This is something I sent to our clients recently and realized it has good lessons for all.
I’ve been involved in a real estate buy-sell transaction as over the last 18 months we’ve been trying to sell our family cabin in the Midwest. In this part of the country it is not a red-hot real estate market, with only one exception and the exception is places on a chain of lakes, which our place is not.
Bottom line, it’s been slow. About one year ago we had a verbal “offer” about 25% below the asking price. Our agent told them not to even bother writing it up, which was the right decision.
All of a sudden, this fall, after no serious interest all summer, we got two offers. One was another lowball offer, which definitely hurts one’s feelings. The other was in the negotiable range, so we negotiated, and reached agreement.
Lesson one: lowball offers destroy all faith and trust. You don’t even want to deal with the person.
After hundreds if not thousands of online views, scores of people looking at the place in-person, two lowball offers, and one negotiable offer, we came to realize the following, which business sellers often don’t want to accept:
Lesson two: the market was speaking to us about what the value really is.
At the same time, we realized, and this applies to business buyers:
Lesson three: no buyer (maybe a very naïve one) makes an offer they expect to be accepted.
In fact, if a seller accepts the first offer a buyer makes the buyer should wonder what’s wrong. Because rarely is the asking price what a seller really wants and rarely is the first offer the limit of what a buyer is willing to pay.
Summary, in business deals it’s very much about relationship. In business and real estate, emotion and feelings play a big part.
“Promises only bind those who believe them.” Jacques Chirac