All Talk, No Walk

By
Real Estate Broker/Owner with GenoPetro.House


A Real Estate contract is generally not enforceable in the great state of Illinois unless it is a) Written, b) 'Signed-off ' on by competent parties (Acceptance), and c) Some form of Consideration ($$$) is placed in an escrow account to show 'Good Faith' on the Buyer's part. Think of it as the Holy Trinity of the home buying experience.

It's the 'Good Faith' part of the experience I wish to address here. The truth is, most of the negotiation process in this Northside Chicago market takes place verbally. Once a written Offer is submitted to the Seller's side of the deal, the details usually get hammered out by the respective Realtors involved via cell phone, text messages and email. Sometimes we are The Negotiators, other times, mere Messengers. Either way, there are at least four channels of emotion, rationality and objectivity that need to be successfully navigated--the Seller, the Listing Agent, the Buyer, and the Buyer's Agent-- not to mention the chorus, and supporting cast of Attorneys, Home Inspectors, Lenders, Appraisers, and Blood Relations waiting in the wings for Act II to begin. Once there is signed Agreement the 'experience' as it were, takes off in another direction altogether. Another story for another day.

So here's the scenario: A potential Client sits at her computer, Googles 'Search Chicago Real Estate' and of course, lands on Page One. After surveying the first 10 choices she decides to click on ChicagoHomeEstates.com because...well, it just sounds so right. Chicago...Home, no...even better... Estates. She then decides to choose an Agent so she can Register on the site for greater access, picks the best looking one and Voila!...she arrives at my Home Page. Once registered, she is free to search the Chicagoland area for a home or rather...an estate of her dreams. She requests a showing for a Condominium that piques her interest. I respond.

Now this is where the afore mentioned 'Good Faith' begins. Our website Features our own Listings while at the same time providing a Search Engine for the entire MLS of Northern Illinois. This is provided under under the guidelines of Broker Reciprocity and is about as clear as clear can be, in my opinionated opinion. Every Listing that is not in the Chicago Home Estates personal inventory has a clearly marked icon (a little house button to click for more info) stating so.

There is a question asked and a response box to be checked: Working with a Realtor? YES or NO.

Check NO, and I'm her guy.

Check YES, and her own Realtor will need to show her the requested property (and should probably also invest in his own website with advanced Search Engine capability). Just so you know, there are only two sides of any Real Esate transaction as far as Realtors are concerned--the List side and the Buy Side. There really isn't any more room in a deal for a third Realtor. We have a name in the business for such a soul. We call him 'The Unpaid One.'

It is at this point in the experience that I make it crystal clear to my potential Client that her Request For Showing either is or is not my own Listing (I have no intention of ever being The Unpaid One) and I proceed from there.

Now let's just say that we meet at the property, introduce ourselves to the Listing Agent, and take the tour. Thirty minutes later she decides the place is perfect and wishes to make an Offer. Whether I write the deal or not I have established what is called Procuring Cause on that particular property, thus avoiding any possibility of becoming The Unpaid One. We soonafter fill out an approved Board of Realtors contract, sign in all the appropriate spaces, forward it on the the other side of the deal, and wait for a counter-offer.

It is at this point that the verbiage begins. Several phone calls back and forth between all parties involved and hopefully, a middle ground can be found. Let me walk you through the dialogue of a recent negotiation attempt that mirrors my example above. The gender has been changed to protect the idiot,,,I mean innocent..
"The List Price is $639,000," I said. "I suggest we come in around $605,000 and hopefully get this deal done under $620,000. " Just so you know, while aggresisve in negotiations I am not a 'low baller.' If the Listing in ridiculous then that's another story but in this competitive Chicago market, most properties sell within 3% of the Asking Price in less than 120 days.

"We are obviously not on the same page," says my Client. "I will not consider offering anything with a '6' in it. Tell them $550,000 and we'll close in three weeks." (In case math wasn't your best subject in grade school, that's $89,000 under List Price.) I put on my Messenger outfit and prepare to deliver the news.

"Good news is...we have an Offer for you!" I say to the happy, happy Listing Agent. "Bad news is we are coming in 15% under List." Actually, I don't really say any of this. Instead, I just let the ink on paper speak for itself.

As expected, our opening Offer was met with dead silence by the other side. After 10 minutes of verabal resuscitation and another 3 or 4 minutes of 'point and counterpoint' with the Listing Agent I was finally able to persuade him to just give us a counteroffer. He called back an hour later. "$625,000. November 30th Close." This was good.

"Not good enough," was my Client's response. "$565,000 and we want our September Close date..."

FAST FORWARD ...
THREE MORE COUNTERS AND 72 HOURS LATER...

"They are willing to spilt the middle and come down below their 'Drop Dead Number,' I inform my Client. "$600,o00." I deliver the news feeling more like The Negotiator than the Messenger for the first time in a couple of days. I know that I am but $1 away from getting a deal done with no '6' in it. I am indeed, the man.

"Okay, but I want $10,000 more back in the form of a Closing Cost Credit paid to me at the settlement table," demands my Client. "Net sale price of $590,000. It's my final Offer. Make it happen Geno!" Bad Faith. Bad Faith, but I do as directed.

And I do get it done, feeling a little uneasy about throwing in a Closing Credit curveball so late in the negotiation (poor form, to be sure). The Sellers however, eventually agree after several more hours of persuasion, and I forward the good news to my Client.

