Effective Real Estate Negotiations

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Effective Real Estate Negotiations
Creating Maximum Advantage!
Tom Gille REAL Systems
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Welcome and Good Morning

• A few rules so that everyone gets the most out
  of the afternoon
• Please put all cell phones and pagers on vibrate
  or the off position
• There are no stupid questions, so please feel
  free to ask about anything you may not understand

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The Four Steps to Successful Negotiations
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Todays Take-aways

• Step One - Planning
• Goals
• BATNA
• Reservation price
• Step Two - Setting the Stage
• The importance of being comfortable
• Gender issues
• Trust

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Todays Take-aways

• Step Three - Tactics
• Recognizing commonly used tactics
• Responding effectively
• Step Four - Follow through
• The spirit of the deal
• Building relationships

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Effective Negotiations

• Negotiations are a process
• not an event

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Can you intuitively choose the right answer?
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The Negotiations Process

• Planning
• Setting the Stage
• Tactics
• Follow Through

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Albright CIO Interview 2/05

• CIO What's the most important thing to keep in
  mind when you're in a critical negotiation with
  someone whose views and agenda are quite
  different from your own?
• MADELEINE ALBRIGHT There are really two things.
  You have to know what it is you want. You can't
  go into a negotiation without clarity about what
  your objective is. The other critical piece is
  almost the exact opposite, which is trying to get
  into the other person's shoes. If you don't
  understand what they have to get out of it, you
  can't figure out what steps they can take to give
  you what you want.

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Planning for success Before you start do
you know your Key 3
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1
3
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Negotiation Planning

• Do you have agreed upon goals?
• What exactly is a good deal?
• 2. What are the alternatives?
• What is your BATNA?
• What is your reservation or walk away price?
• At what cost is it no longer a worthwhile deal

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Negotiation Planning

• Knowledge about The Other Side
• Their goals?
• Who will represent them what is their
  authority?
• What do you know about past deals?

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Negotiation Planning

• Who will play Devils Advocate with you?

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The Negotiations Process

• Planning
• Setting the Stage
• Tactics
• Follow Through

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Effective Negotiations

• Setting the Stage is
• Creating an environment that is productive
• Knowing where they would be most
  physically/emotionally comfortable?

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Are You Ready to Negotiate WithThe New CEOs
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Why the Gender Gap?

• Biological Influence
• Early Conditioning Expectations
• Societal Norms

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The Gender Gap
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Gender Perceptions

• Masculine Traits
• Contest/competition
• Individual status
• Confrontation
• Independence

• Feminine Traits
• Relationships to others
• Community
• Modesty
• Harmony

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A Continuum is More Realistic
xx
XY
Masculine Traits
Feminine Traits
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10
1
1
5
5
3
3
8
8
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Women are Often More Right Brained
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Remember What Mother Goose Had to Say?
What Are the Messages Were Given About The
Differences Between Boys and Girls?
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Feminine vs. Masculine Rapport-talk vs.
Report-talk
Why We Have Communications Issues
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Why We Have Communications Issues

• Men often dont converse they lecture Social
  niceties are minimized in order to get down to
  business
• Discussion is often more politics, sports and
  business
• Women build rapport by being good listeners
  Spend more time on social talk to build rapport
  and build working relationships
• Gossip conversation is used to establish
  intimacy

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Is Your World a Turnip or an Oyster?

• One of the major barriers preventing women
  from asking for what they needis the perception
  that their circumstances are more fixed and
  absolute less negotiable than they really
  are.

Women Dont Ask
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What am I Worth?

• Group A I know what Im worth and Im
  determined to make sure the company pays me what
  Im worth.
• Group B My worth is determined by what the
  company will pay me.

Its Controlled From Outside
Male 85 Female 15
Male 15 Female 85
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Traditional Labor Division

• Gender Roles In 2001
• 98 of child care workers, 82 of elementary
  school teachers, 91 of nurses 99 of
  secretaries
• 87.5 of corp. 500 officers, 90 of engineers,
  98 of construction workers, 70 of financial
  managers

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Three Tips For Increasing a Womans Negotiating
Effectiveness
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Tip Number OneDo your homework and find out
what you, or the deal, are worth.
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Tip Number TwoNo one will think less of you
asking for more if you make a rational
requestjust ask!
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• One of the major causes of female anxiety
  around negotiating womens fear that asking for
  something they want may harm their relationship
  with the person they need to ask.
• Women Dont Ask

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Tip Number ThreeAvoid the Winning Through
Intimidation Style
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Three Tips For Increasing a Mans Negotiating
Effectiveness
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Tip Number OneBe aware of your own gender
perceptions1. Know the difference between
assertive and aggressive.2. Dont confuse
pleasant with pushover.
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Tip Number TwoSpend time building rapport
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Spend Time Building Rapport
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Tip Number ThreeDevelop flexible negotiating
styles
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You have done your homework and you have set the
stage
Now you are ready to start!
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The Negotiations Process

• Planning
• Setting the Stage
• Tactics
• Follow Through

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Tactics Any skillful methods to gain an end
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Who Goes First?

