The Rule of Two
The Rules change when another buyer shows up
Negotiating 101
Let’s imagine you are a seller, and are negotiating with a buyer. The Buyer has taken his time to skillfully negotiate you to a more acceptable price. You are asking $259,900 and he came in at a bid of $222,000. The buyer would prefer to purchase under $240,000 but would be willing to pay almost full price because his wife loves the home and he wants to make her happy.
Did I forget to remind you that women control real estate?
Buyer One
Blink
You have mulled it over, and the buyer’s last offer is $235k and you are at $246,000. What to do?
He who blinks next loses.
In “Negotiating 101” (experience in the field) Real estate agents are taught the power of “magnetizing” deals. Get the principals close enough in price and see if both sides can continue to give up a bit more ground.
When the buyer comes up to 239 and the seller comes down to 242, the transaction is oh-so close.
Realtors will start mentally spending the money immediately, and we are not even to first base yet.
Dont be surprised to see the principals ask agents to “cut” their commissions.
There is no right answer for this one, as everything is negotaible.
Small Mom and Pop shops make their own rules, and may be more inclined to have some flexibility than the conglomerates with a higher overhead.
Buyer Two
Magic Words
Hold everything.
Your agent calls you and says: “I have good news for you.”
After a solid week of negotiating, you are emotionally weary and drained. You assume that somehow between the buyer and the agents, they have worked it out.
Then he utters the Magic Words: “I have another offer to present to you.”
The dynamics have suddenly changed, and you are now in a multiple offer situation.
You are no longer competing against the buyer; the two buyers are competing against each other.
Bravo!
Buyer One
The Rule of Two
You feel confident one of these two buyers will work out, as long as you are truthful and reasonable. Your agent says “I am going to ask them to give us their best and final offer”.
This is the Rule of Two, and if your home is exposed to the market long enough, often two buyers become interested at the same time.
In a traditional transaction, dont waste time. Tie up the transaction as fast as you can, and then renegotiate if you want to quibble after inspections and appraisals.
Buyer Two
Pareto Principle
The Rule of Two is closely tied into the Pareto Principle. (The 80/20 or 90/10 rule).
If you work backwards, and want two to three bidders to represent 10% of the buyer pool, then we need 20 to 30 viewings to give us those core buyers.
The essence of moving a home quickly is condensing the time it takes to attract twenty to thirty buyers, and then let market dynamics sort out those two to three most likely buyers for your home.
Keep it simple.
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