I don’t play poker. I think I’d like to play poker. I enjoy playing Rummy, I have for years since I used to play it with my mom. I still do play it now and again with my some friends of mine in Carmel. But when it comes to Real Estate, it seems that almost everyone has the Poker gene.
Negotiating a real estate transaction can be (I imagine) a lot like a game of poker. A good agent will do his or her best to find out what cards are in the other player’s hands. A good way to start that when representing the buyer is to ask the seller’s agent: “What is their motivation?” If you can determine that the seller is highly motivated, then you know that the seller doesn’t have a very strong hand. Of course, you can also make some assumptions about what’s in the seller’s hand. How long has the property been on the market? Has the home been sitting vacant, while someone pays the mortgage on it, and the seller is tired of losing thousands of dollars, month after month?
Or, when one party tells the other “this is my highest and best offer” – are they bluffing? What if they’re not bluffing – can you afford to let the deal slip through your hands? This happened to me not long ago. A couple months back I wrote about knowing when to say no – that is, sometimes you just have to be firm and say “no, that price is too low” and move on. In that blog entry, I wrote about how I had counseled my client to just say no to a low-ball offer – thinking we would get a better offer. And, finally, we did.
But the negotiation for that one was a bit tricky as well. The offer was a low-ball – we met them half-way, and told them it was our best offer, we wouldn’t sell below that. Not surprisingly, even though I’d been clear that we wouldn’t go lower than that, we received a counter-offer that was lower than our “lowest” price. I called my client for a quick consultation. I urged her, “Don’t take this offer, it’s too low.” I didn’t have to do much convincing, she really didn’t want to sell it for any less than the counter offer she had already made. So, I called up the buyer’s agent and gave her the news. I thanked her for her hard work putting the offer together, but that unfortunately, our counter offer was our lowest price, really. It was a short conversation.
Evidently, they thought we were bluffing. They probably didn’t know the cards we had in our hand, because they hadn’t asked. The owner did not have high holding costs for the property – it had been in the family for years, had a ridiculously low tax base, and no debt. She could wait to get her price. A strong hand.
I can’t say I was surprised when the buyer’s agent called me a few hours later. If the buyers accepted our counter offer, was that price still good? I told her that yes, I imagined it was – especially because the terms of her buyers’ offer were otherwise quite favorable. I spoke with my client, and she said yes, if they met her price, that was fine. And so, a deal was struck.
Like I said, I’m no poker player. Maybe this isn’t like poker at all – maybe it’s better described as a game of chicken. It sure can be exciting to play, whatever it’s called. I’m waiting for the Reality TV Show: “Real Realtors.” Stay tuned for that one!