Deal or No Deal?

Posted by noemi in Money & Investment | 3 comments

TweetMy husband’s text message cracked me up:

The buyer offered ______ pesos for the land. Is it a deal or no deal?

Haha, we were deciding on whether to accept a buyer’s offer on my husband’s property in Baguio. The proceeds will be used as equity to our new home.

Almost every night when my husband is home, we tune in to entertainment shows to just free our minds from a hard day’s work. Mindless shows like the lucky game show “Deal or No deal?” with Kris Aquino lightens my husband’s mood. While the game show is progressing, my husband and I decide if it’s a deal or no deal. Oftentimes, my husband place the banker role. Most often I take the conservative role and scream “DEAL!” or “How stupid!”.

Back to that text message “Deal or no deal?”

I texted back “Deal, dear”

Although the deal offered is less than our expectations, I badger my husband with the concept of opportunity cost whenever we decide on purchases.

opportunity cost, or economic cost, is the cost of something in terms of an opportunity forgone (and the benefits that could be received from that opportunity),

Assessing opportunity costs is fundamental to assessing the true cost of any course of action. It’s a deal because the sales proceeds go to an opportunity we cannot let go. It’s an opportunity to cut down on interest rates from the bank loans. It’s an opportunity because we can move in to our new home right away. If we wait on a bigger monetary cost , we lose the opportunity to enjoy the new life we so much dream of.

It frustrates me to no end when dealing with sellers in my real estate brokerage. They often reject a buyer’s offer just because it did not meet their ideal monetary cost. I often explain that opportunity cost added to the monetary cost is the true value of the sales proceeds. Some sellers get it . Some don’t.

Just like in the show “Deal or No deal?”, these contestants need to assess the opportunity cost with the offer before taking that huge risk of opening yet another box.

“[tag]Opportunity cost[/tag] is not the sum of the available alternatives, but rather of benefit of the best alternative of them. ”

Think how the money can be used now.

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