Don’t Con A Con Man – Lease And Other Negotiation Approaches

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“I can’t help the way I feel; Things you do don’t seem so real; Tell me what you got in mind; Cause we’re runnin’ out of time; … .” Were Birmingham, England’s Fine Young Cannibals thinking of the lease and mortgage negotiation process? Yes, today’s posting is a rant. Short, but a rant nonetheless.

Don’t con a con man. If you are going to tell us why you won’t agree to negotiate something, please don’t make up a story like: “The devil made me do it” or “we never do that” or “our insurance people won’t let us” or “Dodd Frank says “no” or [fill in your own war story]. Of course, it’s perfectly fine to do so if it really is true and you can explain “why” instead of “because.” We’re all professionals and there is always the risk that we actually know about insurance or banking regulations. And, if we don’t, it is professional courtesy to teach each other about what is true and what isn’t true.

He – “Our insurance expert told us that we can’t get a waiver of subrogation from our insurance carrier, not at any price.” She – “I don’t think that’s right; I think they are standard in the pre-printed ISO form of policy used in 95% or more of the cases.” He – “[I’m not going to respect what you just told me and] I’m going with what my insurance expert told me [years ago in another situation when nobody questioned me] and I’m not going to [give you the respect of] go[ing] back to someone and ask them about what you just told me.” Have you heard that yourself (not the italicized parts because those were his silent thoughts)?

How about hearing that our standard form requires financial reports in accordance with generally accepted accounting principles (GAAP)? Is it improper to tell someone that GAAP doesn’t apply to cash basis taxpayers? So, how can you respond when the “other side” says that’s not true (and I’m not even going to find out if I’m wrong)?

“We have never done that and won’t start now!” Does it matter if you have ten leases with the same landlord or tenant and they have done it ten times? Don’t con a con man.

In our view, some of these “explanations” fall into the “wizard behind the curtain” school of saying, “No.” We don’t think its appropriate to say some thing like, “So and so told me that such and such isn’t possible,” and then not make “so and so” available to discuss what can be done to make it happen. “Pay no attention to the man behind the curtain” is a fine thing to say if you are in Oz; it’s not good for relationship building back here in Kansas.

What a way to build a relationship!

It’s OK to stand your ground, but people deserve to learn why you are doing so. Let’s earn respect for ourselves by being honest. Perhaps we should know why, but it’s better to say we don’t know rather than make up a story. That’s for Teflon-coated, fact ignoring candidates for elective office. It isn’t fine for professionals. We are all colleagues. We are doing adoptions, not divorces. In every deal we are actually all on the same side of the deal 90% or more of the time. Yes, there are certainly issues where the negotiating parties have interests adverse to one another, but think about it – isn’t that the exception, not the rule? Even if we are wrong (and depending on your definition of “aligned interests” it would be fair to disagree with us), doesn’t professionalism and civility demand that we respect each other and not make things up?

It’s a hard habit to break. The negotiating equivalent to Gresham’s Law is at work. So, let’s start with baby steps. When someone tells you that there is no longer such a thing as an “all risk” insurance policy and hasn’t been since 1983, either believe them on the spot or check for yourself (and then you will believe them). That might engender a reciprocal professional response when you raise some point. It’s a start.

“You may think that this is the end, well it is, but to prove we’re all liars, we’re going to sing it again, only this time we’ll sing a little higher.” Not today, however – Civility demands that we stop here. And, in a surprise to long-time Ruminations followers, today we will.

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