Everyone could benefit from a legal mentor: a trusted generalist with some knowledge of the law.
An entity is worth what a seller is willing to sell it for and a buyer is willing to pay for it at a certain moment in time—no more, no less. That’s reality. It doesn’t matter what you think your valuable is worth. Unfortunately, what really matters is what someone else thinks it is worth. The good news is that different people have different opinions of the value of things. So it really pays to present your valuable to as many potential buyers as possible before accepting an offer. However, you still better establish in your mind a realistic assessment of what you think it is worth. The last thing you want to do is reject a sound or even fantastic offer. And once you sell, stop analyzing! If your reasons were valid, move on.
I spent years as a stockbroker. It was not uncommon to watch a stock skyrocket in price on rumor. Those clients who held on to unwarranted gains out of greed often ended up losing money when the rumors proved false and the price imploded. Then they never seemed to be able to get over taking a loss in a stock that had temporarily made them feel rich. The problem is that stocks don’t care what you think. They don’t know that you love them and don’t care if you hate them. Valuation is all that matters. You best know what your purchase is worth and do the opposite of what everyone else is doing. That’s usually a better strategy.
People should clear their minds before buying or selling anything. Dispatch with sentimentalities, for instance. No one cares that the golf clubs belonged to your dad. Now, if they once belonged to Arnold Palmer, that’s a different consideration altogether. And don’t allow others to impose opinions of value on your consciousness. Especially, remember that love is a blind fool. I once sold a mint-condition, 1971 classic Chevrolet Monte Carlo for well below its market value because my fiancée didn’t like its color. (See No.5) Love made me make an “unconscious” decision. To make matters worse, I have violated my own advice for forty years by never forgetting this gross error in judgment.
Appraisals are useful but not sacrosanct. If you are successful enough to own things you ought to be smart enough to question an appraisal and apply your own sense of reason. Especially, never put blind faith in an appraisal by someone who would benefit from the sale. This, of course, means you should scrutinize advice from real estate agents and financial advisors, for example, who make commissions selling your property or securities. Their judgment is always clouded by the hunger for a commission! I know. I’ve been on both sides of these deals. Trust me. If you can’t make an intelligent assessment of value on your own, then hire an unbiased appraiser and question their evaluations to the best of your ability. If you still can’t get comfortable, consult your legal mentor. He has typically seen the good, the bad and the ugly sides of value.
Jeff Barganier spent 2.5 years in a bank trust department, 2 years as associate general counsel to a real estate securities firm and 17 years as a financial adviser. Today, he makes his living as an attorney, writer and entrepreneur. Click here to read his full biography.
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The opinions expressed in this blog post are the author's own, and do not necessarily reflect the opinion of Red Oak Legal, PC.