Sale Negotiation

What makes the Lawyers Real Estate negotiation strategy superior to all other methods used in today's real estate industry? It's our emphasis on giving every purchaser an equal opportunity to compete on price.

Lawyers Real Estate ensures that potential purchasers are given an equal chance to compete on the basis of their bid price, before any other considerations are taken into account. Once we have identified the purchaser or purchasers who are prepared to pay the highest price, we then negotiate the final terms of the sale. [More Information]

All other real estate sale methods work in the opposite way. They place procedural hurdles in front potential purchasers, regardless of their ability to offer the highest price, and then take bids from those who get through the process.

 

Two real estate negotiation methods

Broadly speaking, there are two real estate negotiation methods. We call them:

  1. The Legal Method - used by Lawyers Real Estate; and
  2. The Real Estate Institute (REI) Method - used by real estate agents in accordance with rules set by the various Real Estate Institutes.

The Legal Method uses free market principles, as regulated by law, to ensure that the vendor remains in control of the sale so that the best possible price can be achieved.

The REI method relies on the real estate agent, rather than the free market, and tends to slow the sale process as it filters out potential purchasers for reasons that are not related to the needs of the vendor.

 

The Legal Method gives EVERY bidder an opportunity to compete on the basis of price

The priority of the legal method of sale negotiation is to commence negotiations as soon as possible, and the first step in commencing negotiations is to bring the parties into contact without delay. The starting point for every potential purchaser is price.

Lawyers Real Estate gives every purchaser an equal opportunity to compete on price

Potential purchasers are given immediate access to the vendor of the property so that:

  1. Threshold questions can be asked to determine whether the property is what the purchaser wants;
  2. Prompt arrangements can be made for an inspection of the property; and
  3. Communication lines are opened for the exchange of information relevant to the needs of both parties to the negotiation.

As soon as the purchaser has determined that the property is suitable, the purchaser is able to submit a price bid to commence the negotiation process.

No-one is disqualified from bidding until an acceptable price has been reached.

Contract terms are then negotiated to determine which bid will be accepted by the vendor.

 

How Lawyers Real Estate uses the Legal Method to get the best price

First, Lawyers Real Estate focuses on the 3 most important components of the Legal Method:

  1. Simplicity
  2. Speed
  3. Communication

We then combine these in a public bidding system that encourages prompt bidding on the basis of price, followed by meticulous negotiation by a qualified lawyer in order to arrive at terms and conditions that satisfy both parties. No-one is disqualified from bidding until the highest price has been determined, and no deal is finalised until the vendor is satisfied.

While we allow potential purchasers to deal with us in person or by telephone, fax or email, the majority of enquiries are handled by our unique bidding facility, www.SLOD.com. Please click on the SLOD! logo below:

Lawyers Real Estate uses the SLOD! best price negotiation strategy

 

 

 

 

Why the REI Method fails to achieve the best price

If you are interested in understanding why the REI Method is inherently flawed, and why it can never outdo the Legal Method in achieving the best price for a property, please read on. We have provided a detailed analysis of the REI Method and the way it eliminates potential purchasers from the pool of competing bidders.

 

The REI Method eliminates the majority of potential purchasers

Every time a potential purchaser is required to comply with a procedure or process, another hurdle is placed between that potential purchaser and their opportunity to bid on the basis of price. Any single hurdle has the potential to or deter a purchaser, or to impede the progress of negotiations.

Purchase who deal with real estate agents face many hurdles

First hurdle - conflicts inherent in the REI Method

The REI method tends to focus on the needs of the real estate agent, rather than the needs of the negotiating parties. Unfortunately, various procedures designed to keep the real estate agent in control, to ensure a sale during the currency of the agency contract (usually an Exclusive Sale Authority), to minimise man-hours spent on the sale, and to avoid the need to negotiate legal issues, tend to work against each other and create conflicts.

The result of the many conflicts inherent in the REI method is that the negotiation process is:

  • Slow to initiate;
  • Cumbersome in its implementation;
  • Hampered by conflicts of interest as between real estate agent and vendor;
  • Narrow and constrained in its ability to accommodate unusual arrangements;
  • Less likely to produce the best price; and
  • Prone to challenge by way of consumer complaints or legal issues inadequately dealt with.

