Herman School of Business
Wednesday Update / Notes on a Deal
For those just joining in on Wednesday…we are consulting with a couple who built a house on the South Jersey Shore…and they are sinking into the abyss. After lowering the price several times we are now down to a price that is less than what is owed to the bank. See earlier Wednesday postings for background.
This week I talked with a reporter from the local newspaper and he is considering doing a story about the fact that house auctions may be on the way in an area where up to now they have been non-existent. Letters went out to 110 Real Estate Brokerage firms all over Cape May County. This Saturday I will be at the property to meet Brokers who I will call over the next three days and invite over for a tour of the house.
NOTES ON A DEAL
Today you get a “blog within a blog.” Helping my clients come to a conclusion about their property has caused me to follow the outline I used when selling troubled companies. It means having a plan whereby you identify every potential prospect, in this case every Brokerage firm in the county, and making them aware of the deal in play. To have a bigger impact we always found a way to write an article or press release and involve the media if we could. In this case I am using the fact that a house for sale among 1,300 houses for sale is different…because the sellers may use a method of selling out of the ordinary.
Once you have located the prospects you must get to them over and over again to make sure you get their attention. Once is not enough. After sending the letter I will also call each office. And then send a new letter this weekend to the same people. And if I can get enough fax numbers I will fax a third message next week.
I will follow up next week to see if we can get the story published in the paper.
When all the players know about the deal…and all are aware that the Seller is highly motivated…then you “herd” the buyers towards the finish line…by taking control of the situation and setting a date certain by which the buyer must act or they will lose the chance at this bargain. By creating a date by which all buyers must act it brings the sense of urgency to keep them focused on this deal, rather than have the buyers think they can act whenever they feel like it.
In the past I have used “sealed bids” to allow buyers to put forth their offers in a confidential manner. This allows me to negotiate with prospects without them knowing the level of interest of other buyers. There have also been open auctions where the buyers must publicly announce their bids, although sometimes it is done through a third party to keep the buyer secret. In the end I choose the method which I think will allow me to get the most money for my client. If after weeks of marketing and private discussions with interested parties only one real buyer emerges an auction might hurt my client, because the buyer who finishes second actually sets the price at an auction. You can’t decide which way to go until you know the level of interest from buyers. That will take another week or two in this situation.
- Posted: 12 March 2008
- Comments: 0
- Category: Selling a business
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