negotiation case - selling house
TRANSCRIPT
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IDENTFYING&IMPROVINGOURBATNA
SYNDICATE2
29111311HaidirAfesina(fezi)
29111328HendraWinata
29111329MitaListyatri
29111338AndekPrabowo29111344AprianEkaRahadi
29111384ChairunnisaMirhelina
29111387FranciscusXaveriusKresnaPaska
29111393AgungIndriPramantyo
MM5010StrategicDecisionMakingandNego\a\on
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SELLER
29111328HendraWinata 29111329MitaListyatri
29111393AgungIndriPramantyo
BUYER
29111311HaidirAfesina(fezi) 29111338AndekPrabowp
29111384ChairunnisaMirhelina
29111387FranciscusXaveriusKresnaPaska
Near Hastings & Centennial parks
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Casesynopsis
SELLER
Lis\ng#9013878:$240,000
Directselling(NOAGENT)
Onemonthonthemarket
OneofthenicesthouseintheCentennalParkarea
Originallypurchased$155,000
Descrip\on
Builtin1947 1846squarefeetofspace
InsideAmeni\es
Largeeatinkitchenwithallappliances Newlydecorated
OutsideAmeni\es
Detachedgarage(2.5cars) Restaurants&transporta\onwithinwalking
distance
NearHas\ngs&Centennialparks
BUYER
Submiedoffer:$220,000
Rentforfewyearsandthenresellataprofit
LookingforsinglefamilyhomeinCenterville
Priceofneighboringhomeswithsimilar
characteris\c:
Lis\ng# SellingPrice SquareFeet
8906898 $213,300 1715
8904725 $233,600 1875
8908614 $239,600 1920
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BARGAININGZONE
BuyersReserva\onPrice
$235,000
BuyersAspira\onPrice
$220,000
BUYER
Sellers Reservation Price$225,000
SELLER
Sellers Aspiration Price$240,000
Z O P A
$225,000$$235,000
BATNABUYER=Willingnesstobuyi.e.theonlybuyerwhocomeina
month
BATNASELLER=Futureprospectoftheareai.e.strategicloca\on
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Lis\ng# SellingPrice SquareFeet Price/Squarefeet
8906898 $213,300 1715 124.4
8904725 $233,600 1875 124.6
8908614 $239,600 1920 124.8
AVERAGE $228,900 1837 124.6
Remark SellingPrice/squarefeet Sellingprice@1846square
feet
Average 124.6 $230,000
Seller#9013878 130.01 $240,000
#1.Priceofneighboringhomeswithsimilarcharacteris\c:
BUYERPERSPECTIVE
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#1.5ALTERNATIVESIFNOAGREEMENT
BUYER
1.Renttoown/Leaseop\on
2.rentotherhousessurroundit
3.Askinghelpfromanexper\seorcommunitytoiden\fytheseller`sauthority/decisionmaker
4.Sharedownershipwithfamilyorfriendi.e.5050
5.Alliancewithpowerful&influencedpeopleororganiza\on
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http://public.rpl.herorentals.com/RPL/search/USA.index.mvc?page=results
Bedrooms: 1 Bathrooms:1 Monthly Rent: $ 500Date Available: June 8th, 2009
Lease Info: 6 months/12 monthsApplication Fee (Standard): $ 38Pets: No PetsParking: 1 car carportFireplace: No fireplace
Approx Square Feet: 600 Dwelling Type: Single family
Near Hastings & Centennial parksStrategic locationBigger house
MarketResearch
Based in Hostede, the Americanpeople are individualism, means theneed of individual treatment forpersonal approach in order to
convince to sell to us
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#3.2BUYERIMPROVINGBATNA
Arrangementwithsupplier,partnersorcustomer
1.Cer\fiedhomeinspector2.Buildrela\onship(personalemo\onal)withsellerandcommunitysurroundthe
areai.e.toiden\fytheseller`sauthority/decisionmaker
3.Offerreleaseclausetotheseller
RemoveanyconstrainsthatweakenBATNAOfferreleaseclausetothesellerBycheckingpoten:allyrelevantbusinessfutureandnego:atedwiththesellerthe
percentageofsharedprofit
Changetermsofnego\a\onGethomeinspectedandappraised
Regardlessofitsnewameni:esandfurnished,thebuildingisold.Theinspector
wouldcheckifthereisanytermites,anytermitedamage,houseelectricalsystem,
plumbingandalsohealingandcoolingsystem.Thusthepricewilldependonthe
report.
