Good Faith Deposit, Negotiating from a Position of Strength

Good Faith Deposit, Negotiating from a Position of Strength

Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes

Negotiate from a Position of Strength

The old “Poor Mouthing the Offer” which some buyer agents still recommend is an outdated & flawed strategy, especiallyin a seller’s market.

Recommending that the buyer act like they can barely afford their own offer in hopes that the seller will feel sorry for them and lower the sales price, causes buyers to lose deals!

Think about it, if a realtor recommends the "Poor Mouthing the Offer" strategy when they are the Buyer’s agent, do they suddenly forget this same strategy is being used when they are the Listing Agent and other Buyer Agents make offers on their listings using this same antiquated strategy?

Scenario: $1,000,000 List price

Buyer #1:

offers $960,000 submitted with a qualification letter for the same $960,000 with $5,000 scribbled in the deposit line of offer

Buyer #2:

offers $955,000 submitted with a qualification letter for $1,213,700 (odd number is for a reason) with a $40,000 Good Faith check or Escrow Letter

Most sellers and listing realtors would go with Offer #2, where the buyer is negotiating from a Position of Strength, backed up with a substantial Deposit showing they are a serious and capable buyer.

Anyone know of any realtors who actually make offers this way?

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  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    8y

    They are both different tools used for different situations. I had a client who when looking at a house noticed the plaque she gave her bus driver 30 years ago when she was 6. The bus driver was recently deceased but his wife hung that plaque in the kitchen and looked at it for 30 years. 

    We came in at a weak position on that one and they live there today. So I agree that a position of strength is a preferred option in some cases, there isnt a single answer. Too many variables

    Good topic though

  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    8y

    Another thing to consider is what the max amount in small claimes court is for the area. Anything goes wrong on the 40K EMD and your client may end up on the docket trying to get it back over years with lawyers.

  • Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
    8y

    Yes, and same with the property, the buyer can cloud title and tie up the transfer of title, thus tying up the sale of the property too should a seller try to take a deposit under bad faith.  

    But this is why I NEVER deposit money in the Seller's Title Agent's account or listing agent's account. 

    Deposit in your own Real Estate Attorney's Escrow and get an Escrow Letter to use in the negotiations.

  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    8y

    I know in some states it is normal to put it in your own brokers account, but in my area it's not. Someone offering 40K EMD in their own brokers account is a weaker position than 5K in the sellers here. Will you find an a seller that will accept that? Sure I suppose. But they will automatically have a sense of distrust which is counter to the position of strength.

    Just my 2 cents

  • Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
    8y

    Florida is... New York, and NJ and MA, CT, IL, MI, RI, etc.  

    I guaranty if you were to battle anther realtor with a borrower/ buyer who was to do as I described above, 7 out of 10 times you would lose down here in FL  with that outdated strategy of "Poor Mouthing the Offer" with ridiculous Good Faith Deposit amount in escrow.

    If I were selling a 500k home, and an a buyer hit me with a 5k deposit, their offer would be out like the fat kid in 5th grade dodge ball!

  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    8y

    @Account Closed

    Sounds like you have it whittled down to the single best strategy for all situations in all areas. 

    Best of luck in your investing

  • Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
    8y

    No, just 25 yrs of experience being involved in literally thousands of deals and watching realtors do things the wrong way or take shortcuts, loosing deal after deal for my borrowers is what has taught me what works best.

    Unfortunately, down here in FL, everybody and their mother has had or has a real estate lic. and too many think or lead their clients to think they know a lot more than they really do.  The WORST are the ones selling in the 3 million and over range.

    I see it and have to deal with the extra time and effort needed to work badly structured and submitted offer after offer, house after house.   

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