“Dad, dad, it’s urgent, please call me” said the Text. Instagram. WhatsApp. Messenger or whatever virtual communication I received yesterday from my eldest.
On the call that followed she explained she had found a flat that her and her boyfriend want to move in to, at the beginning of July. There are plenty to choose from in these challenging times.
“But we’ve got a problem” she said. She needs me, I smiled to myself. One of the benefits of being a parent and a professional negotiator.
“They are asking for £1500 per month but we can’t afford it” she explained “but they will accept a start date in 6 weeks, if we can agree on a price. They said make us an offer, so I have offered £1300, but the agent has come back and said she thinks that £1,300 is not high enough”. My daughter had asked for some direction from the agent, the intermediary, but she was reluctant to offer any advice and just said “you make us an offer and we will consider it”. “Shall I go in at £1,400?” my daughter suggested.
I have recently been running one of our online negotiation courses with a major global organisation who is regularly negotiating nine-figure deals, (yes, over $100,000,000 negotiations!). So, my daughter’s challenge should be a walk in the park. However, what is fascinating about the modest challenge of trading a few hundred pounds either side of a flat rental agreement is that this ‘conflict’ has almost identical issues that the major global corporate I am advising is also facing.
Both sides in the flat rental deal have made some basic errors in the exchange which I will share. The agent has offered flexibility too early without establishing the buyer’s intent (for example they could have traded the delayed start date to the lease for less (or no) flexibility in the price. Precedent has been set in offering flexibility through saying ‘make me an offer’. Will anyone take their first price seriously again? Control of the negotiation has been handed to the buyer and the £1,300 counteroffer has anchored the price at the other end of what we call the bargaining arena. Now the agent has got to do the heavy lifting to get the exchange back up to nearer the original £1500 mark.
On the other hand, the £1,300 offer is unrealistic. In part, because it is far from the stated offer but more importantly it is too rounded and doesn’t obviously relate to a budget problem, more just a rounded (down) arbitrary figure. The temptation to ‘meet in the middle’ should be avoided. We don’t see ‘splitting the difference’ as achieving half of what you aimed for, but in fact more like ‘giving away half the shop’ - arguably unsatisfactory for both parties. One should consider that instant counterproposals also can send signals of desperation and weaken the power balance. There is also a danger that this becomes simply a haggle – where there is only one variable at play, usually price.
So, my advice to my daughter is to slow down. To make a considered and specific offer back (£1346 in this case – it will at least make them think it is budget-related). I have suggested she thinks about what other value they can bring to the deal (reduced deposit, commitment to the later date, contribution to the overhead, break clauses in the tenancy agreement, help moving in, access to the garden etc) – these are what we call wish list items – critical negotiation capital to trade in exchange for concessions one might have to make to get the deal over the line.
I asked her what the highest rent amount was that they would go to and the answer was vague. Another mistake. The market has moved in the renter’s favour with few people moving during the health crisis. That shifts the power balance in my daughter’s favour. So, establish a ‘limit position’. And trade within it - the more you concede towards it, the more value you should demand in return. It might just work.
I’ve just called my daughter for an update, always nice to end a blog with a happy ending. “Oh, don’t worry dad we think we’ve found another one”. I might send her an invoice! I’m off to play golf (not even virtually)…