Greg McCarvell

Effective negotiation is key to success in real estate. As an investor or as an agent having strong negotiating skills will give you the little extra edge. Imagine yourself as a buyer or seller - if using a realtor who knows how to negotiate versus someone who knows how to shuffle paper was worth $4,000 to you, wouldn't you prefer the money in your pocket?

In my opinion, proper negotiating techniques account for as much as 5% of the outcome in a residential real estate transaction. I consider myself a skilled negotiator - the reason I feel this way is not because I have a big ego, more it's how many times I've seen weaknesses in other agents skillset cost their client money. I figure if I'm not making those mistakes, by default I am a strong negotiator!

In this entry I am going to briefly cover one specific negotiating tactic that has made my clients thousands. Over the past three years I'm sure this one technique has been worth over $50,000 to my client base. The main reason I attribute such a large number to this technique is because I basically use it in every transaction. I call it the One Point Method.

The One Point Method
Real estate deals are sometimes very straight forward and other times very complex with many factors pulling in all different directions. In my experience there are 3 big factors that are generally part of the discussion. First, the price - this is the big one and usually of paramount concern. Secondly the closing date and terms surrounding completion date. Third you have conditions embedded in the offer (financing, conditional on sale of a home etc).

This three pronged problem is where you will source out your winning strategy. If I recieve an offer from an unskilled agent or a client who refuses to accept advice, the first sign is that they attack on two points. For example, they are looking for a huge discount AND a condition on sale of their home. This is your automatic cue to begin the One Point Method. Below are the typical steps you take to bring this offer to conclusion in your favour:

1) Have you client briefed on the strategy. It's a lot harder to play a game when your teamate doesn't know the play!

2) Show off your disbelief! Don't be overly dramatic, but talk to the other agent or their client. Make it obvious to them that they are looking for accomodation from your client in two specific areas - not more detail than that - just make sure they are aware of the two or three areas. This needs to happen automatically when you see the offer so it seems sincere.

3) Sit down and analyze what really matters. Of the issues present in the offer, sit down and put a dollar figure on each issue. Know how much it would cost to carry the house for 60 days, talk about the market and how a conditional on sale would work... try to put a number on EVERYTHING.

4) Go for the item that represents the most value. While recognizing the part of the negotiating that is worth the most money, approach the other side as if you are "giving in" on something. Give on the points you don't care as much about or are worth less financially. Even better if you are giving in on two points - don't you seem reasonable now!! This percieved weakness is what allows you to stay strong on the ONE POINT you have chosen.

In summary, the more points of negotiation you have, the less strength you can generally go after each of them. I advise my clients to use the clout all in one place - the one they care about most. If you are looking for someone who knows how to make the most out of your negotiations, please call me, I would be happy to help you.

When I first started in the real estate industry, it constantly amazed me the amount of turnover a newly developed neighbourhood would experience in the first 5 years. Over time I realized this is a natural occurance for many reasons. In my opinion the main reason is that a younger demographic tends to be attracted to new builds. The younger demographic tends to have more major lifestyle changing events that inspires moves.

I've worked with many sellers having a home under 5 years old - for this client it is imperitive to understand the new home buyer because they will quite often cross over into recently built resale. Below are some tips on how you can cater to new home buyers on the most important levels.

1) Bring out the list of upgrades: if you are in a position where he builder is still offering the same model or a very competitive model then you need to determine what they are offering a similarly equipped house for built new. Take a walk over and find out - it will be very valuable information.

2) Take credit for your post build improvements: decks, fences, gardens, shubs, patios, retaining walls, finished basements and more! All of these items cost extra from the builder, tally up your post build assets and hand them to your Realtor - these will help you build a case and crystal clear marketing tools.

3) Talk about the dirt: one of the downsides of building new is the dirt, muck and dust constantly present in a new development. With a recently built resale you can have all the characteristics of a new home and not live through the 2 years of dust. Make buyer's aware of the daily car washes they will need if they go the other way!

4) Sell it like it's a new home: there are distinc differences in how to effectively sell a new home versus a resale home. Undertanding this difference can be experienced by attending a couple of new home open houses hosted by builder reps. The new home buyer is interested in the small details - they want to know the breakfast bar is an upgrade, they want to hear how the 4 paint colours cost extra money... they are accustomed to this from he builder, so continue on that line of selling. On top of the new home selling techniques, layer in resale tactics and you'll have them won over in no time! Bring the details into focus by talking about quality of life, the area, the overal package of the home - help them fall in love with what is in front of them, some people find it daunting to pick all the colours and finishing themselves.

5) Work with a Realtor who knows what they are doing! If you live in the London Ontario region I have a great person! See www.londonhomebuilders.com for info!

Greg McCarvell

It seems to be the overwhelming trend - first in the United States, the the Western parts of Canada, then Toronto and now even London - it's official - buyer's market is the new reality. I am writing this entry mainly because it's information I seem to be covering almost on a daily basis with my clients. If clients are asking, there is a good chance that the general public would appreciate the information as well.

Here is the bottom line: What does a buyer's market have to do with me and my financial health?

Fortunately, it's an easy answer. The logic I am about to outline is intended to put you in the correct state of mind to really evaluate if this is a "BAD" market. That is the wrong terminology - for some people a seller's market is a bad market - let me illustrate.

Thinking in CURRENCY terms
The most basic thought pattern I would like you to have is thinking of your investment in real estate as a different currency all together. Consider market shifts a differentiation between our Canadian Currency and Real Estate currency. Consider it like you consider trading Canadian money for American money. Here are some different scenarios:

1) A homeowner wishes to downsize. It is this client that could possibly feel the negative effect of a buyers market - WHY? The currency is depreciated against the Canadian Dollar (prices are lower)... therefore when they convert (sell) there home into Canadian currency, they are exchanging at a lower rate. What is the level of negative impact?

Here is the part of the thought pattern you need to be careful of... if a person is selling completely and then moving to a rental, yes they will feel the full impact. But remember, in this scenerio the client is downsizing. What is a typical downsize? Perhaps they are going from a property worth $300,000 to a property worth $250,000. This client will only feel the negative impact on the $50,000 difference. The other $250,000 is remaining within the same currency (which will eventually fluctuate back up). So if the market prices were down a drastic 10% compared to recent past, the actual loss is 10% of $50,000.

What this works out to is $5,000. Now in the big picture, would I advise a buyer to wait in their home until a market recovers for a $5,000 benefit? Probably not. Here is why: lifestyle. If you're downsizing, most likely you've already been putting it off for years. Secondly, nothing is 100% in real estate - I can't call a properties value within that small range - it's within the margin of error. Just make sure you buy properly and I would bet your cost to move is well worth the benefit of living where you belong.

2) A homeowner wishes to Upgrade. This is the client who will benefit from a buyer's market. You can reverse the above scenerio and the $5,000 gain goes in the favour of this client. You will be investing more into the real estate currency and buying it at a discount. Don't get wrapped up on selling price, the discount is in effect for the home you really care about - the one worth more money!

The ultimate winner is the first time buyer. They are able to act quickly on closing dates, wait until the right deal comes along and are moving into the market when prices are affordable.

I hope you find these thought patterns helpful in sizing up the buyer's market and how it effects you in real world terms.

Recently I was invited by RE/MAX Ontario-Atlantic to speak at a convention series called “Trading Secrets”. I was only able to participate in two sessions, GTA and Sudbury, due to a conflict with my broker registration course. The premise of the event is to have a panel of 4 top producers converse on how-to’s from the eyes of a successful Realtor. I knew going into the event that I would learn more than simply being in the audience. Keeping at the top of your game is the result of many things - determination, consistency, organized planning AND having new, fresh ideas constantly.

Walking into the event I could feel the anticipation of the audience as they mingled in the lobby and common areas, music played in the background of the convention center - there was a lot of excitement! Eventually I met the 3 other panelists - truly great people. Eventually we were introduced and took the stage. I didn’t think about it, but I soon noticed I was the only one who brought a pen and paper with me! I wasn’t even thinking about it, but I was planning on having a way to record some new ideas because this is an unrehearsed session. As it turns out, I put the pen and paper aside and learned a lot from each person on that panel. I also clarified in words many of the tools and tactics I use in my career that up until now were only internally defined.

To me the most important part happened after the session was complete. As the event finished up people approached me with conversation pieces relating to the information I presented during the session. It was amazing how many different ideas came to the table - and they were all making there way to my ears because of my role as an instructor! I think I figured out how teachers in school know the answer to every question - they have been asked them in the past by students!

Shortly I will be updating my designation from Sales Representative to Broker. Achieving this is a multi-step education program culminating with a 10 day in class course designed to train sales representatives with a strong educational foundation on the specifics of running a real estate company.

Topics I would expect to be included are:
Regulatory requirements for document retention
Specifics of legal commission / compensation packages for Realtors
Rules and responsibilities surrounding real estate trust accounts
Various formats of real estate offices and operational differences
Advertising guidelines and responsibilities with respect to registered sales people at your office
Notification processes regarding licenses, hiring and firing of Realtors

I am sure there will be many more, I am also expecting there will be a lot of cross over and refreshing of previous courses I have taken.

The WHY...
This course will open a lot of doors and opportunities. As a broker I will have a deeper understanding of the industry itself, this depth of knowledge will increase the level of customer service I am able to provide. Also, if I were to choose, I would now be qualified to open a real estate office or operate a franchise.