Negotiating Tip: Response Strategy

By John Hamilton

Hello Good Negotiators

When negotiating we seem to spend a great deal of time preparing an initial offer or proposal. Once conveyed, we then eagerly await for a response from our opponent.

But how prepared are we to respond to our opponent’s response.

Since most initial offers are rejected, all or in part, shouldn’t we plan far enough ahead to have a “respond to a response”

strategy? Good chess players plan multiple moves ahead. If we anticipate possible responses we might receive, we could truly have a more effective response strategy.

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Response Strategy

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What do we do when someone reacts to our proposal by saying:

1. Yes

Consider conveying an immediate “thank you” followed immediately by confirmation comments relating to how this is a “fair and good deal” for everyone. Add a kicker, if possible, by saying “I’ll be sure and recommend your (product/service) to my

friends/associates.” This tends to minimize the concern of your

opponent who may think he has made too large a concession by saying ‘yes’. After all, we don’t want them to have ‘acceptance remorse’.

Now if the “Yes” follows some extensive, back and forth bargaining, be sure follow your “thank you” with a compliment aimed at their negotiating skills. Telling someone they are a good or tough negotiator seems to minimize possible ‘acceptance remorse’ and even hints that they probably got the better of this deal.

2. No

One effective and often overlooked response to a “No” is to simply ask again. It is amazing how frequently a second request for the same thing can yield positive results. If one’s proposal is reasonable and has been made in a courteous and professional

manner, acceptance often follows a second request. Almost

everyone can (and does) say “No” once. But can they endure a second request? Many can’t. If you are a parent, you know that your children had success in asking for the same thing, multiple times while ignoring your initial “No”. Persistence and repetition tends to works for adults too, especially if it is positioned as a planned response strategy.

If you’re trying to lower your cost or have someone waive certain fees, don’t give up at the first “no.” Plan in advance to share the reasons you should get what you’re asking for and follow that up with a leading question. For example: “What can you do to help me lower the cost (or have this fee waived)?”

Don’t use closed questions that can be easily answered with a “yes”

or “no.” Instead press them for suggestions or ask them for “what else” or “how” we can make this work for us both. If no suggestions seem forthcoming, press on (like our kids do) and ask “Are you sure?”

Always keep in mind that an appropriate response strategy can be to just walk away from the negotiations (either temporarily or permanently). Do not let momentum draw you into a bad deal.

Negotiations can almost always be rejoined later if broken off cordially.

Good negotiators are always thinking and planning one or two steps ahead. They have a tendency to plan response strategies that can produce more win-win results.

KEEP Negotiating.

Five Tips to Sell REO Properties Faster

Written by: Bob Corcoran

The cold winds of winter may be blowing, but something is keeping real estate as hot as a sweltering July day: real estate owned properties.

Just ask any of the thousands of agents who’ve started tapping REOs as an extra source of income. They’ve learned to adjust to the market and go to where the action is. And even better, they’ve learned a few tricks along the way on how to make their REOs more attractive for the market.

But Bob, aren’t REO homes a tough sale? I’ll grant you this, usually when you have a bank owned, empty property every flaw is magnified. A small crack in an REO, just looks bigger than in a typical home for sale.

So the fundamental element of marketing these homes is to make them not look like what people associate with foreclosed homes. First impressions are especially important for REOs. You want prospective buyers to immediately say to themselves, “This doesn’t look like an REO home.”

The house needs to look just like any other house on the market in the neighborhood. Here are a few more tips to add some sizzle to your REO marketing:

1. Be a cleaner. Some say today’s Realtors are spoiled. In the old days, agents used to carry vacuum cleaners, Windex and Ajax. If you want to work in the REO market, you might consider doing the same thing. If the bathroom floor is dirty, who’s going to clean it? It’s a different world with REO and you have to be willing to do what it takes to get the house sold.
2. Think colors.When you approach an intersection, what’s the first color you notice? If you said red, you’re still in the game. Why not landscape with red and yellow flowers. Red says to stop and yellow adds a warmth and coziness.
3. Add smells.Here’s a sentence to remember: If it smells like bad, it doesn’t matter what it looks like. Go to the dollar store and buy some air fresheners. Or better yet, brew up a fresh pot of coffee. The smell of coffee imparts the best of emotions. It tells people this is a good place to raise kids, it gives a warm and a comforting feeling. 
4. Put up signs. Open houses sell properties. When you’re marketing an REO property you need to make sure that it’s depersonalized and use cue cards – white piece of paper on the wall – that explain to prospective buyers the positives on what’s been done to the property. KB Homes is a good example. Anytime you go into one their properties, you know instantly from the cue cards what the upgrades are.
5. Communicate often and regularly. When you get an REO assignment from a bank, you essentially become the bank’s link to that property. When banks assign the Realtor to a property, it expects them to become the eyes and ears for everything that has to do with that property. Tell the bank everything you can about the house from the first inspection through the entire process.  

I’ve actually developed an REO quick start program to help agents and brokers move more quickly into the REO market, and I’m happy to send you some free information on it. Just e-mail me at Bob@CorcoranCoaching.com.   

So what are you your thoughts on selling REOs? Have you found ways to market them more effectively? What’s working and what’s not? Any thoughts on how to work better with outsourcers and banks? Please share any comments or questions you have about this article. Send e-mails to me at the address above.

Bob Corcoran is a nationally recognized speaker and author who is founder and president of Corcoran Consulting Inc. (CorcoranCoaching.com, 800-957-8353), an international consulting and coaching company that specializes in performance coaching and the implementation of sound business systems into the residential or commercial broker or agent’s existing practice.

