Question

part 1. You have been negotiating the purchase of real estate all day and the negotiations have turned nasty. The remaining issue is the purchase price for the real estate. The seller is screaming at you that this land has been in his family for 100 years and you do not understand its market value. How would you handle his screaming and what other steps would you take to finalize these negotiations?

part 2. Suzie has been asked to lead a team traveling to Peru to negotiate a purchase agreement for a key component to your company’s major product line. What pre-negotiation steps should Suzie take before departing for the trip?

Answer 1

Part : 1
To handle the screaming of their clients, Professional must ensure that his advice is in their clients’ best interests. Some professionals go further by being fully transparent when conflicts arise (which they often do) and make certain that any conflicts must be fully disclosed to their clients.
This is one of the biggest mistake during property negotiation i.e. to start with Price Negotiation. Trust me, once the price is finalized buyer’s stand on other points become weak. For example, if you are buying a resale property and observed damaged flooring then you can always negotiate on cost of repairing from property value. In case, price is already negotiated then nothing much can be done. Property is not a standard product where you start property negotiation with price. Price is negotiated first only in case of standard products like branded furniture, consumer durable etc.
To finalize the negotiation and market price Professional must ensure his and their client interest and follow the different methods to determine the fair price of the property which will benefits to both. Like
There are three approaches to value real estate: (a) comparable sales approach, a relative valuation method, (b) income approach, a time value of money based method, which includes the (i) direct capitalization method and (ii) discounted cash flow method, and (c) cost approach, which values real estate at its replacement cost.

Part : 2
Suzie will take following Pre - Negotiation steps before departing for the trip.
1). Know Your Strategy
If your negotiation strategy isn’t clear to you, how can you expect to enjoy results that benefit your company the most? If senior management hasn’t made clear your strategy, which is sadly too often the case, make sure you ask.
2).Choose Your Negotiating Style
Will you lose the battle to win the war? Will you compromise and meet in the middle? Might you compete to the bitter end? Make sure to choose a style that best fits the circumstances. “5 Negotiating Styles to Consider When Closing a Deal.”)
3). Identify Goals
Do you want to maximize the short-term value or work to establish a longer-term collaboration that grows in value over time? Is your goal to steal market share at the expense of profit? Make sure to know what you want going in, instead of settling for what you end up with.
4). Prepare A SWOT Analysis
A simple but often overlooked tool. Think of the real external opportunities and threats as the walk-away positions on both sides. True power in any negotiation is having developed a good walk-away alternative. Understanding this point may not get you the deal you want, but it will prevent you from agreeing to a lousy deal.
5). List Pre-Meeting Questions
I was once told while being trained by a mentor that once you understand someone’s motivation, you are in control. In negotiations, information is power. If you hope to get creative and stack the cards in your favor, it pays to know everything you can about the other side’s decision-makers, underlying interests, and walk-away position.
6). Compile Options / Deal Design
Negotiations are an opportunity to get creative. Work with your team and put together a comprehensive list of options to consider in designing your deal. If you’re not comfortable with numbers, make sure someone on your team is. Make sure to leverage your SWOT’s “Opportunities.”Armed with information from your pre-meeting questions, you are ready to start prioritizing your interests. What can you trade? What can you get in return? Start with your most important interests or goals first.
7). Set The Agenda
If you don’t set the negotiation agenda and take control early, the other side likely will. Email your agenda before the meeting, and print a copy to use during the talks.
8).Build A Team
Avoid entering talks alone. Anyone who has ever been ganged up on knows the dangers of feeling isolated. The same goes for preparing to negotiate. So, it’s important to co-opt a colleague or two. Ensure that your negotiation team is clear on your strategy and respective roles. Without clearly defining these aspects , you run the risk of contradicting each other at the negotiating table and losing the upper hand.