The Naples market is performing very well. More of you are finding yourselves entering into a possible negotiation competition during the purchase of your Naples property. Today, I’ll cover what to expect if you’re competing for Naples real estate and how best to maneuver toward your personal objective. Naples can be a tricky place during competitions because not all buyers and sellers want to compete. This probably sounds weird but stick with me.
We have a beautiful mix of both east and mid-west buyers and most recently, we see a huge uptick in west coast clientele. People have different ideas and philosophies when negotiating, and when you put them in a single space, it can get a little kookie. Some of my clients are excited to put on their boxing gloves when they find themselves in competition, while others will about-face and burn a hole in the ground to run away from one. These differences of opinion aren’t entirely tied to city dwellers vs. country dwellers. It can be a real challenge to determine who is going to take on which personality.
Buyers: These people typically have a very defined objective and are well versed in real estate transactions, if not in Naples, in other parts of the country. Some have been involved in competitions in the past, so they have some acumen as to how it can go. Experience helps, but we do things differently here, so their experience may not reflect what’s about to go down here. Regardless, if these people find they’re getting ready to compete, they’re up for the challenge.
If they’ve never experienced competing for a purchase, they often lean on their personal business dealings, especially if they’re purchasing Naples luxury real estate. Many Americans don’t negotiate a substantial amount, but business leaders do, and their experience can greatly help them navigate a successful transaction.
Sellers: These people may also have been involved in a past competition or have outside business intelligence where they’re ready to receive what’s coming at them. They’re up for the challenge of reviewing more than one offer and determining the best party for the award of winning their property. They also might be so brave to stoke the fire by initiating a full bidding war.
Both fighters typically take their intelligent agent’s advice to accomplish their negotiation. They are also (mostly) level headed and can keep their emotions in check. Every once in awhile, we get somebody who goes way overboard. This can be a dangerous situation because that kind of behavior can turn off the other party regardless of their side. I’ve seen overzealous buyers lose for this behavior, and sellers can miss out too.
Buyers: These people are more sensitive. They don’t want anybody to take advantage of them, and they don’t like to fight. Some of these buyers will say, “Eh…we don’t want to compete. Keep us posted, and if it doesn’t come together, we’ll revisit it.” These people can be very skeptical about whether or not there is another buyer or if the Seller’s side is playing a game with them. If the seller’s agent invites this buyer back, skepticism over why the first buyer walking away can set in. It can feel like a very untrustworthy position, and they may decide not to participate for this reason alone.
Sellers: These folks are also sensitive and feel very overwhelmed by the idea of having to choose between two or more buyers. I will often hear them say things like, “We will only consider one offer at a time.” They don’t want the feeling that somebody is going to get hurt. They may also negotiate the first offer without giving the second buyer a chance because they don’t want to deal with the anxiety. Sometimes sellers get nervous about legal implications and don’t want to find themselves in an undesirable legal matter. Hence, they’re willing to forgo a competition to lighten their chances of legal issues.
Clearly, there are some pretty large character discrepancies between the two groups, which can lead to a great deal of misunderstanding, aggravation, and other negative feelings. The most important thing to keep in mind is your personal objective and whether or not it can be accomplished with the characters in place.
Many of the best most tenured real estate agents are very well versed in competing in Naples. They know the tricks, they know the best strategies, but many agents have no idea what they’re doing. They deliver poor advice, and their buyers end up losing out. Some agents have a challenging time effectively communicating and have trouble setting expectations. This can be a recipe for disaster.
Buyers: Choose an agent who knows how to compete. A great agent who can show you all possible scenarios and properly set your goals and objectives by offering sound and smart advice can help you accomplish your goals. This is especially helpful when time is of the essence. You may not have the time to wait for your agent to figure out what they’re doing. Timing is critical.
Sellers: Go with an agent who can organize the best-case scenario for you to help you avoid uncomfortable battles and keep you out of legal troubles. This should be a great experience for you, not a stressful one.
There are plenty of games some agents play when negotiating. Here are a few:
Is There Really Another Buyer?
This is the Buyer’s most asked question.
True Story: When I sold real estate in Texas back in the ’90s, I worked several deals with the “top agent in town.” She was a real powerhouse. We had worked closely for several years. Inevitably, every time I told her I had an interested party on one of her listings, she always had another buyer coming to the table. While some of that may have been true, most of the time, it was pure B.S. I finally called her on it, and that was the end of that charade.
True Story: I took over a listing that had been on the market for nearly 4 years before me. Surely enough, it ended up selling under a competition. Both buyers had a hard time believing there was another interested party after so much market time. Both buyers ironically came in at the same price. Other terms were better, which resulted in a winner and a loser.
Seldom is it possible to confirm another buyer’s presence, but some agents in town are worthy of your trust. Faking a buyer is a really dumb game to play especially since so many buyers are unwilling to compete. Unfortunately, most buyers determine there was another buyer when the property goes under contract without them. By then it could be too late. There is one more shot though…do you know how to do it? I do.
What Should We Offer?
Competitions are not a time to hold back on your number if you really want to buy the property. Do you fully understand the value of the market? If you’re working with me, you will. Some Naples buyers don’t mind overpaying for what they really want, while others do not want to make poor purchasing decisions. The sweet spot of a competition is to write the most compelling contract without handing over your firstborn. Ask me about my philosophy about this. I’d tell you here, but then I’d just be competing with a bunch of mini me’s, and that’s not fair to my future buyers. LOL!
Hints Towards the Winning Number
I had a buyer this year who had a fair amount of interest in a property. I asked the agent to keep me posted on buyer activity. Some agents will actually provide updates as a courtesy. Some don’t. Don’t 100% rely on these types of updates because agents get busy and do not want to shake a deal up. In fact, many selling agents won’t update if they have a strong offer. Why would they upset the apple cart?
