As a teenager I’d lost a sale because the buyer thought the seller was making too much money. He’d researched what the seller had paid for the home, and was aghast at the price from which the seller refused to budge. A price, mind you, for which I had abundant evidence was very reasonable.
At the dinner table that night, Dad smiled as I complained loudly of the unfairness of losing out on a $222 commission. (Don’t snicker, that was a lot of money back then. A round of golf, including cart, was under $10, $1 got me three tacos, a burrito, and a large Coke at Taco Bell, and $5 brought me change after filling my tank.) After he tired of hearing me whine about my epic loss, about 39 seconds, he dispensed this advice.
“Focus on, and be concerned about being happy with your side of any business transaction, while being honest and behaving with integrity. If you care about how much the other guy might be making on his side, you’re looking through the wrong end of the telescope. You should rejoice any time you’re happy with a business deal while simultaneously the other guy is also excited.”
How many times have investors lost stellar deals because they were concerned the other guy might be making a buck, even two? What is it about some people? It’s like they can’t force themselves to finalize a potentially profitable transaction if it means the seller hitting his own jackpot. Their behavior would be comical if it wasn’t almost tragic in so many cases. They will actually walk away from an incredible transaction because closing it would mean the seller was able to do exactly what they’re hoping to do themselves.
Looking through the wrong end of the telescope makes it impossible to see, much less analyze the big picture. By focusing on what the other guy is getting, it can sometimes mean you’re missing the real reason you should be closing the deal — or not.
Keep your eye on your big prize.
My favorite first hand example of this principle in action happened back in the mid-80′s. A client was interested in a couple duplexes located in a blue collar area. I’d brought them to his attention because. though they were on one lot, the lot could be split at a relatively low cost, resulting in an increase in value of each duplex significantly. The split had been started more than a decade earlier, but for some reason had never been completed. It was a real find, pretty rare.
The seller had acquired the units in the early 70′s, and was going to realize a ginormous profit. The buyer was, to use his words, ‘nearly insulted’ at the gain this guy was going to enjoy. So he calculated what he deemed reasonable, and made his offer accordingly. Of course, he didn’t get far with this ludicrous approach, and lost the opportunity. I immediately called another client who had just entered into a tax deferred exchange. This property would fit nicely with their Plan. They agreed, and along with a couple other properties, closed on this one.
Three years later, in ’89, they sold those duplexes for just short of double what they paid.
In those days I put out a small newsletter to clients only, and used this property as an example of how creating separate parcels from one original lot can be very profitable. Oops. The wife of the ‘insulted’ client called me, asking why I hadn’t called them about those units when they were available. When she heard Hubby had indeed had first shot, turning them down for the reason he did, she was livid — and not with me either. 
Focus on your agenda, and what your Plan is trying to accomplish. Pay attention to the other side, but only to the extent you can give them what they want without defeating your Purpose. You do this by looking through the right end of the telescope, and keeping sight of the big picture — and your big prize.
Looking through the wrong end of the telescope so often results in losing out on exactly what you wanted in the first place. Sometimes you just need your telescope aimed the right way — the small end is for your eye.
Related posts:
- Don’t get me wrong! You need to Invest in Real Estate Education!
- Evaluating This Deal The Wrong Way Could Cost You $16,000…
- How I Made $50,000 on my First Real Estate Deal Even Though I Did Everything Wrong
- Why People Who Think Real Estate Mess Will Soon Improve Are Wrong
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Article Author: Jeff BrownJeff has written 126 articles for us.
Visit Jeff's Website: http://www.bawldguy.com
Licensed since 1969, broker/owner since 1977. Extensively trained and experienced in tax deferred exchanges, and long term retirement planning.
Joshua Dorkin
{ 4 comments… read them below or add one }
This is a major problem with buyers. It does not matter if it is an investor or first time homebuyer. As an investor, I only care about my bottom line. If the numbers work: interest, rents, taxes etc….It does not matter how much is paid for the property and how much the seller makes. It defies logic. Same with other buyers, they are always concerned at how much the seller can have back of their equity. Who cares! How can anyone really put a value on the “Quality of Life”. If a owner occupant loves the home and they will be happy for years to come, why are they so concerned at how much the seller will make? If it is a fair price….just buy it.
Hey Rob — I feel your frustration too at times. Fortunately I’ve learned to have fun with it, though sometimes my clients don’t see the humor.
Great post – and relevant to everything. So many of us have an overdeveloped taste for schadenfreude, and it’s never worth it.
I have to shoot a video blog about this same topic. You wouldnt believe how many times I hear The seller doesnt owe anything so he shouldnt be concerned with how much money Im offering. Thanks for another great read.