The Foreclosure Case Study: The Kelly Blue Book

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In this scenario, I played the role of the seller. The seller listed his car for sale because he needed to raise $12,000 to place a down payment on a condominium. The Kelly Blue Book (KBB) value for the car was anywhere from $10,000 to $16,000, depending on the condition of the car. Unbeknownst to the seller, the buyer knew about the seller’s need to raise $12,000 for the down payment and could leverage this information to get a lower price for the car. Before starting negotiations, I wrote out my plan with the following key points: 1) start my offer at $15,000, 2) Go no lower than $13,000, 3) Highlight the excellent condition of the car, and 4) Be willing to offer a concession of paying the title transfer fees ($300 value). If the buyer’s…show more content…
The seller needed at least $225,000 to meet these financial obligations. As the buyer, I was unaware of the reasons that the seller was parting with his boat. The buyer was pre-approved for a $250,000 loan to buy the boat, plus he had $25,000 in savings, so the listing price of $270,000 was within reach. I was much more prepared this week before we conducted negotiations. In my written plan, I established my bracket, the questions I would ask, and the negotiation cadence. My brackets were: a $210,000 opening position, a $240,000 target, and $270,000 as the bottom line. My cadence was set at raising the bid at irregular patterns: $210k, $229.3k, $236.2k, and $240.9k (if counters went that far). As we started negotiations, I focused first on probing for interests by asking questions on why the seller was selling the boat and why he thought it was worth $270k. I used facts to make the seller rethink his asking price (mentioning another boat listing for $185k) and allowed that to sink in before making my first offer. In my first offer, I used logic to justify my opening bid of $210k ($185k for other boat, plus estimated $25k in repairs—budget from my savings…show more content…
One thing I overlooked was asking the seller to clarify why his boat was worth $270k from an objective point of view; his reasoning was primarily subjective. If I had discovered that there was no real data backing up the price of the boat, I could have used that to set my opening bid even lower. In the end, we closed negotiations at my first counter offer of $239,300. Thinking back on this week’s negotiations, I believe I was much more confident this week. Creating an outline of how I wanted to frame my questions and establish my cadence made me feel more in control of the negotiations. I learned with the proper planning and framework, I can drastically improve my negotiation abilities. One area I could improve in, however, is probing the seller for how they determined their data points (i.e., asking price). This information could help me determine how to shift my tactics. If the price were from a subjective point of view, I would use a more personal approach to come to an agreed middle ground on price. If the price were from an objective data point, I would need to come up with some concessions to bring the price down so the seller doesn’t feel like he is losing money or
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