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#4.NEWBATNAIFSUCCEEDED
BUYEROfferedreleaseclauseagreementRegardlessofagreeingthepricethatsuitstobuyer,itisbelieved
thatthesellerwouldbeinterestedashewouldgettheshared/
commissionforthenextsalesasbuyerwillsellagainthehouse.However,onlyifthereleaseclausemet.
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#4.BUYERNEWBATNAIFSUCCEEDED
Reserva\onPrice
Aspira\onPrice
NewBATNAValue
BUYER $235,000 $220,000 Avg.HomePrice**
($DecreaseFactorfrom
Nego:a:on)+($commissionforNext
SalestoExis:ngSeller)
($NetProfitfromNext
Sales)
** Buyer: 230,000
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#2.Mathema\cal
(18751846)/(18461715)=(124.6X)/(X124.4)
29/131=(124.6X)/(X124.4)
29X3607.6=16322.6131X
160X=19930.2
X =124.56(Averagesellingpersquarefeet)
SELLINGPRICE=1846x124.56=$229,937
SELLERPERSPECTIVE
Lis\ng# SellingPrice SquareFeet Price/Squarefeet
8906898 $213,300 1715 124.4
#9013878
SellerHouse
? 1846 ?
8904725 $233,600 1875 124.6
8908614 $239,600 1920 124.8
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#1.Mathema\calforHomePriceApprecia\onRate
Assump\on: CentervillelocatednearDC(virginia)
Source:hp://www.forecastchart.com/homepricesdc.html
BaseYear=240,000/(100%+AverageHomePriceApprecia\onRate%)
AssumeSeller&Buyeragreewithprice$240,000,wherethebasepriceis$239,497usinglastyear
data,Sellergetaround$503
ButifSelleragreewithprice$229,937wherethebasepriceis$239,497usinglastyeardata,Seller
lostprofitopportunityaround$9,560
Last10year Last5year LastYear LastQuarter
AverageHomePriceApprecia\onRatein
DCfrom2012
24% 12% 0.21% 1.04%
BasePriceusing1YearForwardUsing
Price(Apprecia\on)
240,000 193,548* 272,727 239,497 237,530
SELLERPERSPECTIVE
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#1.5ALTERNATIVESIFNOAGREEMENT
SELLER
1.Rentedthehousetobuyer
2.Marke\ngstrategyi.e.STP
S:middleclass
T:singlefamilyP:investmentforan\queloversclub
3.Marke\ngtac\ci.e.Adver\sing
ATL:Property&businessmagazine
BTL:Socialmedia&community(WOM)
4.Buyerassistedfinancingfromselleri.e.50%cashdeposits,5%interest,10years(nego\able)
5.Runningbusinessopportunityi.e.guesthouse
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#2.BESTALTERNATIVESIFNOAGREEMENT
SELLERRunbusinessopportunity1. Posi:ve(guesthousenearbyhas:ngandcentennialparks)2. Nega:ve(conspiringwithhisneighborsaroundtoofferhigher
abovenormalrates(1.5:mes)toboostthemarketprice
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#3.SELLERIMPROVINGBATNA
Arrangementwithsupplier,partnersorcustomer
1.Homeinsurance2.Buildrela\onshipwithcommunitysurroundthearea
3.Posi\onedasan\quehistoricalvaluei.e.investment
4.Adver\sement(ATL&BTL)
RemoteanyconstrainsthatweakenBATNA1.Homeinsurance2.Assessbusinessopportunitywithbusinessen\tyarounde.g.ShoppingCenter,
Restaurant
Changetermsofnego\a\on1.Priceexpira\on
2.Askcommissionpercentageifbuyerwanttoresalethehouse
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#4.NEWBATNAIFSUCCEEDED
SELLER
RunbusinessopportunityBased on Seller calcula.on on slide 6, Seller will lost profit opportunity
$9,560 if Agree the sales cost of $229,937 to Buyer or below $239,947
Thereforeweprefertokeepthehouseandrunbusiness
e.g.runningaguesthousetoimproveSellerBATNAwhilewaitforapprecia:onRatefromthehousepricewhichhasincreasedtrendin
DCarea
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#4.NEWBATNAIFSUCCEEDED
Reserva\onPrice
Aspira\onPrice
NewBATNAValue
SELLER $225,000 $240,000 Avg.HomePrice*+
($Rent/year)+($Home
Apprecia:on/year)
Seller: 229,937