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Members of the public seem to think that all I do is sell houses. While that is part of my work, the amount of time I spend selling represents just 20 per cent of my job activities.
The role of the REALTOR®, in my view, is not so much a salesperson but more of a consultant – a good Realtor consults with his or her clients, guides them, and helps them to arrive at sound decisions. This consulting role is crucial because the stakes are high – the client is buying or selling a home, one of their biggest financial investments ever.
As a consultant, a good Realtor explains all of the pros and cons of a property or process to the clients and helps them to understand the true value of a property.
When I’m not consulting, the rest of my time is devoted to many other aspects of the job that consumers may not see or understand, but which are equally important in meeting the needs of my clients. Research occupies 35 per cent of my time, while prospecting takes another 35 per cent. The remaining 10 per cent of my time is spent on administrative tasks and duties.
Whereas a retail salesman is all about unloading a product, real estate sales is a different beast. Our focus must be on striving to promote and protect our clients’ best interests. This is a crucial distinction. I have no interest in selling the wrong product to the wrong person at the wrong price.
Many people seem to believe that ours is a simple job. They think we just fill out a listing agreement, plunk a sign on the lawn, and the property sells. That is far from the whole picture. A great deal of research is involved, and although we might make it look easy, people don’t always understand what went on in the preparation stage.
Research is essential to success in this business, and it’s the part that the public does not always see because it happens on our own time, behind the scenes. When working with a buyer, a Realtor must thoroughly investigate an area and various properties, among other things. When working with a seller, we must develop a marketing strategy and come up with a price for a given property based on our research. Wide exposure of a property through various channels is the right approach to selling a home and does the best for the sellers.
All of this research is important and time consuming, but it is time well spent since it helps us serve our clients. Information about a property, its current or future zoning, possible changes to pertinent bylaws, material facts, defects and valuation are just some examples of details that must be researched in depth and verified.
A good Realtor is straightforward and tells it like it is to the clients, even when it may not be what they want to hear. It is hard to tell a seller that their expectation about the selling price of their home is unrealistically high, but it is important to bring reality to the discussion. It can also be difficult to deal with clients who dictate to you or expect you to be at their beck and call — available at all hours of day or night. Sometimes our job is about managing expectations.
I was once showing properties to a new buyer client. He liked one place and insisted on submitting an offer that was 20 per cent less than the asking price, despite my advice to the contrary. Obviously, we lost the bid.
After that, I sat down with him and politely explained how the process works, but I did not sugar-coat my words. I advised him that it’s my role to assess whether a property is priced fairly and then to collaborate with him so he can make an informed decision about whether to bid. I told him that I would help him submit a fair offer on a property he likes.
This frank discussion improved our professional relationship. He came away with a greater respect for my effort and ability. We resumed our search, but because we were now working within a more realistic budget, he ended up purchasing a property that was outside of his initial search area. In the end, however, he was happy with what he got and had a better understanding of how to meet the challenges a buyer can face.
The right approach, in my view, is always to try to present the facts as I see them and to give the client information based on my best estimates, backed by substantial research. Doing this, and providing statistics and background evidence for those numbers, saves my time and that of my clients.
Telling clients what we think they want to hear is a mistake we may be tempted to make, but in the end it causes more damage to the process and perhaps to the industry. In fact, it may cause clients to think I am a slick salesman rather than a Realtor.
Ravi Minhas is a Caledon REALTOR® and has been a member of the Toronto Real Estate Board for eight years. She serves as a volunteer on the Marketing & Communication Committee at the Ontario Real Estate Association.
If you lack negotiation skills, you won’t be able to put together a deal for your clients or keep your business afloat. Negotiating skills are crucial in real estate and, luckily, they can be learned on the job and improved throughout your career.
The REALTOR® Edge newsletter spoke with two Ontario REALTORS® and a negotiating expert to gain insights into how to succeed in negotiations.
Sharon Shortt of Belleville sold more than 1,000 homes during her 25-year sales career. Now a broker of record, she says she understood that her role in the negotiation process was that of a mediator between buyers and sellers.
“Although I am representing my client, if a deal can be negotiated that leaves both the buyer and the seller happy with the result, then we have a successful transaction, and ultimately everyone wins,” says Shortt.
“As REALTORS® we strive to serve the best interests of our clients, but it’s rare for both sides to get every single thing they originally wanted in a real estate transaction. All of us want to serve our clients, but the overall goal is for both buyer and seller to be happy with the result in the end.”
“The goal was for both buyer and seller to be happy with the result, even if they didn’t end up with every term that they originally wanted,” says Shortt.
There is usually something that needs to be negotiated from an original offer, Shortt notes, whether it is the closing date, price change, chattels such as appliances, or numerous other items. Sentimental items can also be a sticking point in negotiations, such as a tree planted by owners when their daughter was born that they wish to take with them. She has seen offers go back and forth as many as eight times, which isn’t that uncommon, she says.
“The challenging points are always the situations you least expect,” she adds. “Sometimes you can work them out, and sometimes you can’t.”
Negotiations can be very difficult, says Shortt, but she considered the challenge as “the very nature of the business — every Realtor has experience with negotiating.”
When the words “tough negotiations” came up in conversation, she thinks back to the pricing negotiations she undertook a number of years ago for a chain of sales where the last buyer made an offer conditional upon the sale of his home, and the offer was accepted. “Unfortunately, as time passed, it became apparent that this buyer wasn’t going to be offered the price he needed for his own property to buy the other. We had to go back and renegotiate the sale price on each of the three properties involved in the chain,” says Shortt. “It was a lot of work to get everyone to agree, but in the end, the transactions all closed successfully.”