And then within a matter of hours my Client bails out of the deal totally. The reasons and excuses were numerous but the real reason (and thus the point of this sad but true essay) is she could. The original contract was written over the phone and faxed to all parties (not unusual for people with busy schedules and allowable by law), no Initial Earnest Money check was ever collected (again, the initial check is but a token gesture and is not needed until Signed Agreement occurs), and the motivation to Sell was greater than the motivation to Buy in this case. My internet Client was just fishing around the bottom of the lake seeing what she could snag on the cheap. Looking back, it was just a lot of words accompanied by very little action, not the least important of which was the Seller's signature. Lots of talk with no accompanying walk.
Postscript: As it turns out the Buyer (no longer my Client at this point) tried to go around me and cut a deal with the other side on her own shortly before this all even started. When that didn't fly she then tried to persuade me to take my commission out of the Listing Agent's portion hoping to keep the Buy-Side Co-Op for herself. Again, failure to launch.

In the end, she had just agreed to use my proffered services as the great Negotiator/Messenger I am, and waste my time for half a week ultimately doing what she felt was in her own best interest. And I'm actually cool with that. Thus is the nature of the beast we call the internet.

The other three deals I'm presently working on (all internet Registrants on our site) are as sweet as blueberry pie--the people couldn't be nicer. Half of my annual business comes from a mixture of the ChicagoHomeEstates.com website and the Blog you are presently reading. The other half is made up of past Clients and referrals. And only a few deals a year come from people who can't talk and walk at the same time. C'est la Vie, say I.

Geno Petro

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Show All Comments
Rainmaker
271,173
Ken Cook
Digital Content Creator - Marietta, GA
Writer For Hire
Ah, my favorite part of the mortgage industry - 3 months of negotiations, pointing out credit errors that can be scrubbed, 2 offers that fall through because the appraisal and actual value are yards apart or the property is in poor condition, one brother-in-law who used to be a loan officer giving all but good advice, and finally an approval. Only to have the agent tell the client (now that their credit is perfect and their income is up thanks to the phone call made to the boss by the loan officer asking if the client could get a raise thank you very much) that the agent has an in house lender who can get them approved and closed in just days. Pissed? You bet. Anything I can do about it? Not legally ;) Let us drink in deeply the blues of "oops" or "oh crap". 
Sep 07, 2007 04:50 PM #1
Rainmaker
223,559
Laurie Mindnich
Centennial, CO
Geno, you just illustrated with perfect clarity the buyers that we are often dealing with- I love your stuff.  Perfect.
Sep 07, 2007 05:09 PM #2
Rainer
62,822
Irene Morales Ward
REMAX Distinctive Real Estate, Inc. - Stafford, VA
Realtor - ABR, e-Pro - Northern Virginia Real Estate
My gosh, Geno, I am hooked on your blogs.  That story was priceless.  What a B1+ch!!!!! But as always, your humor got you through.  Thanks for sharing that story. 
Sep 07, 2007 09:14 PM #3
Rainmaker
112,411
Tracey Thomas
BrokerInTrust Real Estate - Calabasas, CA
CA Real Estate Broker

Oh Gino, I can relate.  Internet leads sometimes have a lot of talk and no walk, but there are also those nice blueberry pie ones.  The key to success here is doing exactly what you did, identifying the non-walker ASAP and cutting them loose.  No resuscitation for this client, they are of the blood sucker variety.  They suck the life out of you and your business.  

Great post Gino, I give this a high five and feature flag.  Understanding that this client is lurking out there, identifying them quickly and cutting them loose without looking back is key to success when you do a lot of online marketing.

 

Sep 07, 2007 09:35 PM #4
Rainmaker
574,887
Neal Bloom
Keller Williams Properties, Weston FL - Weston, FL
Realtor CRS-Weston FL Real Estate

Hey Geno,

Ah...the love of the negotiation process...love it.

Sep 08, 2007 07:46 AM #5
Rainmaker
352,428
Debbie Cook
Long & Foster Real Estate, Inc - Silver Spring, MD
Silver Spring and Takoma Park Maryland Real Estate

Geno,

I love your writing.  Ain't it the truth, all the low-ballers, tire-kickers and game player buyers come out of the woodwork like termites in this market.  We just have to wade thru these until the real diamonds show up.

Sep 08, 2007 11:07 AM #6
Rainmaker
217,670
Joan Mirantz
Homequest Real Estate - Concord, NH
Realtor, GRI, CBR, SRES - Concord New Hampshire
Ah yes...the good old end game! Well they are crawling around out there as we speak! Too bad we don't have con meters...
Sep 08, 2007 10:04 PM #7
Ambassador
328,765
Karen Hurst
STONEHURSTREALTY.COM - Warwick, RI
Rhode Island Waterfront!
I don't think it's just Internet buyers, either. They are even referrals! I have never met so many people "looking for a real deal". They know the market is down and they think 1/3 of the asking price is a good offer. I had a client/buyer ask me, "Don't you have to present all offer"?  Well, Yes, I do, but come on, why do you want to waste your time, my time and the sellers time? Nicely written
Sep 09, 2007 07:00 PM #8
Rainer
36,378
Chris Hendricks
Walnut Creek, CA
Geno, in college they had a name for girls like that....
Sep 10, 2007 11:47 AM #9
Rainmaker
337,606
Gary Bolen
McCall Realty - South Lake Tahoe, CA
CRS - Lake Tahoe Real Estate Information

Geno, another good, well crafted story. Yes we all get them, and it's so instantly nice, at that very second when they are gone. Like you, most of our online customers are well informed, nice, terrific people. And they make it all worthwhile.

Cheers 

Sep 10, 2007 11:08 PM #10
Rainer
32,083
John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA
Geno, classy and tasteful... and delightfully condescending. Kudos.
Sep 13, 2007 02:28 PM #11
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Rainer
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