How To Deal with A Quick Offer in Real Estate
Tips for New Real Estate Agents
There is nothing better than putting a property on the market and receiving a quick offer. As a real estate agent, you jump for joy knowing that the pricing, marketing, and timing all aligned on this listing. You go to present the offer to the seller knowing that they will be equally as excited to be receiving an offer this quickly and the seller turns to you and says the following:
“No, we are too new on the market”
“Let’s wait for a higher number”
“Shoot, maybe we should have priced it higher”
Just like that, your excitement evaporates, and you are trying to find the right things to say to your seller.
We have all been there. It feels like the massive pit in your stomach as you try to find ways to help your seller see the importance of dealing with the offer in hand, while also trying to remain on their side and help them through the transaction.
The Seller Isn’t Wrong
Too often, real estate agents in this situation and they blame the seller. They are upset and frustrated that the seller can’t see the importance of working with this offer. In these cases, don’t blame the seller.
The seller is trying to make the best decision he/she/they can with the information that they have.
The key is “with the information that they have.”
They are thinking that because a quick offer came in, there are more on the way. They think that the offer price will stay the same if not increase with future offers.
This isn’t a wrong seller. This is just a misguided seller. And it is your responsibility to provide them with all the information they need to make a decision.
At the end of the day, it will always be the seller’s choice, however, you want to make sure they have all the information necessary.
Educate The Seller Before You List
When we are signing the listing contract, we can get overly excited and forget about setting ourselves up for success down the road.
In real estate, we should always be digging the well before we are thirsty.
Dig the well before you are thirsty
What does this mean? Simply, make sure that you address this before you list the home for sale.
Let the seller know that there is a pool of buyers currently out there looking for a home like theirs. When you list, these buyers will have all eyes on the new listing. You will likely get the most views when you first come on the market, and these buyers can be willing to pay a premium for catching it before it becomes stale.
Chat with the sellers about what they will do if they receive a quick offer. Even in a slower market, have this discussion with the seller. You can let them know that receiving a quick offer is rare, but, in your experience, the first offer can be the best.
Ask them up front if they would be willing to work with an offer if it came in right away.
“As you know, we are in a slower market but there are buyers out there. In fact, the buyers that are currently looking for a home are usually the most motivated. When we come on the market, there will be a lot of attention on your property. After you sit on the market for some time, you can open yourself up to lowball offers or you need to wait and hope that another buyer will enter the market. So, knowing that, would you be interested in working with a quick offer if it comes in”
“Yes”
“Great! I’m not saying it will happen but it’s just best to have this conversation off the bat”
“Sounds good”
Follow Up Reading: 24 Books for New Real Estate Agents (In Order)
Tips To Dealing With Quick Offers
Make sure the seller knows that you are on their side. If you push a seller to work with an offer right off the bat, they can put their guard up and think that you are just trying to get a deal done. Even though, you want to help them get the highest price and on the best terms, it can feel like you are forcing the sale.
Therefore, let them know you are on the same team. Literally say “my goal is to get you the highest price and on the best terms.”
The seller needs to know that you are on their team and you will back them up 100%.
Risk Approach
The risk approach is used to help sellers understand what “could” happen when they reject an offer. As mentioned, the seller is saying “no” to the offer because they believe another one of equal or greater value will come in the future. This is not always the case.
By rejecting the offer in hand, they are taking a risk. Now, there are risky people out there but very few people risky when it comes to selling their largest asset. By drawing attention to the risk associated with not taking the offer, it causes the seller to think long and hard about rejecting the offer in hand.
Script
“It is totally acceptable to let this offer go. There is a risk associated with it, but there is a risk either way. In my experience, this can really come down to risk tolerance. Those that are riskier let the offer go and roll the dice on getting the next one. Those with mid risk tolerance will try and work with the offer to find mutual ground and those with low risk tolerance will just take the offer in hand without negotiating.
So, rejecting the offer is perfectly fine. It is a little riskier but again, it all comes down to risk tolerance”
The other side is there is risk in taking the offer. The risk is another offer could come up but it’s much riskier to hope for a higher number than it is to work with the offer in hand.
The one caveat is if the buyer is truly low balling and not wanting to budge, but even then, I would do what I could to get the buyer up to a range that worked for everyone.
Reverse Psychology Approach
This approach is used to help sellers understand the importance of the price. This is done by taking the focus off the price in an effort to actually cause the seller to think more about the price.