Every time a purchaser has to deal with a real estate agent another hurdle has to be jumped

Second hurdle - involvement of the real estate agent

The real estate agent is the second hurdle in real estate negotiations. This is because the real estate agent stands between the property and all potential purchasers.

While the Legal Method allows clear communication between the purchaser and the property, the REI Method creates a bottle-neck by requiring all purchasers to make contact with the real estate agent before any progress can be made in the negotiation process. Thus, a potential purchaser seeking further information about a property has to:

  1. Contact the real estate agent - this may require several attempts, and can cause frustration and negative feelings when calls are not returned promptly or at all.
  2. Ask the real estate agent questions - real estate agents cannot remember all details about every property they have listed, and will usually have to consult the vendor before providing an answer. Again, the problem of slow or not return of phone calls arises, compounded with the possibility of incorrect or inadequate information being provided. This can cause tension and animosity at a very early stage.
  3. Co-ordinate an inspection with the real estate agent - timing property inspections with of numerous potential purchasers, co-ordinating these with vendors, and allocating inspection times across a number of properties being sold by the same estate agent creates a further bottle-neck and delay in commencing negotiations. In some cases inspections may be limited to a 30 minute "window" on one day of the week, which may not suit some people.
  4. Submit a binding offer through the real estate agent - again, all of the above problems affect the ability of the purchaser to inform the vendor of their interest by submitting a bid. Most real estate agents will refuse to put a price to the vendor, or to submit a bid of any kind to the vendor unless the bid is in the form of a binding Contract of Sale. The catch-cry of the real estate agent is invariably, "We only put written offers to our vendors". This approach filters out all potential purchasers who are at the "due-diligence" stage of the negotiation process, and who are attempting to determine whether they are prepared to do business with the vendor on the basis of price. Such purchasers are forced by the agent to commit to the property before price has been negotiated - an approach that creates a great deal of stress, suspicion and often anger for potential purchasers.
  5. Trust in the absolute integrity of the estate agent - real estate agents do not enjoy a good reputation when it comes to problems such as "dummy bidding", failing to submit bids, refusing to provide documents and the use of deceptive tactics. Delays, incorrect information, reluctance to assist or to fulfil requests all tend to heighten suspicion about the real estate agent, the sale process, the property and the vendor.
  6. Remain "in the dark" - all of the above problems are compounded and multiplied when the parties are prevented from "comparing notes". Keeping the parties separate allows the real estate agent to control the parties and transaction. While this is of benefit to the real estate agent, the parties lose ownership and control of the transaction. This gives rise to suspicion, and sometimes animosity as the two parties find themselves becoming ever more reliant on the real estate agent they "fly blind" into the negotiation.

The involvement of the real estate agent as the "gatekeeper" of the transaction has the effect of slowing progress, frustrating the parties, and filtering out potential purchasers who cannot or will not participate in the process as determined by the real estate agent.

A bidder who cannot quickly determine the suitability of the property, and submit a simple bid, may not bid at all.

Every time a purchaser has to deal with a real estate agent another hurdle has to be jumped

 

Third hurdle - discriminatory sale procedures

Sale procedures used in the REI Method are inherently discriminatory. Many potential purchasers are prevented from competitive bidding because of factors that are quite common in real estate sales. These include:

The REI Method regards every negotiation point as a hurdle to be cleared before a price can be bid on a property
 Reliance on bank finance
The REI Method regards every negotiation point as a hurdle to be cleared before a price can be bid on a property
 Requiring building or pest inspections
The REI Method regards every negotiation point as a hurdle to be cleared before a price can be bid on a property
 Use of deposit bonds
The REI Method regards every negotiation point as a hurdle to be cleared before a price can be bid on a property
 The need to include special conditions
The REI Method regards every negotiation point as a hurdle to be cleared before a price can be bid on a property
 The need to remove unfair conditions
The REI Method regards every negotiation point as a hurdle to be cleared before a price can be bid on a property
 Not knowing the asking price
The REI Method regards every negotiation point as a hurdle to be cleared before a price can be bid on a property
 Being refused the opportunity make a second bid

Let us examine some of these discriminatory sale procedures in more detail.

 

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Public auctions

The public auction is are the most discriminatory sale procedure of all, and the most likely to result in a low sale price.

 

 

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