When it comes to negotiating with buyers of commercial real estate, it is very common for the real estate agent to get swept up in the ‘chance of a deal’ rather than to stay focused on the facts and the intentions between the parties. The contract of sale is there for one reason only and that is to accurately reflect the intentions between the seller and buyer over the subject property; the parties can then move to a settlement of contract.
Property negotiations should be factual and accurate at all times. Errors and misrepresentations between the parties can become very costly in legal claims and actions. As agents to the listing it is our duty to the client to ensure that all facts are correct and accurate for the property and the transaction. When in any doubt about the transaction, stop and investigate. Do not go to contract or start a negotiation with any property that is only partly understood or researched.
Can you always believe what the client tells you about the property? It’s an interesting question and the answer is ‘no’. Whilst some clients may understand your questions about the property, they may not give you the full answers that you require. Some clients don’t understand the importance of some property facts and investigations; other clients may not want to tell you everything about the property in an attempt to influence a sale in their favour.
Protect yourself at every stage of a property transaction. Take your notes from all conversations, ask the right questions, document things correctly, and investigate the facts yourself. Don’t rely on the untested facts given to you by others who may have a vested interest in manipulating the deal. Many real estate agents have found themselves tied up in lengthy and costly legal battles for that very reason.
Here are some rules to help you with working with buyers in any property sale or contract situation.
- Remember your client and their sale requirements as detailed in the original listing and any further communications. Stick to their instructions and requirements (not yours).
- Use logic at all times to remove all emotions from the sale negotiation. Sellers and buyers to a property transaction can be emotional from a ‘strategic’ perspective. It is a fact of psychology and is used all the time to derail or sway the negotiation in some way. Remain calm and negotiate logically. Have your facts about the property, the parties, and the offer accurately documented.
- A valid and valuable deposit should be taken at the time of offer and acceptance to ensure that the client is protected in potential situations of buyer default under the contract.
- Create clear contract terms and any special conditions that tell the parties what is required of them as they move forward in the transaction of sale.
- Determine realistic settlement conditions and dates that the parties to the contract can satisfy. If dates are too tight or close you could very well make the contract too hard or unrealistic to complete in a short period of time.
- Proof of finance availability will be essential in this property market. There is no point going to contract if the buyer has not obtained preliminary finance approvals.
- Determine the correct property facts and information so that the contract is accurate in all respects. When in any doubt on any property information, double check the facts before you go to contract.
- Have accurate descriptions for seller and buyer on the contract so any enforcement of the terms and conditions can be correctly undertaken.
Whilst these things may seem logical, it is very easy for an agent to forget just what they are doing in the negotiation and make mistakes. In any contract situation, mistakes usually finish up in court and damages will be determined. That’s not a happy situation for any client or agent.