What are the initial offer-target and walkaway points

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Reference no: EM132220432

Twelve months ago Jackson decided to move closer to where he works in Atlanta. Following this decision to move, he put his condo on the market and started looking for a new condo – but with no results. Eight months later, Jackson finally received an offer to buy his condo and, after a brief negotiation, settled on the selling price. Because he had not yet found another condo to buy, he postponed closing the sale of his condo for six months to give himself additional time to look.

The buyer, Barbara, was not happy about having to wait that long because of the inconvenience and the difficulty of getting a bank to guarantee an interest rate for a loan so far in advance. Thus, Jackson adjusted the selling price to $150,000 so Barbara would accept this delay in closing, but it was clear she would be much happier if he could move the closing date earlier.

Unfortunately, there were relatively few condos on the market in the area where Jackson wanted to live, and none of them was satisfactory to meet Jackson’s needs. He jokingly said that unless something new came on the market he would be sleeping in a tent on the town commons when the leaves turned in the fall.

Two months later a condo came on the market that met Jackson’s requirements. The seller, Sofia, set the asking/selling price at $145,000, which was $10,000 above what Jackson hoped to pay but $5,000 below the most he would be willing to pay for the condo. Jackson knew that the more he paid for the condo the less he would have to make some very desirable updates, buy draperies and some new furniture and hire a moving company.

Sofia believed her asking price was very fair and competitive based on other condos that sold in the area. She wanted her condo to sell quickly so she could pay off her mortgage of $120,000 and hopefully have $20,000 in cash to buy a new house in New York City. Sofia was very quiet about her mortgage and future plans so she could maximize her selling price.

Question:

What are the Initial Offer, Target and Walkaway Points for Jackson and Sofia?

Jackson Sofia

Initial Offer Point $ $

Target Point $ $

Walkaway Point $ $

Reference no: EM132220432

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