Disproportionate value

Dated: June 19 2021

Views: 38

When I’m guiding a negotiation on behalf of my clients, I look for disproportionate value that we can use to create an advantage. If a buyer offers an additional $10K to buy a house, the offer is proportional, because the $10K is worth the same amount to both the buyer and seller. But sometimes an offer can cost the buyer relatively little while creating a larger perception of value in the seller’s mind—a disproportionate value. Inviting a seller to remain in the property rent-free after closing can be that way. The monetary value of the rental might be $4,000, but to a seller staying on and not paying rent will seem a bigger deal than adding $4,000 to the purchase price.

In a situation where the risk of a dispute between buyer and seller seems low, another low-cost method of distinguishing a buyer’s offer is to increase the size of the earnest money deposit. Assuming that the deal will go through, it costs nothing to move additional money into the escrow account, yet that larger deposit could become a tie-breaker if the seller is comparing two otherwise identical offerings. I have even written counter offers that relieve the seller of the responsibility of getting rid of unwanted personal property in the house. To a harried and tired seller organizing a move, it can be a very big deal not to have to coordinate a moving sale, Goodwill contributions, and trash haul-away—yet the cost of removing leftover belongings after escrow closes is likely to be less than a couple hundred dollars. In a highly competitive market, it helps a lot to think creatively and to understand the motivations of the other side.

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As a residential real estate executive with an extensive background in corporate marketing, I am able to apply unusually strong skills in marketing communications, e-marketing, strategic planning and ....

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