Success in 2013: Build on What We Learned in 2012
The name of the first month of the year comes from the Roman God Janus, who is depicted with a head of two faces, one looking forward, the other backward. That’s appropriate as we enter the new year. Let’s learn from the past to build success in the new year. Here are a few lessons learned that might help.
Terms Matter: Which is a better deal, customer A who offers $1.2 million, or customer B who offers $1.5 million? What if customer B never closes? You get the point. It’s more than just price. How will you get to the closing table with the funds? How long will it take? Do you need to sell something first? Counselling sellers about how to evaluate deals adds value, and brokers who learn to do this effectively will close more deals than their competition. A pre-qualified buyer offering less than one who has not been vetted for financing is a better risk, and her offer even at a lower price point might be a better one. When presenting an offer on behalf of a buyer, be sure to talk terms. If the buyer is flexible on closing, say that, it can sometimes have value to sellers. Financing but could do cash? Then waive the contingency to differentiate the buyer and extract other concessions.
Negotiating Is Not About Winning: Most people think that negotiating is a contest, with the “winner” getting the best deal. But the truth is an effective negotiator seeks to find a common ground where both parties can find comfort in the deal. When a party feels they have been had, or given up too much, they regret the deal and often try to find a way out. At the very least the client will not feel well served by the brokers advocacy, even if it was otherwise effective, and might not return for another transaction later. Talk to both sides and find out where the concerns lie. It’s not always about money. Sometimes a seller just needs more time to move, and does not want the pressure to close. An anxious buyer might be willing to wait a little longer to close if that is what it takes to do the deal.
Look At Things From The Other Side: “Are you happy with the deal,” I asked a seller recently. “Not really,” they responded, “I wanted more money.” I thought about their answer, and then asked, “If this deal died tomorrow, would you be happy?” “Of course not,” they quickly replied, “I want the deal to happen.” Sellers always want more money. Buyers always want to pay less. But that does not mean that someone can’t be “happy” with a deal that nets them less than they hoped for. Asking clients whether they would want the deal back later if it fell through now will often get them to focus on the positives of the transaction, and realize that it is one they want to do.
Manage Expectations: I recently had a banker who told a client they would be clear to close very shortly, and go ahead and schedule the closing. The buyer did, arranged movers, time from work, utilities, etc, only to get the closing delayed when the bank wasn’t ready. 10 days later they closed, and the buyer was unhappy. What if the banker had told that same buyer that the bank was close, but not quite there yet, so let’s not schedule anything just yet. Chances are the buyer would have arrived at the closing table at the same time as the other scenario, but this time happy. Same time frame, different results.