• Substantial psychological research suggests
  that, more often than not, negotiators who make
  first offers come out aheadBy making the first
  offer, you will anchor the negotiation in your
  favor.
• Should You Make the First
  Offer, Harvard Negotiation Newsletter
  July 04

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Importance of Early Anchors

• What are the advantages of having an aggressive
  early position?
• High anchors direct attention to the deals
  positive features, low anchors to its flaws
• Strong first offers display confidence in your
  position
• Strong first offers provide opportunities for
  concessions from you

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Importance of Early Anchors

• What are the disadvantages of having an
  aggressive early position?
• The other side walks because your offer is too
  far outside their bargaining zone
• The other side considers your offer an insult and
  reacts by striking back
• The other side has done extensive homework and
  presents you with a rationally outlined
  significantly lower counter offer that becomes
  the new anchor

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Defensive Strategy
Unbundle gains, bundle losses
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Defensive Strategy

• Which would you prefer?
• Scenario 1 - While walking down the street, you
  find a 20.00 bill.
• Scenario 2 While walking down the street, you
  find a 10.00 bill. The next day, while walking
  down the street, you find another 10.00 bill.
• Question How much did you gain in each scenario?

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Defensive Strategy

• Which would you prefer?
• Scenario 1 Opening your wallet, you discover
  that you have lost a 20.00 bill.
• Scenario 2 Opening your wallet, you discover
  that you have lost a 10.00 bill. The following
  day, you lost another 10.00 bill.
• Question - How much did you lose in each scenario?

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Defensive Strategy

• The Bottom Line
• Unbundle concessions and good news
• Bundle costs and burdens

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Successful Concessions

• Never give a concession
• Bank It!

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Concessions

• Rules for effective concessions
• Give small concessions early on
• Creates climate of reciprocity, but dont
  continue to give to someone who cannot or will
  not return the favor
• Measure the point value of each concession
• Keep a score of what you have given
• Explain how valuable your concession is to the
  other side and how costly it is to you

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Concessions

• Rules for effective concessions
• Dont give major concessions early
• Later concessions lose value or give the
  perception that you are holding back
• Violates procedural fairness concept
• Small concessions in evenly spaced installments
  give the appearance of continued progress
• Make your concessions contingent on a concession
  from the other side

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How to Respond to Liars
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How Do You Know When Someone is Lying?
Lets Make a List!
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Dealing with Liars

• What Can You Do
• Ask questions in different ways
• Rephrase and go for yes or no answer
• Ask if all material facts have been disclosed
• Ask questions that you already know the answer
• Take notes and review periodically

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If Youre Not SureContingent Agreements
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Contingent Agreements

• When to use contingent agreements
• To make commitments more self enforcing
• To avoid the need to reconvene
• To reduce chances of future litigation

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Effective Negotiations

• The Gambit Stonewalling

Its our companys policy!
Take it or leave it!
What you see is what you get!
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Effective Negotiations

• The Gambit Artificial Deadlines

Its now or never!
Well start looking at other sites tomorrow if
This offer is only good for 24 hours!
We have to have a decision today!
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Effective Negotiations

• The Gambit The Screamer

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Effective Negotiations

• The Gambit Nibbling

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Effective Negotiations

• The Gambit Swapping
• Remember the words of the famous ancient

Quid Pro Quo
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Effective Negotiations

• The Gambit Good Guy/Bad Guy

Let me see what I can do for you
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Effective Negotiations

• The Gambit Put It In Writing

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The Negotiations Process

• Planning
• Setting the Stage
• Tactics
• Follow Through

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After the Negotiation Homo Economicus vs. Homo
Sapiens
Daniel Kahneman, Nobel Prize, Economics -2002
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Prospect Theory The Death of Homo economicus

• Real people tend to judge their well-being
  relative to others, not in absolute terms
• Peoples actions depend on the way choices are
  presented.
• People fear loss more than they crave gain.

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Follow throughEnhancing the Relationship

• Would you want to do business with each other
  again?
• How do you know how the other side feels about
  the deal?
• Did you do a little something extra after
  everything was completed?
• Dont do a victory dance!

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What We Covered

• Step One - Planning
• Goals
• BATNA
• Reservation price
• Step Two - Setting the Stage
• The importance of being comfortable
• Gender issues
• Trust

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What We Covered

• Step Three - Tactics
• Recognizing commonly used tactics
• Responding effectively
• Step Four - Follow through
• The spirit of the deal
• Building relationships

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A Final Thought...
In times of change, learners inherit the world -
while the learned remain beautifully equipped to
deal with a world that no longer exists.
Eric Hoffer