Negotiating & strategies on the final selling price

**llewxamg** · 03-13-2008, 08:21 PM

hi everyone,

please read my strategy and tell me if you aggree/disagree or any suggestions.

i'm selling a bar/restaurant in the northeast. It's a commercial property in a residential zone (a thorn with respects to it geographical location). same owner for 25 plus years. in a state of 7 million plus within a large county (land wise) of 145k people. purchase price was at $ 260k. this year, my asking price was 775k without doing a comparable market analysis (CMA). my very-interested buyer countered with 550k (cash only, i don't want to hold the note) based on 3 things: his CMA, little to no chance of residential conflict, and the overall condition of the bdlg.

my strategy is: i intend to bluff and say that i have a cash offer of 589K from a local investor. if you can make a better offer it, it's yours. i want 650k but believe this unobtainable. if he doesn't buy it or refuses, i will say something like, i want this to be a win-win situation for both of us, so what's the best you can offer. (i do have an actual 2nd interested buyer but don't want to encounter delays)

the tough dilemma i face, unfortunately, is i'm unable to do my own CMA because of several very important issues. and no i don't have a RE agent (after future capital gains tax & lawyer fees, and god knows whatever else fees, i decided an agent may not really help at all). with that being said, the CMA issues are this is a remote area. while yes there are other properties, there are no SIMILAR properties based on square footage, type of business, and the distance away from mine, and, more importantly, the AVAILABILITY of a business currently up for sale or which has sold in the last TWO years! (never mind 6 months). when i say type of business i can't include go-go bars or dance clubs in a CMA because they are not similar.

i classify my buyer as somewhat lucky with his CMA because property 1: a quarter of the size of mine, was sold for track development (i.e. being torn down), property 2: while in a better location than mine the sq. ft. is one-half of mine, property 3: is very similar to mine, but sold for 475k. that was a steal, but i feel it went for that because there had been very well known bad family bickering management issues & a very anxious seller.

add to the mix, are these tight market conditions, normal risk vs. profit, someone offering all cash for this type of business is rare.

i feel i can counter his residential conflict issue by saying most bars are susceptible to noise complaints no matter what zone your in and with respects to overall condition, i can reference my repair receipts and explain that i had my entire roof was replaced, new siding, etc. most very old bdlgs need some type of improvements (if it's working, don't fix it, unless your Trump, of course).

by the way, residential houses in this town average starting price 300k.

should i change my strategy or leave as is?

**Greg** · 03-14-2008, 01:51 PM

At the very least you need to pay for an appraisal. You are trying to save pennies and risking thousands.

**brianlaughlin** · 03-14-2008, 04:15 PM

I guess it depends on how motivated you are. I've always steered away from fibbing when working with people. I've seen too many examples of it coming back to haunt someone.

I think you were selling this directly. Perhaps you can hire someone and exclude people you find. That way you can create a real bidding war for your property. Plus if you end up paying someone to sell it, but they net you more you still win.

Good luck,

Brian Laughlin

**carlam** · 03-15-2008, 11:59 AM

I agree with Greg, you at least need to pay for an appraisal. As for the "win-win" it can't be if you are untruthful from the get-go.

**TomAnto** · 03-15-2008, 11:00 PM

Don't lie. Instead, figure out why the person wants the bar and how they are financing it if possible. Instead of hammering away at the price there may be some intangibles that could be negotiated for instead. By the comparables you listed here, it sounds like the offer is already a good one.