Adult Conversations about Real Estate
Episode 3: How to Negotiate as a Buyer's Agent. Part 2
In this episode of The Follow Me Show, we learn how to negotiate the offer for your client as a buyer's agent after the home is under contract, from the inspection to the appraisal. We give real world experiences with previous deals and hard lessons learned along the way.
Here are some key points about communication during escrow:
Inspection Contingency - Performed within the the first 7- 15 days of a fully signed contract and escrow. Depending on the terms of the contract and what is found on the inspection report, some items may need to be requested for repair, replacement, or a monetary compensation the buyer. The key is helping your buyers to understand the difference between necessary repairs, and frivolous requests that may be considered more cosmetic than a repair request that affects the functionality of the home in some way.
Appraisal Contingency - when the contract is being financed by traditional financing (ie: conventional, FHA, VA or USDA) the property will be appraised to determined the value of the home. This is the second and final time that you may need to negotiate the sale. If the home appraises for more than the contract price, your buyers are in the clear and are buying with built in equity (woohoo!) If the home appraises for less, it's time for your buyers and the sellers to decide who's coming up and who's coming down on the price. As a buyer's agent, your job is to find out well ahead of a signed contract if and how much your buyers are willing to put in their own cash in the case of a low appraisal.
Stick to important facts. Buyers, especially first time homebuyers, may get cold feet through every step of the contract. As a buyers agent your job is to put out fires while leading the clients know only what is on a need to know basis. For example: if you were having an issue with the cooperating agent that does not affect the contract in anyway, do not share this information with your clients. Do not divulge and gossip, or anything that may stress out the buyers because you have had a pair of loose lips.
The social influence. One thing that can always make the difference during contract negotiations is your social influence. If you are either a well-known agent, whether through your community or have an amazing social media presence, these factors can aid in negotiations. An agent that has a well known reputation is likely to have more influence on what they can get for their clients.
Outsource the paperwork. Get a transaction coordinator so you can focus on the most important parts of the contract: your buyers. A good transaction coordinator will assist with email correspondence, contract addenda and deadlines. A top notch transaction coordinator will work closely with title, the buyers, lenders, and cooperating agents to stay on track for a smooth closing.
Listen to the podcast for a full breakdown of how to negotiate as a buyer's agent.