I just attended my 25 year law school reunion. That may be why I’ve been thinking of school lately and why this edition of the newsletter is in the form of a case study. There is much to be learned from real life situations.

Ted and Tina were getting divorced and decided to sell their home. They hired me to help them.

Their property was very unique for its neighbourhood. Their home was of average size, but their lot was one of the largest in the neighbourhood. There was a big addition at the rear, but the entire home required updating or renovating. It took a fair amount of thought and discussion to estimate the fair market value of their property as there weren’t really any comparable properties that had recently sold. We had to look at sales of similar properties in adjacent neighbourhoods, figure out who the likely buyers would be for their home and estimate the amount these buyers would be willing to pay for a property of this type in their neighbourhood. After estimating the fair market value of their property, we then had to set the list price. Because we believed that the most likely buyer would be a builder or someone who wanted to renovate the home and this type of buyer usually wants to negotiate price, we decided to list their property at a price that left some room for negotiation instead of following the now common practice of listing low and hoping for multiple offers.

Lesson 1: It’s best to have an agent who understands your market well enough to help you determine the proper list price and pricing strategy for your particular situation.

The property went on the market just as summer was arriving. Ted and Tina were not desperate to sell. We told them to be patient because the market is usually slower in the summer. We also told them not to be discouraged or insulted if they received a lowball offer because some builders or renovators might try to buy their property for a ridiculously low price. To them, this is a business and the less they pay for the property, the greater their profit.

Lesson 2: Not every home sells right away with multiple offers. Have realistic expectations with respect to the time it will take your home to sell. You’ll feel less stress.

Lesson 3: Keep your emotions in check. Once you decide to sell your home, move into business mode. Your goal is to get the best terms possible, including price. Leaving your emotions out of your decisions will help you achieve this goal.

During the approximately 3 months that their property was on the market, Tina and Ted received 5 offers (6 if you include an offer that was made over the phone). The first offer was for approximately 13% less than the list price. Because they were prepared, they were not insulted by this offer. We advised them that we felt that the price being offered was too low to accept. The buyer was not willing to increase his price, so no deal was struck.

Lesson 4: Despite what you may be told, your first offer is not necessarily your best offer. Don’t feel pressured to take your first offer because you think you may never get another offer. In this case, each of the 4 other offers which Tina and Ted received was higher than their first offer.

Their second offer started out even lower than the first, at almost 17% less than list price. Tina and Ted weren’t fussed. We started negotiating and ultimately got the buyer to agree to a price that was within about 3% of list price. Unfortunately, the buyer relied upon a condition in the agreement to terminate it a few days later.

Lesson 5: Don’t count your chickens until all conditions have been waived. A deal without conditions is worth more than a deal with conditions because buyers can use conditions to get out of deals. That’s why some sellers choose to accept an offer with a lower price and no conditions instead of an offer with a higher price and conditions.

Lesson 6: It’s smart to require a certified cheque or bank draft on account of the deposit so you have the buyer’s money firmly in hand when a deal is struck. Buyers are less likely to have a change of heart after they sign on the dotted line if they know that they may lose their deposit and that they can’t put a stop on their cheque.

In the course of negotiating the third offer, the buyer eventually offered a price which Tina said she’d be willing to accept. Ted said he’d be willing to accept it, too, but wanted to try for a little more. The buyer’s agent told us that her client agreed to the higher price, but half an hour before he was to meet with her to sign the paperwork, he called her to say that he had changed his mind about the property altogether and didn’t want to buy it at any price. At this point, it wouldn’t have surprised me if Ted and Tina were emotionally spent and stressed beyond belief, but when I asked them how they felt, they both said that they were okay. Tina said that she knew the house would sell and that she wasn’t going to get stressed about the timing of the sale because she had no control over that. She went on to say that there are much bigger problems in the world than selling a house.

Lesson 7: It’s okay to try to negotiate for a little more money, but be willing to accept the consequences. Every time you make a counter-offer, the other party has the option of walking away from the deal. Ask yourself if the gain is really worth the risk.

Lesson 8: With respect to real estate transactions, if it’s not in writing, it doesn’t exist. The fact that the other agent told us that her client had agreed to the higher price before he changed his mind carried no legal weight.

Lesson 9: Try not to get stressed when you’re buying or selling real estate. No one is going to get sick or die. Keep things in perspective.

The fourth offer was for a reasonably fair price. This buyer stuck to his opening price and wasn’t willing to negotiate. The price wasn’t satisfactory to Ted and Tina so there was no deal.

Lesson 10: Not all buyers are willing to negotiate. Some may offer their best price right off the bat. Remember this in the context of Lesson 7. Every time you don’t accept an offer and make a counter-offer instead, you run the risk of losing that buyer.

Offer number five. (Finally.) This offer initially had a low price, low deposit, long closing date and two conditions. We were able to negotiate a higher price, larger deposit, earlier closing date and removal of the conditions. Tina and Ted were satisfied with the terms which we were able to negotiate and accepted this offer.

Lesson 11: Be as patient as you can given your circumstances. Things will work out.

Lesson 12: Hire an agent who truly cares about you, has your best interests at heart and is willing to put in the time to make sure that things work out as well as possible for YOU! It’s much easier for your agent to do a quick deal and move on to the next client than it is to spend more time with you.

After all was said and done, Ted and Tina were an absolute pleasure to work with. They were polite, considerate and respectful of us and each other while going through a difficult time in their lives. I have rarely seen this level of civility displayed in other divorce situations. It was an honour and a privilege to represent two such fine people.