Deal Killers Gone Wild

Deal Killers Gone Wild by Bill Roberts

I recently read a couple of posts on the subject of whether or not friends and relatives should weigh in on the decision to buy a house or not. First there was How Much Influence Should Outsiders Have on a Real Estate Transaction? by Jason Crouch. Jason summed it all up very nicely "My general rule of thumb when dealing with well-meaning friends or family members is to politely yet firmly remind them that I do this EVERY DAY, and that I am their representative, and as such I am obligated to look out for them ahead of what I want/need.  I never have to push very hard.  The truth works wonders.  Perhaps you will have to spend more time than is normal to salvage the deal, but it is certainly better than starting from scratch or losing the client altogether.

"Don't let your buyers or sellers be misdirected by those around them.  Remember that you are the expert!"

Then I read an older post by Randy Prothero (WooHoo Sally's friend and colleague) called "There Are More Amateur Real Estate Experts Than Ever Before." Randy puts a humorous slant on it, but we all can relate to the "problem." Randy so aptly states the obvious, "When someone is buying or selling their home the most natural thing in the world is to discuss the transaction with their friends and family.  They look for positive reinforcement that they are doing the right thing.  This is how it has always been." When describing a certain bad behavior by a client, he asked him "why?" His car salesman friend suggested he do that to get a better deal.

I read both these posts and all the comments that followed. Most everybody agreed that you have to take control and assert your position as the "expert."

Now all of this was very entertaining, and I'm sure it also very frustrating when you encounter it. But fortunately for you, these situations only come up occasionally.

How would you like to go through that on every single transaction? How would you like to have somebody else be the "expert" in every single case?

I sell business opportunities. When negotiations get down to the real nitty-gritty the buyer will inevitably say he has to run it past his attorney or accountant.

OK. I know what you are saying. What's wrong with that? You're not licensed to give that kind of advice anyway. And what about the liability? Better him than you, right?

Let's look at this starting with the last item first. Liability. Do you honestly believe that the accountant or lawyer wants this liability? What does he really know about this business, anyway? Do you think he could possibly know enough to take on the liability for advising the client to go ahead and buy the business? Don't you think that he is aware that over 70% of small businesses fail within five years? When the business fails the owner is going to be looking for someone to blame.

What lawyer or CPA in his right mind wants that kind of liability?

So now your buyer asks the accountant or lawyer, "Should I buy this business?"

Want to take a guess at what the answer will be? Every time! Talk about DEAL KILLERS GONE WILD. If the attorney is asked that question, he has to say no. He has no choice. His E&O carrier would cancel him on the spot otherwise.

The only hope in a situation like this is to counsel the client ahead of time about their advisor's liability issues. If they can grasp this concept maybe the lawyer won't kill the deal. He'll still try, mind you.