When I was a teenager, I went through a period where it was considered high style to be able to contrive riddles with no answers. One such was, 'How far can you go into the woods?' The answer is, 'half way, because if you go in any deeper, you'll be coming out again.' People who buy or sell are faced with the same sort of tricky questions. Because profit lies in the eyes of the beholder, the determination of how much is too much to pay, or too little to receive depends on the needs and aspirations of those involved.
For instance, burned out managers might measure profit in the form of freedom from hassle. In such case, the other party in entering into negotiation would want to emphasize the lack of management as a major advantage. On the other hand, someone with money problems might willingly trade off the extra effort an income rental might require in order to boost his earnings.
An illustration of this is where one party exchanges raw land for a management-intensive rental property. On the one hand, the land-owner may be giving up future appreciation for income. On the other hand, the other party is giving up income not for land, but for serenity and personal freedom from management cares and liabilities. Although the economics of the transaction have to be reasonable, it's likely that a lot of equity has been surrendered on both sides of this kind of exchange less in order to get the benefits the particular kind of property received than to escape the disagreeable aspects of the property given up.
Negotiators often miss the boat by being in too big a rush to make a deal without taking the time to explore any uncomfortable circumstances of ownership that would reveal the other party's real needs and motivation. From time to time, ads run in the newspaper list 'illness' as the reason for a sale. If you were a doctor trying to treat illness, you might just prescribe something to relieve its symptoms or to make a patient more comfortable. But you'd wind up with a healthier, happier patient if, prior to prescribing treatment, you took time to learn more about his or her occupation, working conditions, family size, marital bliss or discord, ages and circumstances of the children . You might discover that helping a person reduce or avoid stress in his or her life would do as much as some wonder drug.
The same principle applies to buying from someone who may be sick of a property. Or to selling to someone who hasn't quite decided what he expects of a property. In either situation, taking the time to get to know the other party can pay big rewards in terms of the benefits you can acquire in a transaction. Getting comfortable with each other prior to commencing any negotiation. As long as we're working in this medical metaphor, the best advice I can give you is, 'Physician, heal thyself!' The first step in negotiation is to know what's best for yourself.
Setting your own objectives prior to engaging in a transaction can produce amazing results. Conversely, failing to take the time to identify the specific benefits you want to wind up with, and the value of these to you almost certainly means that you'll achieve less satisfaction from any deal you enter into.
The first step is to ask yourself why you're buying or selling something. What will improve once you make the deal? Will you be able to make more money? Reduce your liability exposure? Acquire or rid yourself of something you don't need or want? Next, ask yourself how much of your cash, credit, profit, or cash flow you're willing to give up to achieve your objectives. You may find that the sacrifice of TIME may be your greatest cost when it comes to buying or selling.