We look forward to hearing from you.  Sign up TODAY for your complimentary business consultation. http://www.CorcoranCoaching.com/bpw.php

By Marshall Redder

“A Short Sale Will Never Work Unless You Can Get an Offer”

When asked if I would write an article on short sales, I said to myself, where do I start? It’s almost like a science. However, there are certain guidelines that you must stick to in order to be successful in getting short sales approved by the seller’s lender.

First, let me go back to the headline…“A Short Sale Will Never Work Unless You Can Get an Offer.” Michigan is in a declining market, and everyday I go through my Expired listings and over 10% say, “Subject to seller’s lender approval of a short sale.” That means the listing REALTOR^® of those properties spent the entire listing period wasting time and never getting an accepted offer. Why? One reason: price!

When you are looking at listing a short sale property, looking at what is owed on the property is not relative to what the property will sell for. You must research the area and see what homes are currently (the last 30 to 60 days) selling for. Homes in my market are currently selling for 80% of what they did three years ago.

So if a homeowner did a refinance on the property in 2005 and it appraised for $200,000, that property will now sell for $164,000. Anything higher and I am missing the market. Also, when I acquire the property, I have the seller sign five automatic price reductions for five percent of the asking price. These price reductions go into the MLS every 15 to 30 days until we receive an offer. This process will put the listing that started out at $164,000 down to $129,900 in 90 days. By following this system, we are bound to get an offer. If you are in a buyers’ market and prices are declining, this is what you have to do to get properties to sell. At what price they will sell at, it’s hard to say. And as your MLS listing inventory increases, you must be even more aggressive on price reductions.

Next, and probably most important, is your initial phone interview with the prospective seller. You need to find out if there is a first and second mortgage on the property and are the lenders the same or different, and are there any liens on the property. If the second mortgage lender is not the same as the first, you’re probably wasting your time. I avoid those listings and move on. You also need to know if the seller is behind on their payments, because it becomes difficult to do a short sale unless they are behind at least one month.

Your next step is to determine which lenders will do short sales. Keep a master list of all lenders, especially lender names and phone numbers. It is also wise—and a timesaver—to keep a list of the lenders who refuse to do short sales. So when a prospective client tells you who their lender is, you’ll know right away whether that lender has been cooperative with short sales in the past. If you’ve had poor luck, don’t try again. If you have had a successful short sale with a particular lender on a property, even though the next one that comes up at that lender may have a different contact person listed, call your old contact rather than staring in the loop again with a new person to ask for help on a short sale. On an FHA or VA loan, all lenders must cooperate if it’s prior to the auction date. It’s a federal law.

To give the seller motivation to list their property as a short sale you need to be aware of the following. First, by negotiating a successful short sale with their lender, the mortgage will show on their credit report as Paid in Full or Redeemed. This will be extremely helpful down the road for future financing for your seller when they want to buy again. Many lenders today refuse to give a mortgage to a borrower within 24 months of a prior foreclosure. However, if the loan shows “Paid in Full” or “Redeemed” with a successful title transfer, no foreclosures will remain open on their credit report. It will just show up as mortgage lattés, and they can typically get mortgage financing within 12 months.

Second, you need to stress to the seller that by allowing the property to revert back to the bank for less than what the borrowers owed, the bank will incur a loss. In order for the bank to write off this loss, they must give the borrowers a 1009 tax form. This loss is ordinary income to your seller to be taxed at both the state and federal tax levels. A $20,000 bank loss could cost your seller $5,000 to $8,000 in income taxes owed, based on their current income tax rate. The best way for this seller to salvage their credit and avoid a potential 1099 is to list the property and attempt a short sale.

When you list these short sale properties in the MLS, it is highly important, and in most cases mandatory, to put on your listing contract under financial comments, “Contingent on seller’s lender approval of a short sale” and “Limit points and repairs to zero.”

When an offer comes in, it is important to demand that the buyer apply for a loan within 10 days and immediately get appraisals and inspections on the property completed. This will ensure that when you get the final approval from the seller’s lender for the short sale that the buyer is ready to close and not just beginning the financing process. Don’t ever let the buyer wait for anything until your short sale is approved. You must be in control.

The short request with the lender can take up to two months and upon approval, you will receive a demand notice from the lender stating what dollar amount they will accept for payment in full. You mat have to renegotiate your contract with the buyer if the bank wants more than the buyer’s original offer. The bank will base their value on an appraisal and the REALTOR’s BPOs. Try to be present at all appraisals and BPOs to increase your chances of getting your offer accepted by the bank. Show them your listing with reductions and feedback from prior showings.

Most lenders are buried in their Loss Mitigation Departments and will tell you not to call until you get an offer. You will also find that their policy may change with economic conditions and how many properties they are sitting on in your area. Meaning in this market, they may be more receptive to lower offers. Unfortunately, there are no guarantees on what the lenders will do on short sales. It’s simply best to work with lenders where you’ve established relationships and have had good luck in the past.

Form a marketing perspective, spend minimal dollar promoting these properties. If your market is suffering from foreclosures and short sales are becoming popular, you’re obviously in a declining marketplace. Therefore, only one thing will make these properties sell…PRICE!

Remember first and foremost, if your seller is upside down, meaning they owe more than what their property is worth, if you can’t do a short sale the seller will lose their property and be evicted. Then the property will end up for sale by a REO REALTOR in your area.

Short sales are hard to do, however, with this system and knowledge, you can be successful.

Marshall Redder works in the Grand Rapids, Michigan, area and has successfully completed hundreds of short sales. At the time of this writing, he had 20 short sales pending to close and had over 100 properties for sale that are short sale listings. The STAR POWER Star of the Month in December, 1993, Marshall played in integral role in the creation of the brand new STAR POWER business solution, “Short Sale Seller Rescue Program” on sale now. Click here or call 1-800-635-6750 and mention Your Realty Insider to receive a special gift with each purchase.