You might be wondering why I’m blogging about Johnny Damon and the New York Yankees. Hopefully you’re a sports fan because I can, and will, relate any sports topic to a real estate matter. As a New York Mets fan I couldn’t care less who plays left field for the Yankees, however, as a real estate agent I must draw attention to the parallels of this failed free agency transaction to today’s real estate market. For those of you who aren’t up to speed with Major League Baseball, let me fill you in. Johnny Damon’s four-year contract just came to an end with the Yankees. He was a perfect fit, as he NEEDS to play for the Yankees AND the Yankees NEED Johnny Damon. The Yankees offered Damon a two-year contract at $7 million per year. Damon’s agent (the infamous Scott Boras) refused and the Yankees signed Randy Winn. This was an atrocious job by Scott Boras. On an interview with WFAN radio Damon explained his situation by stating nobody would want to take a 40% pay cut after coming off the year he had. His previous contract was signed in 2006 for $12 million per year. Let me explain how this deal hits to close to home as a real estate agent in today’s market….
1. There are several reasons to hire an agent. Besides the obvious, one of them includes keeping emotions out of the deal. This should be very simple for most agents. However, this is never the case with Boras. Why is that? Ego! If you have an ego it’s extremely difficult to be a good agent in any field of business. When you put the facts aside and are only concerned about who’s right and wrong and who’s going to win or lose… BOTH SIDES LOSE! There have been numerous deals where my clients got so angry they were ready to walk away simply out of spite. That is an unacceptable reason for a deal to fail. It is the agent’s responsibility to keep the clients focused on the big picture knowing that once the deal closes the relationship with the other party concludes. Nothing is worse than working with a party that has an ego.
2. Understanding the market. Johnny Damon’s last contract was 2006, which was during a stronger economic period. Much like sellers that have to realize they aren’t getting what they did four years ago, so does Damon. It’s almost a slap in the face to complain about a pay cut when you’re still earning $7 million. Hey Johnny, how about the millions of people that are currently taking a 100% pay cut! This is very similar to sellers we are faced with today. They are upset with the fact that now they will only make $200,000 profit when they sell their house instead of the $350,000 they thought they should make. It’s easy for me to say but they should thank God that they are making something and not facing foreclosure or in a short sale situation like many other Americans. Not to beat a dead horse but Damon also has to understand that at his age his value is depreciating… not appreciating. This point leads me to my final point….
3. Understanding the situation. The bottom line is this… Damon is only worth $7 million dollars per year. How do we know this? Because it’s the only offer he got! This is the same realization sellers are faced with. Sellers always think they are being low-balled until finally they realize they’re not getting any other offers. Your house is worth what buyers say it’s worth and this has nothing to do with how much of a profit you would like to clear. The solution to any negotiation is very simple, however, if you involve ego or greed it’s virtually impossible. In this case, Damon wants to be a Yankee and at the same time make as much money as possible. It’s blatantly obvious that he cannot play left field in any other ballpark and he fits the Yankees lineup like a glove. Not to mention, he won’t win anywhere else. The Yankees want Damon because he popular with the fans and he’s the best #2 hitter possible for their lineup. Again, he fits their stadium perfectly. If both sides were to put egos and greed aside, they could have easily put a deal together for lets say $8.5 million and would be on their way to back to back World Series’. But no, welcome Randy Winn. For the record Randy Winn is an over the hill, washed up substitute….lol.
I guess the moral of this story is to put all emotion and opinions aside and put a deal together that works for both sides. They key to a successful negotiation is when both sides walk away feeling like they won.
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