In a very bold move last week, a client of mine bullied a very tough agent and a very determined seller and ended up with exactly what he wanted.
The words “Take it or leave it” are rare in our marketplace, and majority of the time, they’re a bluff.
Not this time…
My job, among other things, is to advise during the negotiation process.
I give my opinion, I play devil’s advocate, I lay out various scenarios, and I advise my clients.
The rest is up to them.
I can’t make the “final call” for my clients, but I can certainly urge them into taking one path versus another.
Most buyers and sellers will come off as a tiny bit softer when they’re just about to cross the finish line than when they first set out to run the race. You can’t blame them at all, however. Emotions run wild when you’re just a hair from cutting a deal, and most people just want to “end it.”
About six weeks ago, a client of mine made an offer on a Queen’s Quay waterfront property priced at $1,199,000.
The property was owned by somebody so rich that it was only used as a “party pad” and eventually they ran out of use for it.
After sitting on the market for three weeks, we made an offer of $1,150,000, and I instructed the listing agent that this was our “first and final offer.”
My client asked me for a strategy, and I told him he could lowball the sellers and offer $1,110,000 and work upwards, or he could just give them a “decent” offer and call it first-and-final. But I told him that they’d likely call his bluff, and he’d have to stay firm.
Sure enough, the sellers signed back at $1,155,000.
I love how cheap, rich people can be!
They wanted to squeeze out an extra $5,000, and I told my client, “Let’s sign it back for less than we originally offered!” I was joking, as my actions would have likely angered the sellers and we’d be in an egotistical stand-off.
But my client simply shrugged and said, “Meh….it’s a good deal. Let’s take it.”
I asked him if he wanted to play hardball and sign back at our original price – $1,150,000. After all, we called this our “first and final” offer. They should respect that.
But my client wasn’t moved either way. He just reiterated, “I’m fine with the price.”
And that was that.
Last week, a client of mine wanted to make an offer on a beautiful loft in the Dundas West area. It was priced at $349,900, and it had been on the market for roughly ten days.
This is the type of unit that would have sold the very day it hit the market, back in January or February; maybe even receive multiple offers. But as there is more product on the market now in May & June, we’d expect to see “great” properties still available after 7-10 days, or perhaps more.
My client came to me from the very start with a self-imposed maximum purchase price of $340,000, and despite the fact that we looked at properties as low as $289,000 and as high as $359,000, he never strayed from his price ceiling.
We decided to make an offer on the loft at $349,900, and of course, we offered $340,000.
I told my client that there was zero chance of the seller accepting our offer and to expect a sign-back no matter what we offered. We could offer $332,000 and ‘hope’ that we end up at $340,000, but in this market and for this property, I think that offering almost $20,000 under the asking price for a beautiful hard loft that has been on the market for just ten days is an insult.
So, we went with Plan-B, which was the up-front and honest approach of saying, “Hey, Mr. Seller, here is my offer for $340,000, and it is as high as I will go. Please either accept, or reject, and do not sign back. Thanks.”
I conveyed all of this to the listing agent, and asked him to please either accept or reject our offer.
Take it or leave it.
Sure enough, they signed it back at $345,000. Their logic is simple: There’s no way in hell that the buyer would walk for $5,000. Would he?
Yes, he would!
My client was ready to play hardball, and he was ready to walk.
If you’re going to actually play hardball, you must meet these criteria:
1) No emotional attachment. You have to be cold and calculating, and you can’t distinguish between one property and the next.
2) All about the Benjamins. You can only think with your wallet and it has to be clearly about the numbers.
3) You have to be ready to walk. You can’t just bluff at the “take it or leave it.” You have to be ready to walk and never look back.
As a fourth point, I would suggest that you have a backup plan. If you’re just running around town making offers on properties with only money on the mind, then you should have a runner-up property that you intend to offer on the next day. It adds credibility to your hardball stance, whether consciously or somewhere within.
Not only did the seller sign back at $345,000 after being told to “take it or leave it,” he also changed the Status Certificate clause forcing the buyer to obtain and pay for the documents. I laughed when I saw this. I knew it was the listing agent who suggested the change, since he is one of the more lazy and entitled agents in the city.
I’ve yet to work on a condominium purchase & sale whereby the seller wasn’t responsible for obtaining the Status Certificate for his own damn property!
They also changed the “visitations” clause from three to two, but that was a very insignificant point.
I called my buyer and made him aware of his three options:
3) Sign back
Then, I suggested a fourth option, which is tantamount to option #3 but way more fun!
I suggested we simply fax back our original offer, and throw their sign-back in the trash.
That’s hardball at its finest! Not only would be counter with our original $340,000 offer, but we would send them the original copy without the seller’s changes, just as a way of showing how little we care for the seller’s concern. It was as if we never acknowledged that they made changes to our original offer.
It shows our position and how quickly we would walk from the deal.
Now, I’m saying “we,” which really isn’t fair since it was my buyer who was adamant that he wouldn’t move a single dollar, or compromise on a single point.
He really, truly did not care if he got this condo or not, and was completely emotionally detached.
It’s very, very rare to see somebody that emotionally detached. It’s not easy to do. You’re going to be spending more on this purchase than anything else in your life, and you’re going to be living and breathing this purchase decision for years and years. How can somebody be so non-committal?
The listing agent was not happy with our stance, and he threw everything at me.
He said things like, “Well I know you’ve only been in the business for less than a decade, but in my thirty years bla bla bla…”
He was grasping at straws, but in the end all I could say was the truth: “My buyer will not go a single penny higher. Take it or leave it.”
And they took it.
They took our $340,000 offer which I can honestly say is about $10,000 less than this condo is worth.
The $349,900 listing price was exceptional, and I was surprised that it didn’t sell in multiple offers when it first hit the market. Had they waited for another buyer; somebody they could bully, they could have got their full asking price of $349,900.
But they didn’t. They caved to my buyer and his hardball tactics, and he got himself one hell of a deal.
Some of you may think “Big whoop – it’s only ten grand.” That’s not the point.
I’m simply amazed at the lack of emotion that went into this negotiation and how it worked to perfection. That’s the point!
For the rest of us, who cry when watching re-runs of Melrose Place when Billy and Amanda fight, well, maybe we don’t have the stomach for hardball…Back To Top Back To Comments
at 7:44 am
Wow — and wouldn’t life be simpler if we could be so firm and unyielding about everything!
at 8:40 am
Hmm…could we be witnessing the start of a Buyer’s Market? Sellers who were asleep during the last 3 months missed the multiple-offer boat, and will now have to be more humble in their expectations.
To all the bears out there, now is the time to go bargain shopping, as there are plenty out there.
at 10:12 am
@ LC – where? In Don Mills (DVP/Lawrence) I still see houses going for well over $500,000 (except the ugly ones anyway) which doesn’t seem bargain shopping.