How to Properly Counter Offer
A buyer when expressing interest in a property will often feel out the situation with the broker or seller. They then will place an offer, which could come relatively quickly. A buyer will sometimes buy time with due diligence but if they’re interested a lot of offers usually come soon after they get the materials and review them.
That initial offer might be a genuine one, it might be a great offer, or it might be a lowball.
It’s good to understand where on the spectrum they are in terms of what their top level max is without offending.
Many times out of the gate a serious buyer will show some of their cards. Most buyers who are legitimate (placing an offer above 65% of the asking price in all cash) are not looking to play games. They are telling you what the business is worth in their mind. Can you get them to budge. Of course. Will you get them to double their price, probably not.
If their offer is far off from what you’d accept be polite, nice, and blunt that you can’t go low enough, it’s not worth it to you. However if they’re kind of low but you want to stretch them to see if they can enter what you’d initially thought, then you should
So the best counter will get them to increase their cash commitment by a decent percentage but most importantly their total offer to match your asking price. You do this in a strategic way.
There is an art to negotiation. It’s a fine line. You can offend them.
When a buyer is interested in a property, many times a seller will just look at what the buyer offers at what the buyer is looking to buy it for. Many times a seller will become emotional about it and try to explain until their blue in the face why their business is worth more. As brokers, we know why the business is worth more. That is why we generally took on the listing and in fact we see value in many assets that sellers don’t see. The bottom line is you have two numbers and it’s about assessing how far the numbers are apart and what if anything can make those numbers come together. That’s what negotiation is.
There’s a great line in the movie All the Money in the World, when Mark Walhberg’s character has the authority to give $0 in negotiations by his boss, the richest man in the world in Getty. Mark says “Right now, the numbers are $17 million and zero. And those numbers have to move.” This is the art of negotiation. Understanding where the gap is and how you move numbers.
Understanding what you can and can’t do and working within the confines of ethical boundaries to move numbers to get a buyer and seller to come to terms on an agreement.
Contact us fro your next acquisition:
Phone – (800) 773-1523
Email – acquisitions@Jarbly.com
Leader in Business Consulting with Expertise in Representing Sellers & Buyers on Deals
Jarbly is a leader in business consulting with expertise in helping with revamped strategies, enhancing valuation, positioning for an exit, and business and real estate sales.