YOU hear it all the time from real estate agents: “I helped my client win in a multiple offer shootout and we weren’t the highest bidder.” But, have you ever wondered why that happens?
Years as a luxury Real Estate Agent on both sides of the negotiating table has given me the insight that while all Sellers want top dollar, what they most want is to mitigate risk. No one wants to be caught midway into escrow with a Hancock Park-Wilshire home buyer walking because they can’t get a price reduction or a Pacific Palisades home buyer didn’t qualify for the expected loan or a Santa Monica home buyer had second thoughts because the neighbor’s newly built deck robs them of some privacy.
So, how do you mitigate risk?
It’s one of the core competencies of a great Real Estate Agent; unmask the Buyers who pose the greatest risk to your client. And it’s done by asking a ton of questions and doing some Marlowesque sleuthing:
- Does the Buyer have sufficient cash reserves if the house under appraises or if they determine repairs will be needed before move in?
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Has the Buyer looked at the neighboring properties in front and in back? Are they concerned about the overall condition of the home?
PRO-TIP: Conduct both a pre-appraisal and pre-inspection before you list. You want to know up front what the Buyer is going to find out later. This gives you time to prepare your Los Angeles home for sale; making repairs, setting home pricing expectations, and anticipating buyer resistance.
On a recent listing, we received multiple over-asking offers. One, however, stood out; a Developer, all cash, represented by a trusted colleague. My client was thrilled but I was concerned, as the offer was made sight unseen. Home buying, when you are going to live in the home after, is a wonderful emotional experience as you imagine living and working in your new residence and neighborhood, which is part of maximizing home buyer interest.
I counseled patience, insisting we wait until the buyer walked the property. Sure enough, the following day, after a 30-minute showing, they backed out (an apartment complex lorded over the backyard, potentially depressing its future value) and while it didn’t cause problems at that moment in time, it would have mucked things up had it occurred midway through escrow.
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Is the Buyer passionate about the home and the process?
This one is tougher to gauge as buyers are coached to both refrain from showing excitement (presumably because a buyer-in-love will be predisposed to overpay; a nonsensical assumption if the buyer’s team has put together a real strategy) while gushing lovingly in their seller letter (or Video) about the most mundane aspects of a home’s interior design (note, do this. It actually has a positive effect on many Sellers).
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Finally, what does the Seller really want and what are they willing to give up?
A negotiation, like life itself, is all about finding a righteous compromise; one that all parties can walk away happily from. What’s your bottom line price - what’s your “happy dance” place? Do you need to close by a certain date or are you flexible? Do you care that the next buyer continues your legacy or are you simply content to cash out. The more you share with your Real Estate Agent, the better armed we are to bring you the right buyer and the most satisfactory terms.
A native Angeleno, Paul Small grew up in a "show-biz family" and began his career as a third-generation theatrical agent impacting the careers of actors and writers including the likes of Crispin Glover, Paul Haggis, Ray Liotta and Demi Moore. After beginning a family, he traded Sunset Blvd for Madison Avenue and spent the next 20 years in advertising, creating and implementing marketing strategies that drove new business growth, resulting in the successful onboarding of clients such as Coca-Cola, Comcast, Electronic Arts, Nike, Pinkberry, Princess Cruises and the US Army among many others.
Small now applies those same principles of agency; integrity, accountability and perseverance to his clients as they work together to define and fulfill their real estate investment strategies.
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