Five Reasons to Make the First Offer Work
Years ago I bought a residential lot in Carmel Valley and hired a contractor to build a house which I hoped to sell at a profit. The project took more than a year to complete, but I finally listed the home for sale at $420,000.
It took three months to receive the first offer, which was a disappointing $360,000. I countered at $390,000. The potential buyer came up to $370,000. I countered again, this time at $380,000. My counteroffer was refused. “Oh, well,” I thought. “Soon I’ll find another buyer, and at a higher price.”
A month went by, and after making another loan payment and paying the property taxes, I reconsidered. I contacted my broker and asked her to call the first buyer and accept the $370,000 offer. Unfortunately, during the month my potential buyer had purchased a different house.
I wish this story had a happy ending. It doesn’t. Nine months, and many loan payments later, I finally sold the house for $320,000, which was $50,000 below the first offer. After that experience, I resolved that in the future if the first offer was reasonable, I would always try to make it work.
Here are five reasons, in life as well as in business, to make the first offer work.
- The first offer might be the only offer you receive.
- The first offer might be your best offer. In my real estate business I have seen this happen time and again. As they say in the stock market, “Bulls can make money, bears can make money, but pigs go bust.”
- By making the first offer work in a social setting you will develop a reputation for being reliable. When I receive an invitation from someone I would like to spend time with, I accept, even if a better offer might come along later. This helps me to build relationships and also to develop a reputation for being trustworthy.
- Accepting the first offer will push you to make your decisions more carefully. For example, if I am invited to a party on Saturday night two weeks from now I will think about whether that is something I really want to do and consider any possible conflicts before I say “yes.” In this way I make a better decision in the first place.
- When I make the first offer work, I also make my life work better. This is true even when I later have misgivings. Last week my wife and I woke up very early on the East Coast, worked all morning, and then flew back to Los Angeles to attend a Christmas party. At the party, by 8:30 pm, we both felt like tottering zombies and politely told our host that we had to leave early. He said, “Stay for twenty minutes – Ed is going to present his annual Christmas show, and he’s really good.” We stayed. Ed was really good. Daveen and I left the party an hour later with broad smiles and with more energy than we had when we arrived. I was grateful we had accepted our host’s request to stay.
As the saying goes, “A bird in the hand is worth two in the bush.” I respectfully disagree. Sometimes a bird in the hand is worth at least $50,000 in the bush.
Happy New Year. I’m going to make 2015 work.
Alan