This is best used when the buyer has come up to their best and final number and it is a number that you think is on the higher side of market value. It can be so challenging to have a good offer from a buyer only to have the seller reject it because they think they might get a higher number. We want to see the seller end up with the highest price but we know that the longer time on market opens you up to lower offers.
Using the Reverse Psychology Approach takes the pressure off the price thereby putting more pressure on the price.
Script
“I do honestly think this is a great number and potentially the highest we will see, but it doesn’t always come down to the highest price. I know we received a quick offer here and sometimes the time just needs to be right. Again, it could be the highest number we see, however, the timing needs to be right for you”
You can see that I am putting the emphasis on the timing. Yes, timing is important in real estate but often, the price is the most important factor for a seller.
Using this approach causes the seller to think hard about the number and puts into perspective that this could be the best number out there.
Conclusion
It can be exciting as a real estate agent to receive a quick offer. Often, it is the combination of perfect marketing, proper pricing, and the right timing, but some sellers can put up a fight when they receive a quick offer. They can be tempted to reject the offer with the hope that a higher number will come their way.
As real estate agents, we need to help the seller understand the offer and show them the risks associated with not taking the offer. Using the Risk Approach and Reverse Psychology Approach, you can help the seller understand the importance of working with an offer in hand.
Podcast Transcript
[00:00:00] Hello and welcome to Rev Real Estate School. The Podcast with Quick tips and actionable advice to help you sell more real estate in today's world. And now your host Michael Montgomery.
[00:00:11] Hello and welcome to another episode of Rev Real Estate School. My name is Michael Montgomery. Do you ever have the problem of getting that quick offer when you first come on the market and the seller not wanting to work with it? It's very common.
[00:00:25] Today we're going to learn a few quick tips at a script to help the seller see the value of the offer in hand. Now this is important anytime but it's especially important if you are starting to move to a slower market or you're in a slower market. Reason being is as the real estate professional it's likely that you can feel that downward pressure on the market and you know that when you have that offer in hand that it's probably one you want to work with whereas the seller and you can't blame the seller.
[00:00:54] The seller sees the news and knows that the market is still coming along and still sees their potentially what their place was worth last year. So they're still hanging on to a stronger market whereas you're starting to see that market slow. So it's important to understand that you're the real estate professional and it is your job to help communicate this in a way to help them understand it not force them into a situation they don't want to be in but to help them understand the market.
[00:01:20] The objections that we get you get that offer two days on the market you're excited and they turn to you and they say "no sorry we're too new on the market" or "let's wait for a higher price". That's a really tricky one. Or "geez maybe we should have priced this property higher" Then you just feel that big pit in your stomach and you're like oh my gosh how the heck am I supposed to deal with this.
[00:01:42] Now the first point is the seller isn't wrong you can't blame the seller they just know the market as it was you know the market as it is. And again it's your job to help communicate this the best time to communicate this is before you list the property and helping them understand that there's a pool of buyers out there. There's a group of buyers out there looking for properties such as yours when you come on to the market. They're going to be interested if you sit on the market for a longer period of time you're banking on new buyers coming into the market or reducing your price into a range that makes sense for the buyers that are currently looking. So this is one of the main issues is the sellers are not aware of this at the time of receiving an offer. So if you're able to go over this before you list the property and explain to them that there's these pool of buyers out there looking within this price point so we do want to be proactive if an offer comes in then you can come back to this point if the offer does come in right off the bat.
[00:02:42] OK. Now fast forward the offer is came in and you've still received that same sort of response. Were too new on the market or you know let's just wait for that higher price. What do we do? First off the seller needs to understand that you are on their side. So if you start being combative with the seller the seller is very likely going to think that you are just trying to get a deal done. You don't want this and very likely you aren't just trying to get a deal done. You just want to get them the highest price. And if that is the case then this should be communicated. So I'd let the seller know directly. "My main goal here is to help you sell this home for the highest price. And on the best terms." If I lead with that then they understand that we're on the same team and I even say that I say look we're on the same team here let's try and do everything we possibly can to get this buyer up so that we can get you the best terms possible. So I want to lead with that so that they understand as I start to move into the next part of this that I am 100 percent on their side and I am at the end of the day if the seller says no I'm not interested in this offer no problem. We get back to work.
