Give them the sleeves off of your vest

Give them the Sleeves off of Your Vest

I took the weekend off. No phone. No computer. Gail and spent the weekend at Gail’s brothers condo in Boca Grande. The water was crystal clear, the fish were plentiful, the tarpon were running, and I was reminded why we live here in the first place. What a paradise! Boca Grande; it’s part of Lee County but almost a separate world. This week’s e-letter a little late – but, for me anyway, it was worth the time off.
Last week I posted a few more negotiating techniques and some comments. Here is what was left of the list (We covered number one “using your time schedule, not theirs”, two weeks ago.
Sit on their side of the transaction. (My favorite)
Don’t negotiate with your self (A common mistake)
Remember: Price, Terms, Timing AND Product ( The fourth one here is often forgotten)
Give them the sleeves off of your vest
Ask for the sleeves off theirs
Red Herrings
Surprise
Nibble Nibble Nibble
It’s not over. Ever.
It’s all about price.
Last week I talked about sitting on their side of the desk and the Nibbler.
I see amateurs and pros alike negotiate with themselves. Let me give you an example: You place an offer on a home, say $350,000 on a $400,000 ask price. You spend a great deal of time talking this over with your spouse; your agent; perhaps your brother or trusted mentor; and you sign all the paper work and get the offer off to the seller. Then you drive by the house, start picturing your furniture, and you start imagining yourself sitting on the back porch. In effect, you start to become an owner and your ink is not even dry yet on your offer. You begin to worry that you did not offer enough.
Then a phone call comes. Your broker got a call form the seller’s broker. He relays the fact that the buyer is looking for a minimum offer of $375,000. If you are willing to “negotiate with yourself” you will be tempted to raise your offer. Don’t do it. Better to have your agent tell them this is your final offer or some other strong language, but that he thinks he might be able to get the buyer to look at a counter offer if they throw in closing costs. The point is, do not counter your own offer; let the other party do it first. Have them PUT IT IN WRITING. (This helps counter act the NIBBLER as well)
While we are on the subject of counter offers: NEVER GIVE WITH OUT GETTING. This is a technique that will help you immensely. When you are asked for a concession, ask for one in return. Without doing so cheapens your original offer. Without doing so tells the other party that you really did not think your first offer would fly. On the other hand if you offer, say $350,000 and the seller counters with $375,000 (and perhaps this is your target price) you can counter with, “well, I might be able to meet your price if you throw in the flat screen TV and the closing costs”. Followers of this technique use it all the time – they never ever concede with out a return concession.
How to counter this technique? Give them sleeves off of your vest. My old mentor Henry Tounstine is the first one to teach me this technique. It means, basically, give them something that you don’t have any way, or indeed if you do have it you would not miss it if you gave it away. My favorite sleeve vest give away is giving a loan to a buyer for the amount of the purchase price that you never expected to get anyway. Let’s say you are the seller and are asking $400,000; you are hoping for a $375,000 price. An offer comes in at $350,000. For round one you counter at $390,000, and he has to pay the title insurance. He comes back at $370,000, and will pay title insurance. You counter with $385,000, he pays title insurance but you will take a personal note, secured by a mortgage for $10,000. You get the idea. If he accepts, you get $10,000 more than you planned – albeit over time.
You can use this idea whether you are a buyer or a seller. Try to ask for things that may help you a great deal but not mean much to the other party. A good example of this is to ask the seller to pay closing costs. Ask him to take a part of the purchase price and use it to help your cash position at closing. The dollars are the same to him. (This could also be in the form of a decorator allowance or some other monetary concession). The seller wants $400,000. You finally are stuck at a $390,000 price from him and he won’t budge. Offer him $400,000 (Yes I know this is MORE than the $390,000) and ask him to pay $10,000 or more for closing costs or some other allowance. Check with your lender or experienced broker on this – and you must make sure all is disclosed to all parties, including the lender, and check with the lender about the best way to do this.
One more for today – The Red Herring. This refers to the negotiable point in the offer that is designed to “stick out” so it can be thrown out. It will divert attention from other, perhaps more important negotiable items and give the other party a feeling of victory by getting you to negotiate it away. On a commercial deal you may ask for warrants from the seller on all matters from gopher tortoises to burrowing owls to soil contamination. You also may be adamant about these warrants and insist they are deal breakers. This makes them worth that much more when you finally concede to give them up – but not before you get something valuable in return, like a longer due diligence period. Watch for the red herrings, more often than not they really DO NOT stick out.

Two weeks ago I took a bus tour of THE RIVER DISTICT. The developers of downtown have combined efforts and are taking interested parties like the press and real estate brokers on tours of all the current and future projects in down town Fort Myers. Tatiana and I were so pleased that we took this tour. We stopped in at Oasis, High Point, North Star, First Street Village, Prima Luce, Riverwalk at Sunset, Cypress Club, and Patio Deleon. I highly suggest that if you have not been downtown lately you need to come and see what has happened to our sleepy little town.
Downtown is ready. The buildings are done; the sidewalks are widened; the retail space is primed. Yes there is much more to do – but it is ready for the people NOW.
There just are not enough people. It reminds me of that kid’s game with your two hands…here is the church; here is the steeple, open the doors, and WHERE ARE THE PEOPLE? Gail and I have been watching and waiting for downtown to resurge for ten years. I do believe, however, after taking this tour, that we are right on the cusp of something big. Unfortunately I think at this moment we are at the end of a cycle when some shops and restaurateurs could not last the extra year it will take to make this happen, and the next cycle of new stores and shops have not come into town yet. HOWEVER; with over 3000 new roof tops coming very soon (High Point already closed two towers) Fort Myers will be a pedestrian town. We have all the elements of success. First we need the roof tops and they are JUST about here.
First Street Village will be fantastic – but not until 2009. The Publix, however, at First Street Village will open at the end of this year. Look for great things downtown. The condos are all about the views and the city life. My son Christopher and his partner Leon have made a commitment to down town and have just moved into their 3000sf offices on First Street (Devious Design Studios). Go down town, I think you will be pleased. If you want to look at the real estate opportunities there email Debbie for residential or Ron for commercial
Market America Realty just broke our own record with over $100,000,000 in listings, the highest in our history. This news would be good by itself but we also have more sales pending and under contract than ever before. Both residential and commercial properties are moving at Market America. Our target method of marketing properties works, and we are looking for more good properties to add to our marketing efforts. Please give us the opportunity to look out for your interests. Remember, we are in the real estate customer business, not the real estate agent business.
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Gregg Fous
Gregg@ma-realty.com
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