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Berkonomics

Leave something on the table in a sale.

Isn’t the goal of any negotiation to get the maximum possible out of the other side?  I have learned from long experience that the last bit of concession is the most expensive in a negotiation.  Invariably, it’s after the negotiation, whether during the final documentation of the deal or after the closing when the buyer finds those unexpected surprises, and that the seller who drives the hardest bargain is the one attacked with the most energy by the affronted buyer. 

Certainly, sales contracts usually call for a basket or amount of findings below which the buyer will absorb the costs.  The problem comes when the buyer finds surprises that could have much greater effect, but whose cost will not be known for years.  Customer contracts that come up for renewal but are not renewed as expected, a customer bankruptcy after the closing, a group of employees that leave together to start a new business.  There are so many unforeseen opportunities to make a buyer unhappy after the closing, that it is good strategy to leave enough on the table, labeled carefully as such, so that there is no doubt as to the “gift” from the seller.  As a percentage of the total package, often such a gesture is small, but the benefit can be great if the unexpected happens

  • RussDollinger

    In other words, don’t be greedy to avoid buyer’s remorse.

    Good point.

    Thanks.

  • Larry

    I tend to agree. Lawsuits aren’t just about the facts; they are about perception of fair play. Did i get screwed? Fighting for every last dime does not leave a good feeling with the buyer. If something does go wrong afterwards they will be more likely to seek revenge.

  • Sally Heaverne

    I just went through negotiations on our ranch after Tandis and her family moved to Auburn, CA. As you know, the real estate market is slow to bad these days, and I was not getting much encouragement from our friend/broker and his dismal market analysis. I decided to handle it myself and try to stick to my guns on price. It worked out very well, but since the couple raises goats and other livestock and wanted more room, we threw in the contiguous ten acre parcel for a little more $(tho’ more than we could probably have gotten selling it by itself in today’s market). The buyers were thrilled, and we are out from under taxes and maintenance. Your article about leaving something on the table made me feel better about having done that. I think we’ll have a better relationship with the buyers, who are also necessarily our neighbors now. Thanks, Dave!

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