In this scenario, we did receive a call from the seller’s agent. An offer had come in. Through conversation, he hinted towards what it was going to take to buy the property. I felt like it was an unrealistic number, and my buyers weren’t interested in paying that much, so we opted to pass. If it turns out the real number was substantially under the hint he gave me, he’s going to reveal who he is as an agent, and I’m never going to forget it. Hahaha. I’m sitting on the edge of my seat to get the final results.
Tip #1 Timing is everything!
The best thing you can do when the possibility of a competition arrises is to respond as swiftly as possible. Listing agents don’t always get it right and can grow more or less confident based on the buying traffic they experience. Sometimes we think something will go really fast. On other occasions, we think we might have more of a challenge, but one thing is for sure, it isn’t easy to talk negotiating points when a listing agent has a ton of showing traffic and interest. Strike before that happens, and then it’s a guess.
Tip #2 Your Agent Can Make or Break Your Deal
If a listing agent or buyer’s agent behaves a little too crazy, it can really mess things up for everybody. Buyer’s agents can blow a buyer’s position, which could result in a buyer paying more than necessary. Behaving too aloof could cause added concern from the Seller. Both sides need to feel comfortable, and if an agent on either side causes unnecessary disruption, it can hurt the client.
A buyer’s agent’s character and experience can also make or break a deal. I can’t tell you how many times Seller’s agents have said, “hurry up and get in here because I’d rather work with you than the other guy.” Sometimes I hear, “This other agent is a nobody. I know you. Bring me an offer.”
More importantly, inexperienced agents can miss important details and handle negotiations inappropriately cause legality concerns, which could open issues for Buyers, Sellers, or both. Avoid unnecessary legal issues at all costs.
Tip #3 Price Is Just One Term On The Contract.
Most people get so wrapped up in the price they forget the other terms can be equally and, in some cases, more important. Cash vs. loan deals is a good example. Cash is a huge benefit for all of the obvious reasons. Contingencies can booger up an acceptance as well as unreasonable timelines. Many buyers assume the seller wants to close fast, but some of our older sellers can’t move that fast. They may prefer an extended closing date for this reason. There are several other terms, but we can talk about it in real life.
Tip #1 Price To Compete
Suppose you like the idea of a fast sale and competing buyers, price to compete. Sometimes pricing the property at fair market value in a low inventory area is enough to garner enough attention from several buyers.
#TrueStory We listed a property in Pelican Marsh this summer. We orchestrated a wide variety of improvements before listing to make the property attract the neighborhood’s highest amount of buyer traffic. Within 3 days, we had 6 competing offers. The buyer who got the contract had already had a ton of experience purchasing in the neighborhood and made it abundantly known he wanted the property the most. He got it too.
Sometimes pricing the property lower will cause buyers who are willing to go well over the asking price to capture the property. You want to be careful if you’re considering adopting this strategy. Most Neapolitan buyers don’t like gamey tactics. Ask me which is the best strategy for your property.
Tip #2 Talk About Competitions Before Listing
It would be best if you asked the agent you’re considering working with how much experience they’ve had with competitions before you sign the listing agreement. Does their competition philosophy align with yours? If not, do they have the ability to help you understand what you might be facing and give you different scenarios if you end up with competing buyers? Ask me about my strategies and see if they work for you.
Tip #3 Be Prepared To Respond Accordingly
Sometimes competitions happen very fast and unexpectedly. Be ready to be able to respond swiftly and accordingly for the highest success. Make sure you can handle phone calls and paperwork promptly to avoid complications.
Winning After Losing
The agony of defeat can be a real bummer, but there can be a solid chance a buyer can still win even if they don’t win the initial competition. I like to call it a “Hail Mary Pass.” Ask me how this works.
#TrueStory A few years ago, I had clients who really liked a magnificent waterfront property. The timing wasn’t good for them and prevented them from being able to move forward. Once they were ready, they called to discuss writing an offer. I called the listing agent only to learn the property had just gone under contract. When I called the buyer back, he was disappointed but handled the news quite well. He called back again 2 hours later, seriously distressed about his wife’s desire to purchase that property. I had to find a way to keep him out of the doghouse. We went after it with the same skill, determination, and precision of an all-star quarterback and got the touchdown. Several factors came into play ask me how we got the win.
Buyers sometimes surprise themselves with how they react when they lose a property. I have several scenarios where buyers have said one thing and then felt completely different after losing a competition. I know the questions to ask to make sure you don’t surprise yourself and help you gain comfortability regardless of the outcome. The more in touch you are with your own emotions the better you will feel and sometimes it’s worth the extra walk down several roads to help you determine your future. Consider me your virtual theme park host leading you to the very best attraction.
Depending on market conditions and the time of year, sometimes a loss can actually win. Perhaps the market is depreciating, and the next one that comes available is listed at a better price. Maybe you can strike during off-season activity where there’s less of a chance of competing again.
In appreciating markets, you may find you’ll have to pay substantially more for the next available property, and in extreme cases, you may find yourself priced out of the market where you want to buy. This is how pent-up demand happens, which is seldom fun for buyers. Ask me what’s going on in your favorite location.
I hope you found some valuable advice and when you’re ready, consider using me and my team’s expertise to help you accomplish your Naples real estate objective. Please be sure to alert me in advance if you’re coming to town so I can reserve time for you on my calendar. In the meantime, don’t forget to vote, take care of yourselves and hope to see you soon!
Shannon Lefevre, PA
Your Naples Smart Girl!
While you’re here check out these two fabulous properties located in Pelican Bay!