Whose Deal Is It Anyway?

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Let’s start off the New Year with an admonishment for all of us, Ruminations included. Notice to negotiating agents: “We are just agents. We need to take ourselves out of the equation.”

Admonishments should be short. So today’s blog posting will be.

When our counterpart asks for something that might take money out of the landlord’s/tenant’s/lender’s pocket, it isn’t our pocket. It’s not personal. A $5,000 a month, 10-year lease involves $600,000 of basic rent. A $5,000 request for something by a landlord’s representative or by a tenant’s representative is a pretty small request in a $600,000 contract. It is 0.8333%. More importantly, it is one month’s rent and a fight over it for no reason can cost that month’s rent anyway. MOST IMPORTANTLY, it is the principal’s money and that is who should know about the request and decide whether “to do it.” It’s one thing to say “No” as if it is our money and another to say, “I’ll ask my client/boss/principal (but I’m doubtful she will agree).”

It seems to us that the object of negotiation is to works things out, not to defend the form or demonstrate how resolute we can be. Yet, we all fall into that trap.

The prescience we and our colleagues often display is quite impressive. We often know the answer before hearing the question or request. How often have any of us gotten the impression that the only reason “the other side” is listening to the reason the document should read one way or the other is to know when we’re finished so that the pre-planned “No” can be released? And, don’t most of us do that, at least “sometimes”? When that happens, and it seems to happen all too often, it is as if the explanation for a request doesn’t matter. Yes, “one size fits all” seems to be the order of the day.

After re-reading that last paragraph, it occurred to Ruminations that we left out another common occurrence – the one where the supposed listener doesn’t wait to hear all that’s to be said before saying, “No.”

And, the request (with its accompanying explanation) isn’t for us (unless we are the principal). It is for the person with the pocket-book who asked us to facilitate the deal. So, why are we so quick to kick out the same response for every principle we represent? Are they all of the same mind? Or, is it our own “mind” we are seeking to satisfy?

There’s a big difference between listening and hearing. Listening takes time; hearing takes effort.

Speaking of “hearing,” here’s a true story (experienced more than a few times) about “having the answer before the question is asked.” You buy something for $6.50 and hand the clerk a ten dollar bill, expecting $3.50 in change. Instead, you get $4.50 back. So, you say, “I think this is wrong.” What do you hear in return? – “No, it’s not, you gave me a ten dollar bill.” Then, you say, “Yes, but you gave me too much change.” What has happened is that the clerk had the answer set in stone before the question was asked. All too often, negotiators do the same thing.

It’s not personal. No one has to say, “Yes” and no one has to say “No.” But, let’s HEAR what each other have to say before forming our answer, let alone before actually answering. And that doesn’t mean listening just so as to know when to give the answer you already had and knew you would never change.

“My way or the highway” makes for a very unpleasant and dragged out experience. It costs everyone time and money. And, as all readers know, at the end of the day, most deals are made, not broken. So, if you are going to get there anyway, why not take Pleasant Valley Way?

We were going to sign off at this point because either we’ve made the point or not. But, we were reminded about a particular bank assistant manager who stands out in our mind. Retail banks have a lot of rules and there isn’t a lot of flexibility granted to branch employees. So, often the answer, at the branch level, needs to be “No.” What makes this particular assistant manager stand out in our mind was that when she had to say, “No,” she was always able to do so in a way where the customer would understand and say, “Thank you.” It seemed that she had a way of making every customer feel as if they had been HEARD, that she understood the request, but that the answer had to be “No.”

If you were on vacation at all over the past two weeks, you might have missed one or both of our pretty well-received blog postings. In that case you can still see them by clicking HERE (Exclusive Use Restrictions) and HERE (Consents to Assignments).

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Comments

  1. Fred Kruck says:

    Ira, thanks for another thoughtful and well-written post. I just want to add my comment about listening versus hearing – I learned it the other way around. My mother would tell me: “You may hear with your ears, but you listen with your mind.”

    As someone who negotiates, writes, and enforces leases, I hope to continue to not only “hear” your columns, but to truly listen to them for a long time to come. Happy New Year!

  2. Ira, your posts are always enlightening and thought provoking. However, as one of the ‘principals’ that you refer to above, the job description of those negotiating a lease on my company’s behalf is to hopefully know when to say ‘yes’ and ‘no’ without the necessity of going back to his or her boss. Otherwise, the lease negotiator becomes ineffective and the process much less productive. I, for one, want my lease negotiators to act as though it is their money coming out of their pocket! And I encourage them to take negotiations personally because the resulting lease document is a direct reflection and indicator of their abilities. I do agree, however, that too often both landlords and tenants don’t care to ‘hear’ what the other is saying or the rationale of why they are taking a particular stance on an issue. Too often are tenant and landlord agents glorified order takers that lack the authority and/or ability to truly understand the complexities of a lease negotiation and merely say ‘no’ because it is the easier and less risky route. And no doubt, in this post Sarbanes-Oxley world we now live in, decisions are frequently made out of fear or solely for ‘CYA’ purposes. Reading and analyzing your weekly posts and applying most of the principles you expound would be a good start for any and all in our industry seeking to better their lease negotiating skills. Keep up the good work!

    • Michael Lieberman says:

      As a broker that has effectively worked on both sides of the fence (landlord and tenant) I would add that one of the reasons to use an agent/intermediary is to build time and some level of uncertainty into a negotiation. And to provide a larger stage where all of the most important issues are on the table before definitively addressing any given issue. The bit of extra time or lost productivity is almost always paid for by the benefits of my client being fully informed and on board and the rest of the negotiation being smoother and more productive.

      This in part considers the transaction and potential relationship between the principals as a separate process, with attendant dynamics that needs to be thought about when making a deal or obtaining a given price and terms. Although I usually know quite well what my client’s parameters will be I will rarely draw a specific line during negotiations – unless the broader agenda calls for it. For example, when representing a property with multiple qualified offers it may make sense to give a firm “no” to a price not in line with expectations. But in most cases the ability to be flexible, or to have the appearance of flexibility, is most effective in serving the larger goal of making a transaction work and starting the relationship between the principals on a collaborative note. Not to mention that I have experienced numerous occasions where a hard number or term has turned out to be not so hard when my client has had the opportunity to decide in the context of all of the terms.

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