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How Can You Tell When a Buyer Is Wasting Your Time?
By Quiet Light
A freelance writer by trade, I am not much of an expert when it comes to the buying and selling of websites. But I admire and respect the people who do do this work. It can be tough, stressful, but ultimately rewarding.
So in order to expand my life knowledge, I am going to examine some questions I have about the website brokerage industry. To help me understand it, I will be asking the brokers at Quiet Light Brokerage to give me their advice, based on their many years of experience.
Welcome to the new Quiet Light series – Ask The Brokers.
“How Can You Spot The Buyers Wasting Your Time?”
From what I have found out so far, selling a website can be a long, sometimes complicated process. So it can be rather disconcerting, to say the least, when you realize that the buyer is not serious at all about your business, and is pretty much wasting your time.
They could be deceiving you for a variety of reasons, but whichever reason it is, it is not funny in the slightest. You are too busy running your business to be taken in by someone only interested in kicking the tires or perhaps surreptitiously checking out the competition.
It can also make you suspicious of future “interested buyers” – one rotten apple can make you cynical of the whole process.
How can you distinguish between a deal-maker and a deal-faker? It is essential to spot the tell-tale signs, which is why I asked the brokers at Quiet Light Brokerage for their tips, based on past experience.
Bryan O’Neil – Beware Of The Immediate Offer
You may think this behavior strange. After all, why would someone commit to a business and make an offer without researching it first? But Bryan has a simple explanation.
“This type of buyer often puts in offers with the sole intention of entering into the exclusivity period” said Bryan,” to only then begin the actual evaluation of the business – without risking having competing offers show up”.
If they find something they don’t like, they can then use that to justify withdrawing their offer. Or if they don’t find something, they can always make something up.
As Bryan pointed out, this behavior is very unethical, which is why it is perhaps a good idea for every seller to have a good broker, to ensure this doesn’t happen. A good broker will also make sure any buyer who’s granted an exclusive LOI (Letter of Intent) is sufficiently informed about the company, and finally make sure the buyer can afford to go through with the acquisition.
Joe Valley – Instincts & Honesty Make a Difference
“After a time you develop an instinct for who is a real buyer and who is simply feeding their own ego and wasting everyone else’s time” replied Joe. “Using my instincts helps buyers and sellers create a successful and safe transaction they can both be happy with at closing”.
Obviously instinct is something you only develop with experience, something Joe has in spades. He proves it by providing us with a list of things for brokers and sellers to look out for.
- Some buyers exaggerate and pretend to be more than they are. This is easily seen through and is not a good tactic. We’re all here to help – so being honest with the broker is the best approach, otherwise you could burn a bridge with dishonesty.
- Certain buyers rip apart the business as a form of negotiation. These businesses are often the seller’s “babies” and this behavior offends them and only backfires.
- Novice buyers tend to copy and paste a list of questions that are not all relevant to the listing. We put our sellers through the ringer with questions. Buyers should take the time to read it, and their responses, and then ask follow-up questions. They’ll save time in the long run and gain the respect of the seller.
- Occasionally, a buyer will be rude and condescending. Treating the broker poorly will come back to bite you when the client asks us what we think of you when you make an offer, and they all do.
- It is tough when a buyer is insistent that something that cannot be done, can be. Yet they refuse to back it up with proof (because they cannot). This is could be combined with number one on the list. If you are not 100% sure about something, don’t insist.
- When a potential buyer puts ###-###-#### as their phone number it is a bad sign. We don’t cold-call anyone. I’m sorry that others do and that it has made you uncomfortable, but if you are not willing to communicate with us beyond email, it is much less likely a deal will ever get done.
Do you recognize yourself or someone else in that list Joe provided?
Jason Yelowitz – Faulty Expectations Can Ruin a Good Deal
“I don’t believe many buyers intend to waste the seller’s or broker’s time, but I do believe many do not have accurate expectations of how these deals work” concludes Jason. “Some mistakenly believe that they are the only ones looking at the deal and can therefore name one-sided terms”.
“Some believe the asking price is merely a suggestion, when in reality most deals close within a reasonable range of the asking price. Some have unrealistic expectations that their colleagues and acquaintances will fund a deal for them”.
“I find that a little bit of expectation-setting usually helps align the buyer, seller and broker expectations so that all parties can take the time they need to make intelligent decisions without wasting the others’ time or trust”.
Darin Hardin – Pay Attention To The Ones That Don’t Pay Attention
“They ask generic questions but you know right off the bat they haven’t read the business summary because what they are asking was clearly in the summary.”
Well his exact answer was a bit stronger than that, but in the style of the CIA, we’ve redacted portions to protect the children.
“They treat you like you work for them. That they are the only ones that matter in the deal. And they tell you upfront how successful they are and how many deals they’ve done so that you are impressed”.
Darin’s advice is simple: “Each deal is totally unique, as well as the seller and the buyer. Go into it with an open mind and with a win-win philosophy and things will be much smoother and you will get what you ultimately want.”
“Each deal is totally unique, as well as the seller and the buyer. Go into it with an open mind”Click to tweet
At Quiet Light, we have differing opinions, and the staff are actively encouraged to disagree. After all, that is the hallmark of a healthy company.
When it comes to how to spot a time-waster though, the staff are pretty much universally in agreement, except Jason who’s a nice guy and wants to see the best in everyone.
In summary, the main warning signs to look out for are :
- Buyers asking questions when those questions have already been covered in the summary. Not reading the documents means they are not giving the business their full consideration.
- Buyers being rude and demanding, and tearing apart the business you have painstakingly built over the years.
- Expecting the price to be lowered when you have already more or less fixed a price. This feeds into Jason’s observation of “unrealistic expectations”.
- Making an offer without asking any questions first. They just want that coveted exclusivity period!
If you are selling your business for the first time, you are probably going to get burnt a bit by time wasters, but the hallmark of a good broker is being able to filter these kinds of people out.