“The letter is firm. It is possible that they will come back with a strong-arming response saying that we have already committed to certain things. We must stand firm, we are in control. The worst-case scenario is that they will opt out and threaten to sue, any possible financial downside is manageable. Having said all of that I leave it in your hands.”
This was an email I received from my brother during a tense negotiation with an Estate Agent.
The 30th November 2014, is a day I will always remember, as this was the day my mum crossed over. She lived to the ripe old age of 89. The gift she left was a wonderful family home in a prime area and my siblings and I set about renovating it with the intention for future rental.
During the renovation, we had a number of Estate Agents look at the property and then selected an agent. Shortly after we were presented with an opportunity with a secure corporate rental for 3 years which seemed like an opportunity out of heaven.
I share this story with you because it reminds me of situations several of my clients have experienced where they get an unexpected opportunity to work with a reputed client which would be good for their business and reputation. In desperation to secure the business they compromise their value and negotiate for less than they deserve.
As is often the case, the issue is not the opportunity but how you choose to handle it. You can surrender your power and dismiss your value – this was potentially the case here.
This article is about our experience and how we came out the other end.
Things moved along smoothly until we received the contract. On closer inspection, we realised it was quite tightly bound, gave us very little room for maneuver and raised a couple of questions: –
- What if we are not happy with the tenants, what do we do?
- What if we wanted to terminate this before the 3 years were up – what would it cost?
The penalty for early termination seemed quite restrictive and severe.
We talked it through and realised that before signing,a couple of questions needed to be asked and I was the one assigned to do the principal negotiating.
In my experience, this kind of situation can vary depending on the role of stakeholders and the influencer. This can determine how the business handles the situation. You may be led by someone who only listens to the sound of their own drum, or be part of a team where decisions are made collectively. We make decisions collectively.
When I contacted the agent, she was convinced that it was a great deal and sounded irritated when I started to ask questions about the contract. It seemed that because it was such a great opportunity we should just sign and shut up.
Our contention was that we wanted to be in control of or be part of decisions made about the property during the tenancy. The contract did not allow for this which led to the email I received from my brother at the beginning of this article.
The time for the tenants to move in was drawing close, but we were yet to sign the agreement. My brother said, “Mort I am afraid that we may lose this, it is for 3 years after all.” I think we should take the risk as we may not get this opportunity again. Three years of consistent cash flow.” He was right, it was tempting, but something held me back.
Ten minutes later – my other brother said to me, “Mort, the decision is yours, you decide but it is important to remember that we have control here – an agent will tell you anything to get the sale”. I don’t think this is the case with all agents – some yes but not all of them.
I was nervous, but resolute that we should not give in too quickly. The agent called – I remember exactly where I was standing at the time. He said, “look our client is prepared to let this go, I think it would be risky to keep pressing forward with these demands”. I was insistent –even though I was nervous and said “these are our terms” and just went silent.
At the end of the call, I was secretly afraid that maybe we were being too adamant and could lose it.
Does this scenario sound familiar? Where your business could benefit from the investment and the consistent cash flow but in your team, there are different views as to how you should proceed. Sometimes depending on the makeup of the team, you have no choice but to follow the leader or the group consensus. This was not the case here.
In negotiations, you have to be clear on your line and have the belief in what you are offering and your service. Be prepared to take a position. The moment you buckle you will relinquish some of your power.
We had a meeting the following Sunday evening and looked at the options.
- What would happen if we let this go?
- What would happen if we just accepted the terms – what will it cost us despite the loss of money?
After that discussion, I was resolved that if we lost the deal we would find another, but I was going to hold out. I was clear that I was prepared to let it go.
It is important to be clear on what you would do if the other side disagrees. Preparation is key. Talk over the opportunity with someone you know and trust. Look at the options from a hard perspective and decide.
On Monday morning, I was confident and resolved. When I called the agent, the moment we spoke he said, “I tried to call you on Saturday, as the client has agreed to your terms.” I was taken by surprise and said ‘great, thank you.’
James Altucher wrote a great article, “The Ten Worst Things You Can Do In A Negotiation,” in which he said, the deal is not the final deal. Don’t Relax! People think when they agree on a deal, that’s the end of the negotiation. I’m sorry to say, that is only the beginning of the negotiation. There’s agreeing, there’s signing, and there’s closing.” I agree with him.
Although the agent had said yes, there were still a couple of things we were not happy with. We called in a legal expert which delayed matters for a few days and when that was clear I went back to them and said, “there are a couple of things in this contract we would like amended”. That was hard.
I heard him sigh on the phone in frustration and in truth, I felt like I was being a pain but it had to be done.
All along in my mind was the question – can we do this? Will they allow us to add our exclusions to their contract? This is a massive company after all, we are but one client. Is is a bit ask?
Never feel like you are being a pain and cannot ask a question or that they will think badly of you. Let them. The point is that you must focus on your objective – what you want – and be absolutely resolute in this otherwise you will regret it in the end.
Here are some suggestions for believing in yourself knowing your value:
- Be clear on what you want and what you are prepared to accept or not as the case may be.
- Have the confidence to believe in your experience and expertise.
- Don’t allow yourself to feel guilty.
- Look at what they stand to gain – or lose if the deal fails. Will it cost them financially, reputation, time invested – a lost opportunity for them – in this case, our property is in a prime location and they did not want to go a competitor. We needed to bear that in mind.
- Seek advice and don’t just negotiate based on emotion – do your research and prepare.
I am happy to say things worked out in the end. We got what we wanted and had a separate page of exclusions added to the contract. It’s been 3 years and despite a rocky start, the relationship with the corporate client has been excellent, which goes to show, that you can accept a deal at the beginning that is not in your interest and all along you could be unhappy. But why do so?
So, if during your negotiations you want to ask that question that you feel you should not ask – ask it. You want to discuss rates/terms or change your fee structure in some way, schedule that meeting and have the conversation – just do it.
I know this can be easy to say, but having the courage to ask that question that you feel you should not ask is the only way to get to the other side and grow. Imagine how you will feel if you don’t.
Know your value.