In commercial real estate (especially hotels) there are some who think it is all about numbers, yield, return on investment etc. I am here to tell you it is not. Sure, numbers and financial history are important, but it is much more emotional than people think.
For the seller, it is often difficult. If the offers come in low, he is dealing with why everyone thinks his baby is ugly and how that makes him feel. If the offers come in high, he may be tempted so say to himself, “if it is worth that much now, just think what it could be worth in the future.” The buyer is dealing with a completely different set of emotions such as, “will other people think I have paid too much?” Is this really the hotel I want to own long term?” “What if I make a mistake or miss something?”
The third hotel I ever sold was a little independent hotel in Ellijay Georgia. I had zero training on the emotional/ human side of the real estate business. I had to just make it up as I went. We had the hotel listed and got an offer at the asking price. I just knew that if I called the seller and told him about the offer he would think, “since the buyer offered the asking price, I’ll just increase my price.” I needed to keep that from happening. I decided to go see him and explain to him that it wasn’t just the buyer paying the asking price, rather it was the months of working with the buyer and earning his trust, that enabled me to guide the buyer. It wasn’t the property; it was the relationship that resulted in a full price cash offer. Big difference. The seller understood what I was trying to say and agreed to go forward with the sale at the offered price.
That was my first introduction into the mind set of sellers and buyers and it has helped me through all these years. Buyers buy what they want, not what they need. Sellers sell what they want to sell, not what they need to sell. How they “feel” about the sale or the buy, drives every decision. Yes, it is a numbers games but just like when you buy a house or a car, the most important factor is when you visualize yourself living in that house or driving that car. It is the same with hotel sellers and buyers, they need to visualize the deal in order to move forward. Understanding the emotional/ human side of selling and buying is probably the greatest thing a broker could ever learn. Much of life’s decisions come down to how you feel about it, and this is certainly true with hotel sales. KT