When you choose to sell an item of value, there is a natural tendency to over value its worth to others. If you reject reasonable offers and refuse to make a counter offer, then you’re likely to be left without any buyer. Without a buyer, you may watch your item fall in value from age, obsolescence, or market changes.
I have observed this phenomenon on countless occasions, even among professionals:
- A friend rejected a $31,000 offer for her car, only to accept a $23,000 offer a year later. A needless loss of 25%
- An acquaintance rejected a $120,000 offer for her home, only to accept a $79,000 offer 18 months later. A needless loss of 34%
- A friend is a business analyst. One of his clients has been actively trying to sell his business for a long time. Three years ago, the owner rejected an offer for his business of $128 million, and has not received an offer since then. My analyst friend doesn’t think anyone would offer more than $45 million today because of increased competition. A needless loss of 65%
- A relative priced his used car worth $3,000 at $6,000 so he didn’t get a single offer in 2 years. Then the engine-timing belt failed, breaking all of the engine valves. With a useless engine, the most he could recover for his car was $400 from the junkyard, minus the tow fee. A needless loss of 88%
I could list many more stories like these with different assets, but hope that you are beginning to see the pattern. An overly optimistic valuation leads to rejecting reasonable offers. Rejecting reasonable offers likely leads to giant financial losses and delays. The delay is the time period it takes for the seller to accept the reality of the marketplace. But this is unnecessary – if you do this work upfront. Instead of being offended by a perceived low offer, make a counter offer. I know one couple unwilling to accept reality for 17 years and going. Every few years they put their home on the market at a price 30-40% higher than what it is worth. After a year of no offers, they take it off the market. They have done this many, many times and just removed their “For Sale” sign after no interest for 10 months. Meanwhile, the homes around them have been selling like hot cakes.
Please do not create your own similar story of needless financial loss to this list. Price your item reasonably and always make a counter-offer; which includes considering how long it might be before you receive another offer.