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The "Fair Deal Negotiation Process"

It is impossible for one person to represent both parties in real estate negotiations. When a negotiator attempts to act for both parties he inevitably ends up acting for himself, to the detriment of the parties he is supposed to be assisting (See conflict of interests).

This is why there is no place for estate agents in the "Fair Deal Negotiation Process".

	Introduction
	The Stages of the Negotiation Process
	Proper Representation
	Transparency of the Negotiation Process
	Dealing with Buyer's Agents
	The Unrepresented Purchaser

Buying and selling with Lawyers Real Estate

Introduction

Some estate agents act for the purchaser by preparing the purchaser's offer, and then acts for the vendor by responding to the offer on the vendor's behalf. This process usually takes place in the privacy of the estate agent's office, with neither the purchaser nor the vendor having the opportunity to obtain the legal advice they require.

We have developed a fair, open and transparent negotiation process that replaces the improper sales practices experienced by some real estate consumers.

We have called this process the "Fair Deal Negotiation Process".

The Stages of the Negotiation Process

The "Fair Deal Negotiation Process" is best explained by reference to a series of stages. While the following gives an outline of the stages of the negotiation process, it must be noted that each stage can involve complex negotiations on matters of law and issues specific to either party.

	Establishing a Starting Point Price is usually the first matter to be negotiated, therefore a pricing reference point needs to be established. This is achieved by determining a price range, based on formal valuation. All properties sold through Lawyers Real Estate have been valued by an accredited valuer. The valuation establishes a pivot point for the price range, from 5% below the valuation (rounded up to the nearest $5K) to 5% above (rounded down to the nearest $5K), and purchasers are requested to commence the negotiation process by making an offer within the range.
	Making of the Offer The purchaser makes a formal offer by submitting a completed and signed Contract of Sale of Real Estate. The purchaser will have been advised to obtain legal advice prior to signing the contract, and will have prepared her offer on her own terms and according to her own requirements.
	Submission of the Offer The offer is received from the purchaser or the purchaser's lawyers, and is checked by the vendor's lawyer. Legal advice is provided to the vendor regarding any terms and conditions added to the contract by the purchaser, and the vendor provides instructions as to whether or not the purchaser's offer is acceptable.
	Acceptance of the Offer If the offer is acceptable to the vendor, the vendor will formally accept the offer by signing it. The vendor's lawyer will then communicate acceptance to the purchaser's lawyers to complete the sale. The respective lawyers then commence the conveyancing stage. However, if the offer is not acceptable, the matter will proceed to the next stage in the negotiation process.
	Vendor's Counter-Offer If the purchaser's offer is not acceptable to the vendor, the vendor will probably make a counter-offer. The vendor will be given advice and assistance by her lawyer and the contract will be changed according to the requirements of the vendor. It will then be returned to the purchaser's lawyer for consideration by the purchaser.
	Acceptance by the Purchaser If the vendor's counter-offer is acceptable to the purchaser, the purchaser will accept the offer. The purchaser's lawyer will ensure that the purchaser's interests are protected, and will make any further changes the purchaser may require prior to acceptance. After the contract has been counter-signed by the purchaser, it will be forwarded to the vendor's lawyer by way of formal acceptance. Of course, if the vendor's counter-offer is not acceptable, the negotiation process will continue.
	Further Negotiations Negotiations will continue until a deal is struck and formalised, or until the parties realise that the negotiation process has been exhausted. Of course, the decision as to whether or not negotiations will continue always rests with the vendor and the purchaser.

Proper Representation

Sale negotiation is a legal procedure, since the result will be a legally binding contract to sell or purchase real estate. It is most important that both parties to a sale transaction should have proper legal representation, and that their legal representatives do not have any financial interest in the outcome of the negotiations. Impartiality is ensured, because the lawyer represents the vendor on a fee-for-service basis. This is same for the purchaser who has his own legal representation.

Problems arise, however, where estate agents, buyer's agents, or conveyancers become involved in sale negotiations, as none of these have the qualifications or expertise to provide legal advice or to act on behalf of a client in a true agency capacity during real estate negotiations.

Transparency of the Negotiation Process

As the term implies, the parties should be able to "see through" the negotiations and know what is actually going on throughout the process.

All decisions should be made by the parties themselves, with the benefit of legal advice. Where possible, negotiations should be conducted in writing. This ensures that a "paper trail" is left, to enable the client to confirm what instructions were given, what matters were put to the other party, and how the other party responded.

Transparency eliminates the estate agent from the negotiation process, as no estate agents can provide true legal representation. Even if a party decides not to have legal representation, the process remains transparent so long as the person representing one party does not also represent the other.

Dealing with Buyer's Agents

Buyer's agents are simply estate agents who attempt to have the purchaser pay a commission. While there may be some benefit in engaging a buyer's agent for the purposes of locating a suitable property, a buyer's agent simply does not have the qualifications or expertise to negotiate properly on behalf of a purchaser. This is because the buyer's agent is unable to deal with the legal issues involved in real estate negotiations.

Any buyer's agent who drafts special conditions, provides legal advice, or otherwise involves himself with the legal work associated with real estate negotiations commits a criminal offence. This severely hampers the ability of the buyer's agent to make any meaningful contribution to the negotiation process.

A buyer's agent's confidence is quickly destroyed by the mere mention of Section 314 of the Legal Practice Act and the penalty of 2 years' imprisonment for engaging in unqualified legal practice. The bluff and bluster tactics of the buyer's agent have no place in the "Fair Deal Negotiation Process".

The Unrepresented Purchaser

All purchasers are strongly advised to obtain legal advice from a qualified lawyer before signing a contract to purchase real estate. This is a standard practice, and there are good reasons for it:

	A purchaser will feel more confident in making a firm decision if that decision has been made with the benefit of legal advice.
	A properly advised purchaser is less likely to have a change of heart later, and the likelihood of disputes is therefore greatly reduced.
	There is no "cooling off " period when a purchaser has received legal advice before signing a contract. No "cooling off " rights are needed, as the purchaser's decision will be well-informed and not impulsive.
	Because there is no "cooling off " period of 3 days, both parties can have the certainty of an immediate and unconditional contract.

Negotiations tend to proceed more comfortably when each party is properly represented, as decisions are well-informed and proposals are articulated in writing and with precision. The paper-trail created by written negotiations allows each party to know exactly where they stand at any given stage of the negotiation process, and greatly reduces the possibility of misunderstandings.
If a purchaser wants to remain unrepresented, then her right to do so will be respected. In order to ensure that an unrepresented purchaser is not disadvantaged, the lawyer may take steps to ensure that she fully understands the significance of a particular stage or event. Of course, this would be done only after the vendor has been advised, and firm instructions obtained.

The lawyer always remains aware of the fact that the vendor client's interests are often best served by ensuring that the unrepresented purchaser is properly accommodated during sale negotiations.

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