5 ms·

Buyer: I think I could come up to maybe $7500 but that’s about it. .. then later: Buyer: Ok at $10,500 we have a deal. I've sold a few projects in my time, but

Buyer: I think I could come up to maybe $7500 but that’s about it. .. then later: Buyer: Ok at $10,500 we have a deal. I've sold a few projects in my time, but this conversation makes me think I should really look at having an agent represent me in future. The whole "I can only offer $7500" but then that turned into a $10500 sale just goes over my head - the communications skills needed are next level, and I've read Getting to Yes and such books :-) Maybe having someone less emotionally attached to a project could work in negotiations to increase the price to far more than cover their fee?

danvoell 5y ago
Never Split the Difference is another good book to read.
- twobitshifter 5y ago
  This negotiation as written was just moving down by the same amount offered by the buyer, is that what the book would recommend as a technique? It gave a gain of $750 over splitting the difference from the start.
  - JohnCurran 5y ago
    The book does not recommend it as a technique for starting a negotiation but does include a chapter on the final barter/haggle over price and how best to handle it
  - Aken 5y ago
    > This negotiation as written was just moving down by the same amount offered by the buyer Huh, didn't even notice. Thanks for pointing that out!
    - twobitshifter 5y ago
      If you continued to play it out with computers you’d run into Zeno’s paradox. At some point the buyer stopped going to lower increase amount,s but it could happen in which case I guess you’d end up in the middle and quibbling over pennies.
  - SamBam 5y ago
    I haven't read the book, but, in general, it's not a good move to split the difference from the start, because there is usually at least one more round of back-and-forth. So once you've split the difference, you're already going to end up closer to the other person's initial bid. e.g. "I want 10,000" -> "I'll offer 5000" -> "Let's spilt the difference and say 7500" -> "How about 6000?" -> ... now you're already between 6000 and 7500.
    - estaseuropano 5y ago
      Great book, would recommend. Not surr how often it has been useful for me still it is a very pleasant read. The main idea is to not give in so easily and to find mutual wins, e.g. he gives the example that he could help the other party get an article in a magazine - barely related to the deal, cost nothing for him, but was worth a lot to the other party.
    - a1369209993 5y ago
      > "I want 10,000" -> "I'll offer 5000" -> "Let's spilt the difference and say 7500" -> "How about 6000?" -> "Okay, spliting the difference on that works out to 8000. Sounds good."
avinoth 5y ago
In reality it's much easier. I've sold couple of my projects before via different mediums (one is through microacquire - the one OP mentioned, and one was through a connect), and the best way i found to go about it is to be ready to walk away from the deal. I know this is negotiations 101, but it's tough to put it in practice most of the time if one person wants a little bit more to see the transaction through. Surprisingly, communications skill doesn't play that big of a role, unless you really want to "sell it" most of the conversations goes the same way OP mentioned.
- surfsvammel 5y ago
  Another great way is to make sure there are multiple prospect buyers and have them bid against each other.
giarc 5y ago
On the flip side, an agent is motivated to close the deal not necessarily get the highest price. If the agent gets 10% cut, they get $750 or $1050. Is $300 worth potentially souring the deal?
- snovv_crash 5y ago
  That means you need a better incentive structure for the agent. Like 30% above a certain bar, for example.
- SamBam 5y ago
  That's a common complaint about seller's agents in real estate. Unsure what the solution is. A seller can, of course, say that they refuse to sell for under $X, though that could potentially still be leaving money on the table if the buyer might have been willing to offer $X+Y.
  - giarc 5y ago
    A reserve price just sets a target for the agent and they negotiate to that target. I'm sure there are some commission based structures out there that address this inbalance.
  - jjeaff 5y ago
    I think one better way to handle commissions for home sales is to have no commission for the first $x of the price. X being a price that it would be very easy to sell at, a price low enough that the property would just immediately sell without much effort because it is too low. Then apply a much larger commission percentage to the amount it sells for above that "easy sale" price. That way, the seller and the agent actually have more closely aligned incentives and thus motivation for the agent to try and get that last $5k, or whatever.
    - robocat 5y ago
      Have you negotiated this? Or have you ever seen an agent offer this? To explain the issue in detail for others that don’t understand the dynamics: A flat percentage is the standard where I live. Selling agents are only incentivised to get as many sales through as quickly as possible, and the agent will deceive and cheat to achieve that goal. Selling 20 homes at 5% discount is almost double the earnings (commissions) for the agent than selling 10 homes. Agents make wayyyy more by selling more houses quickly than they ever could by spending more time selling each home to get a few percent more. Yet the person selling the home really really cares about that few percent because their home is often highly leveraged: if they have paid 20% of principal and get 1% more from the sale, that is actually 5% extra return (which can easily be equivalent to avoiding many extra years of work before a home is paid off).