Chattels can be a huge stumbling block in the negotiating process, says Michael Gibbons, a Chatham Realtor who turned to real estate six years ago after a 20-year career in retail. He recalls a transaction when ownership of the washer and dryer was a heated point of dispute among the two parties. The laundry room had been custom built with a unique setup and the appliances fit perfectly.
“The washer and dryer were taken out and put back into the offer about four times,” Gibbons says. “It was a big sticking point and both sides were really hung up about it. The fate of these appliances probably added three extra days to the negotiations.”
A creative solution was eventually proposed by Gibbons: he offered to give the buyers his own washer and dryer, which were the same size and would also fit the space perfectly. “From a real estate perspective, it worked out well, but my wife wasn’t happy,” laughs Gibbons. “Sometimes in the heat of negotiations, you have to make quick decisions. In retrospect, I probably should have discussed the idea with my wife beforehand, but fortunately everything worked out in the end.”
“The job for a skilled negotiator is to build enough trust to uncover what’s really important to everyone”
Buyers and sellers sometimes let their emotions take over, which can hobble the negotiating process, he adds. Often, emotion overshadows the professional advice the client receives from the Realtor.
“How important is that chandelier?” Gibbons asked rhetorically. “Emotion always seems to make the value of the items under negotiation worth more.”
When clients dig in their heels and refuse to negotiate, Gibbons often takes them back to the questions he asked during the qualifying process so they remember the bigger picture. He asks them to once again consider carefully what they need and want, and whether the property in question fulfils their requirements.
“In those cases, I know that it meets their needs because they’ve made an offer, so I remind them they might be upset later to lose a property they love because of a disagreement over vertical blinds,” he says.
“Negotiation is where Realtors can bring real value to a transaction,” says Suze Cumming, who sold real estate in Toronto for 25 years prior to opening the Canadian branch of the Negotiation Institute. She now coaches Realtors across the country on negotiating successfully. Cumming believes in a collaborative win-win approach, but says Realtors also need access to competitive tactics to be successful.
People are the complicating factor in any negotiation, says Cumming. “Real estate transactions are unique because there’s so much emotion involved,” she says. “If people don’t feel heard and understood, the negotiation process will be far more challenging.”
When clients dig in their heels on a given point, Cumming examines the stand the clients are taking, tries to understand their area of concern and probes further to discover what’s motivating their behaviour.
“The job for a skilled negotiator is to build enough trust to uncover what’s really important to everyone, and to make sure everyone’s needs are met.”
She recalls a situation when her buyers were among 10 bidders competing for a property they really wanted, but they were unwilling to “grossly overpay”. Cumming learned that the seller had his eye on another property. She advised her clients to submit an offer contingent upon the seller’s ability to purchase the house he wanted. He accepted their offer, even though it was lower than some of the other bids, because that offer took his own needs into account.
“That’s win-win collaborative deal-making,” Cumming says. “The offer put the buyers in a good position because it met everyone’s needs and the seller looked favourably on them.”
“Negotiation skills matter more than any other skills for Realtors because they create better experiences and outcomes for the clients.”
Negotiating Tips from the Three Sources Quoted Above:
Don’t be afraid to ask; the worst the other party can do is say no.
Make sure all agreements are written into the offer and the APS.
Negotiating is a learning process; if you make an error, learn for next time.
Become flawless in the essentials of real estate: legal issues, ethical issues, financial issues and negotiation.
Remember that clients, unlike Realtors, don’t negotiate daily. Don’t press them. Most people are reasonable if they are given enough time to think things through.
Share all relevant information with your clients so they can make good decisions.
Story by Elaine Smith
Sources: Suze Cumming, Michael Gibbons, Sharron Shortt
Editor’s Note: Suze Cumming teaches courses on negotiation in real estate across the country. Her course to become a Certified Negotiation Expert (CNE®1 designation) is being offered in May in Toronto at REALTOR® Quest, Canada’s largest REALTOR® trade show and conference. For details, visit www.thenatureofrealestate.com/negotiation or www.realtor-quest.ca.
Editorial Policy: The REALTOR® EDGE newsletter is produced 11 times a year by the Ontario Real Estate Association. The newsletter aims to provide practical and useful news and information about the real estate industry to members of the association. The opinions expressed in the newsletter are not necessarily those of the publisher. The newsletter welcomes submissions from the real estate community, including letters to the editor, opinion pieces, events and news. The newsletter reserves the right to edit, based on space restrictions and/or suitability, and/or to refuse submitted material for inclusion in the newsletter without reason. All rights reserved. Reproduction in whole or in part without the express written permission of the publisher, OREA, is prohibited. Contents are copyright of the Ontario Real Estate Association.
Editor: Mary Ann Gratton
Contributors to this issue: Merv Burgard, Mary Ann Gratton
Web Editor: Shade Lapite
The Insurance Bureau of Canada (IBC) reminds Ontarians to review their home insurance policies, update their home inventories and take steps to protect their personal property.
“Reviewing and updating your home inventory list helps protect your personal property and can speed up the claims process in the event of a theft or loss,” says Kim Donaldson, vice-president, Ontario, IBC. “Ontarians are encouraged to take a few moments to review the following important tips on how to help ensure a safe home for their families.”
IBC’s top ten tips: