McClelland Minute - March 14, 2010

Spring Madness

On our recent vacation in Florida, we had a day to kill in the Tampa Bay area, so for the first time we attended a race meet at a major thoroughbred track.  It was a fun way to spend an afternoon, even if we really had no clue about the individual qualities of the horses, their jockeys, or the competition.  So we did what most first timers do, we just kind of went with the flow, generally picking what visually appealed to us, rather than trying to decipher the rather complicated racing form that came with admission.  We won some, but lost more.  By the end of the day, we came away with an appreciation for the excitement horse racing offers but also knowing without someone knowledgeable to guide us that the odds clearly weren’t in our favor.

It’s often the same with first time home buyers.  They are so excited with the thrill of shopping for their own house, that they literally gamble on getting results, sometimes ignoring the advice of an experienced Realtor.  Last week one of my partners lost a client simply for telling them what they needed to hear; not what they wanted to hear.  Now we don’t like losing business for any reason, but I have made it a policy in our team that we always reserve the right to give clients our perspective, buying or selling.  Not that we are rude or nasty about it, but our advice is laid out there clearly, supported by facts.

In this case, the buyers had viewed every property within their target area and budget, some even twice.  They reviewed sales of comparable properties.  They acknowledged the asking price as reasonable.  Even so, the offer they wanted us to present could only be characterized as a “low ball”.  We went through all the information with them again, and warned them that an illogical offer often offends the seller, and makes any further negotiation difficult.  In fact, they may lose an opportunity to bargain in good faith and it will likely end up costing them more for the property than was necessary had they chosen a different approach.  I have even seen sellers reject any further communication with a buyer that appears to disrespect them.

However, this buyer felt we were not going to represent their interests fully and subsequently sought the services of another brokerage.  That is indeed unfortunate.  First of all, Realtors are professionals and have a fiduciary duty to be “loyal, obedient, and work in the best interest of their client”.  But being in the business of working with real estate trades every day, we know that the odds of an offer being accepted that is significantly below what is already a reasonable asking price is very, very low.  However, you will hear stories in every barroom and coffee shop about someone’s third cousin’s half-brother having been successful; therefore some customers feel it must be tried.

Personally, I think lowball offers are a waste of everyone’s time.  I have represented well over a thousand properties in my career to date, and enjoy negotiating on behalf of my clients, but always strive to leave an impression in the minds of those across the table that we respect their position, just don’t always agree with it!  Common ground can always be found if there is good will on both sides.

Vern McClelland is an associate broker with RE/MAX of Lloydminster.  For more helpful hints on buying or selling real estate visit www.vernmcclelland.com or call him directly at 306.821.0611

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