, you will easily convince them to change their minds. After all, you are the expert they hired, and they should heed your advice.
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