Typically, we avoid postings two rants in a row, and we had planning today’s posting for a few weeks from now. Then, on Thursday, we saw a piece in The New York Times and we wanted to post a link to that article. But, we can’t find the link and can’t find the article. So, we’ll go it alone.
Our subject is ignorance. That’s a lack of knowledge, not a deficiency in intelligence. Even for smartest of people, ignorance gets in the way of making a deal. It interferes with collegial negotiations. It delay the “signing.” It raises the cost of making the deal. And, it happens over and over again. Ignorance is the gift that keeps on giving.
It isn’t enough to know every lease or mortgage or sales agreement clause “cold.” If we are going to make deals happen, we have to know how the world works. To make a deal happen correctly, we have to understand numbers. It boggles the mind that some of us can’t figure out fractions or make percentages add up to 100. As a consequence, we see too many documents with formulas to determine rental amounts or loan payments that just don’t “add up.”
We see vague statements like “the Treasury Rate” without any reference to WHICH rate. If we are going to use outside references, then let’s understand what we are talking about. We see the use of the “CPI” and, in the context used, it is clear that whoever used that reference had no idea at all what the Consumer Price Index really is or how it works. [Readers who don’t remember Ruminations’ posting on the topic might want to click HERE.]
How can there be a fruitful negotiation over insurance requirements if one or both parties don’t have a good grasp on how insurance works? True, insurance is a complicated field of its own, but let’s and admit our lack of knowledge and stop pretending that we know what our insurance provisions say. Let’s commit the time and effort to learn the subject well enough to discuss it in the negotiation context.
The same is true when it comes to condemnation. Too few negotiators really understand how the process works, who is the real party in a condemnation proceeding, and to whom the proceeds must go. Like with many things that negotiating parties should know, there are variations in “the facts” from state to state.
How about real estate taxes? You’ve got to know how a jurisdiction’s taxing scheme works. Does it have a transitional tax scheme? Do you know what that is? If you don’t, big surprises lie ahead to the person or entity that will be paying those taxes.
Is there a rent tax in the jurisdiction? Should a leasing negotiator know?
It is amazing how many negotiators don’t have any understanding of the property in question. They don’t know whether there are basements or upper floors.
Does the tenant have delivery vans? Where does trash go? How do deliveries get made to the premises? Don’t those things matter when you’re doing a lease?
How about the way HVAC works? Or, as we’ve written before, how does electricity get to the premises or what constitutes a structural element?
Everyone of us wants to feel that we know what we are doing. To make that true, we can’t expect “on the job training” to do the job. If you don’t understand accounting, take a course or buy a book. Commit to learning the subject. Look for programs, live, telephonic or on-line that will bring you up to snuff on those subjects where you are weakest.
Look, it isn’t fair to whoever is relying on us to get the deal done if we think we can fake it when it comes to factual things we should know. It is disrespectful to the “other side.” And, it is arrogant to pretend we know when we just plain don’t.
So, for Valentine’s Day 2015, let’s give ourselves a gift – the gift of self-improvement. That’s a gift that keeps on giving and one that can be shared with others.
How’s that for a Ruminations rant?