The intangible cost of incivility
When I thought about how to approach the question of what goodwill is worth in real estate, I thought of my friend, Nir Kossovsky. He’s a risk and reputation executive with Steel City Re. He works to understand the value of intangibles in business operations – things like safety, security, sustainability and ethics. Although his business does not help establish value of intangibles in real estate, I suspect that the general principles underlying reputation hold true. He'd look at real estate this way:
There is a price premium for properties in neighborhoods that have a reputation for safety and security; for ethical local government; and for programs like waste recycling and park management. There is also a price premium for the intangible of a civil transaction, and a discount for the opposite.
For this reason, I tell my clients that being agreeable in the beginning will yield more success in the negotiation. I find places of flexibility that don’t matter to my clients and use those to get the things they want. An example: If a buyer is flexible on closing dates and deadlines, this can sometimes get more concession on price. But beyond that, if a buyer (or a buyer’s agent) comes off as pushy and aggressive, frequently, the seller will push back. And vice versa.
Now, here is a story from a comment by Inka Dinka that describes what happens when civility breaks down:
“Civility should be the rule. But I agree with Jerry that you need to be careful, else the other side react negatively. I had a former neighbor who was apparently difficult in dealing with the buyer of his house. It eventually moved to closing, but during the final walk thru the buyer noticed that a set of drapes & hardware was missing. Since the drapes were specifically called out in the contract as being included with the house, he refused to release the sales proceeds until the drapes were returned. The seller, at this point being very nice, asked to make up the difference in cash. The buyer refused. But the problem was that everything was either in storage or being shipped overseas, because the seller was moving to Korea. As a result, the seller had to pay the storage company to find the drapes, ship them back to Boston, and then have them professionally re-installed. All in all it cost him a lot of time and money. Based on conversations with my new neighbor, he would have happily taken the cash (or even ignored the entire issue) if the seller had been less of a pain. But he was in no mood to be nice to the seller, so he held him to the contract. I'm not sure if this is what Jerry meant by raking them over the coals, but my guess is that my former neighbor felt a bit raked.”
My clients have raked sellers, and sellers have raked my clients. Are you a raker? Are you a rakee? Have you experienced a mutual ranking? If so, what would you have done differently if you had it to do over again?
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