danvoell 5y ago

Never Split the Difference is another good book to read.

twobitshifter 5y ago
This negotiation as written was just moving down by the same amount offered by the buyer, is that what the book would recommend as a technique? It gave a gain of $750 over splitting the difference from the start.
- JohnCurran 5y ago
  The book does not recommend it as a technique for starting a negotiation but does include a chapter on the final barter/haggle over price and how best to handle it
- Aken 5y ago
  > This negotiation as written was just moving down by the same amount offered by the buyer Huh, didn't even notice. Thanks for pointing that out!
  - twobitshifter 5y ago
    If you continued to play it out with computers you’d run into Zeno’s paradox. At some point the buyer stopped going to lower increase amount,s but it could happen in which case I guess you’d end up in the middle and quibbling over pennies.
- SamBam 5y ago
  I haven't read the book, but, in general, it's not a good move to split the difference from the start, because there is usually at least one more round of back-and-forth. So once you've split the difference, you're already going to end up closer to the other person's initial bid. e.g. "I want 10,000" -> "I'll offer 5000" -> "Let's spilt the difference and say 7500" -> "How about 6000?" -> ... now you're already between 6000 and 7500.
  - estaseuropano 5y ago
    Great book, would recommend. Not surr how often it has been useful for me still it is a very pleasant read. The main idea is to not give in so easily and to find mutual wins, e.g. he gives the example that he could help the other party get an article in a magazine - barely related to the deal, cost nothing for him, but was worth a lot to the other party.
  - a1369209993 5y ago
    > "I want 10,000" -> "I'll offer 5000" -> "Let's spilt the difference and say 7500" -> "How about 6000?" -> "Okay, spliting the difference on that works out to 8000. Sounds good."

avinoth 5y ago

In reality it's much easier. I've sold couple of my projects before via different mediums (one is through microacquire - the one OP mentioned, and one was through a connect), and the best way i found to go about it is to be ready to walk away from the deal. I know this is negotiations 101, but it's tough to put it in practice most of the time if one person wants a little bit more to see the transaction through. Surprisingly, communications skill doesn't play that big of a role, unless you really want to "sell it" most of the conversations goes the same way OP mentioned.

surfsvammel 5y ago
Another great way is to make sure there are multiple prospect buyers and have them bid against each other.

giarc 5y ago

On the flip side, an agent is motivated to close the deal not necessarily get the highest price. If the agent gets 10% cut, they get $750 or $1050. Is $300 worth potentially souring the deal?

snovv_crash 5y ago
That means you need a better incentive structure for the agent. Like 30% above a certain bar, for example.
SamBam 5y ago
That's a common complaint about seller's agents in real estate. Unsure what the solution is. A seller can, of course, say that they refuse to sell for under $X, though that could potentially still be leaving money on the table if the buyer might have been willing to offer $X+Y.
- giarc 5y ago
  A reserve price just sets a target for the agent and they negotiate to that target. I'm sure there are some commission based structures out there that address this inbalance.
- jjeaff 5y ago
  I think one better way to handle commissions for home sales is to have no commission for the first $x of the price. X being a price that it would be very easy to sell at, a price low enough that the property would just immediately sell without much effort because it is too low. Then apply a much larger commission percentage to the amount it sells for above that "easy sale" price. That way, the seller and the agent actually have more closely aligned incentives and thus motivation for the agent to try and get that last $5k, or whatever.
  - robocat 5y ago
    Have you negotiated this? Or have you ever seen an agent offer this? To explain the issue in detail for others that don’t understand the dynamics: A flat percentage is the standard where I live. Selling agents are only incentivised to get as many sales through as quickly as possible, and the agent will deceive and cheat to achieve that goal. Selling 20 homes at 5% discount is almost double the earnings (commissions) for the agent than selling 10 homes. Agents make wayyyy more by selling more houses quickly than they ever could by spending more time selling each home to get a few percent more. Yet the person selling the home really really cares about that few percent because their home is often highly leveraged: if they have paid 20% of principal and get 1% more from the sale, that is actually 5% extra return (which can easily be equivalent to avoiding many extra years of work before a home is paid off).