[00:03:52] Now to help them understand the importance of working with the offer in hand. I have two different approaches. One is called the Risk Approach and one is called the Reverse Psychology Approach.
[00:04:00] The risk approach is this when you have an offer in hand it's best to try and work with that because you don't know if another offers coming in. So when I let the seller know is typically those that have a very high risk tolerance will be willing to let this offer go and not work with it. Those with a measured risk tolerance will probably want to work with it and negotiate with them and try and get them up as high as we possibly can but still understand the importance of the offer that we have. Now if you're a very low risk tolerance then chances are you're just going to want to take that number no matter what it is because you're very concerned about another offer coming in. So what am I doing here. I'm explaining to the seller that if you're letting this one go that's fine that's totally fine however I hope you have a higher risk tolerance because we are banking on the fact that another one will come in that requires a level of risk. Now there's a level of risk on both sides there's risk in taking the offer because another offer could come in that's higher. But if you're in a market with downward pressure or you're in a market that's starting to slow. Then chances are the risk is higher to not work with the one that you have in hand.
[00:05:09] So by coming back to the fact that it depends on their risk tolerance. Most sellers and most people in real estate when dealing with their biggest investment don't necessarily want to be on the end of high risk tolerance. When we're talking about five hundred thousand dollars or something like that you'll notice I'm not telling them, "look you better be risky you better be risky if you're not willing to take this." I'm not playing that card. What I'm doing is simply saying those that would let this one go are typically people with higher risk tolerance. So I'm framing it in a different way. I'm not painting them with the brush that you are high risk. I'm simply saying if you're letting it go and I'm indirectly saying this then you should be prepared to have a higher risk tolerance.
[00:05:50] Next is the Reverse Psychology Approach. Now this is used when you've negotiated back and forth with the buyer buyer's agent and you're at a number that you don't think you're going to see again or even if you're not 100 percent sure you're fairly certain that getting another offer in at this number is unlikely and this will again come up in a slowing market. So what you're going to do here is you're going to take the pressure off the number and indirectly this puts the pressure back on the number you're basically putting the number back into focus in a reverse way. So if the buyer is at their best and final and you're at your best and final and you understand that buyer's number is probably the best that you're going to see then simply I say to the seller look this could be the best number that we see but that's not always the most important thing. Sometimes it's more important for the timing to be right. Sometimes it's more important that the offer comes in at the right time where it makes the most sense and we're newer on the market so potentially the timing is not right for you and there's nothing wrong with this. So we may not see another number that is this high. However the timing might be a little bit better.
[00:07:01] For most sellers timing is important but the number is more important right. So by doing this what I've done is I've said that look let's just take the focus away from the number which I think is the most important for you. And let's talk about timing being the most important thing which is usually not the most important thing. So this is the reverse psychology approach because I've taken the pressure off the number but in doing so they're starting to think more about that number and starting to hear that this could be the best and highest number that we see. That's what they're hearing. The timing might be better because as soon as I've said look we may not see another number this high but sometimes it's not always about the number what's going through their head is "yes yes it is." It is about the number and the timing might be important I'm not trying to take anything away from the timing but I do want them to understand that by letting go of this offer you may be taking a lower number in the future and as a real estate agent it is your duty to help them understand this. Now you can't say with 100 percent certainty that a better offer is not going to come in. You don't know that and you can't say that. But based on your experience chances are if you're out a number that you think is slightly higher than their market value range then you do owe it to them that you might not see another number that is this high. So if you'd like a little bit more information about this head into the show notes we have linked up our favorite books for real estate agents and in the order that they should be read. So there's a link to this and in there there is a section where it's dealing with people specifically there are two books that I'd recommend Crucial Conversations is the first one and the second one is Never Split The Difference. Both of these are talking about high stakes conversations and negotiation and we have to remember in real estate that we are negotiating with the other side but oftentimes we are also negotiating with our own side and with our own client. Thank you so much for listening to this episode. And we will catch you in the next lesson.
[00:09:00] This episode of Rev Real Estate School has come to a close. Thank you for tuning in. We'll see you back here for the next lesson
Follow Up Reading:
24 Books For New Real Estate Agents (In Order)
9 Ways to Get a Listing as a New Real Estate Agent
The Best Price Reduction Strategy
Question: Do you have any tips when working through offers with sellers? Let me know in the comments below
-Michael Montgomery