On a recent trip to Boston we had the privilege of taking part in Harvard Law School’s renowned Program on Negotiation for Senior Executives. These are the guys who, literally, wrote the book (Getting to Yes) on successful negotiation. It was an enlightening and invaluable experience that has direct relevance to real estate transactions.
Their perspective differs from the typical bargaining stance in which the two sides dig in at opposing positions. Instead, the Harvard lads counsel clearly defining, understanding, and serving the interests of the various parties. Among those interests often lies some common ground that can be used for the foundation of an agreement that satisfies, to an acceptable degree, all parties to the contract. The outcome sought is the one which is efficient, that is, “among the best of many options.” And, legitimate in the sense that, “No one feels taken.”
Applying that to real estate, too often buyers and sellers focus all of their attention on price and don’t bother to sufficiently explore those areas in which co-operation would be more valuable than money. Perhaps, the seller needs to stay in the home longer than the escrow period and the buyer is not in a rush. Or, perhaps, the seller doesn’t need cash right away and can get a nice rate of return by carrying a mortgage for the buyer.
Going into home buying process, the buyers and their agent need to take time to be clear about their goals and keep those in mind as emotions inevitably surface. They need to research the market thoroughly and as objectively as possible and know fully what the alternatives are. Not all agreements are good outcomes. The criterion for establishing whether it is or not is the buyers’ “BATNA.” Is it Better Than the Alternatives? If not, the buyers must be self-disciplined enough to walk away and go on to one of the alternatives. That is the buyer’s key source of strength. Getting a reliable sense of the sellers’ BATNA or walk away point is critical as well.
Establishing value in this way, exploring and satisfying everyone’s interests, finding creative options if needed, crafting a fair contract to which everyone will remain committed, and maintaining a good working relationship among the parties throughout the process and beyond is the optimal approach to achieving the buyers’ goals.