Question

michael is working with a business investor who wants to buy several lots in a new subdivision to build houses for sale. when the client asks for a copy of the comprehensive report, michael tells him it isn't required, but he will ask if the developer is willing to provide one. why wasn't the report automatically available?

Answer 1

Imperfect information can make it difficult for a buyer and seller to agree on a price. Incomplete or inaccurate knowledge can lead to uncertainty and trust issues in the negotiation.

Step-by-step explanation:

It might be difficult for a buyer and seller to agree on a price when imperfect information exists because both parties have incomplete or inaccurate knowledge about the product or service being exchanged. The lack of comprehensive information can lead to uncertainty and a lack of trust between the buyer and seller, making it challenging to negotiate a fair price.

For example, in the case of Michael and the business investor, the lack of a comprehensive report on the new subdivision means that both parties may have different perceptions of the value and potential risks associated with the lots. The investor may be willing to pay a higher price if they have detailed information about the market demand, infrastructure plans, and potential future developments in the area. On the other hand, if the information is incomplete or unavailable, the investor may be hesitant to pay a high price.

In situations with imperfect information, buyers and sellers often need to rely on negotiation, compromise, or the involvement of a third party to bridge the information gap and reach an agreement on the price.

Answer 2

The comprehensive report may not have been completed yet, it may contain sensitive information, or the developer does not have a standardized report.

Step-by-step explanation:

There may be several reasons why the comprehensive report was not automatically available:

1. The report may not have been completed yet. The development of a new subdivision can involve various stages, and the comprehensive report might still be under preparation or review.
2. The report may contain sensitive information. These reports often include details about market analysis, financial projections, and other strategic information. The developer may not want to disclose this information to potential buyers before negotiations.
3. The developer may not have a standardized comprehensive report. It is possible that each client's requirements may be different, and the developer might tailor the report specifically for the investor requesting it.

Therefore, Michael is checking with the developer to see if they are willing to provide the comprehensive report for the investor. This will ensure that the investor has access to all the relevant information needed to make an informed decision about purchasing the lots.