When negotiating a real estate deal in Mexico, either the buyer or the seller always has the upper hand.
In a buyer’s market, those looking for a property can walk away if they don’t like the terms because the inventory selection is plentiful. In a seller’s market, bidding wars and multiple offers give the seller the advantage as far as terms of the sale. A very motivated seller, though, is less inclined to engage in lengthy negotiations, and wants to get the offer accepted.
Negotiations start once the seller receives a written offer. (Strategy is used to make the offer.) Everything is negotiable. Agents for the buyer and the seller go back and forth in writing via email or signed forms.
The objective is agreement on the deal’s terms, which include price, timelines, contingencies and items that may be conveyed with the property.
Negotiation continues until the deal is closed, which means past the accepted offer when conditions and due diligence are being negotiated.
We’re prone to experience anger or excitement in the heat of the discussions. And we’re most likely to feel disappointment, sadness or regret in the aftermath. The emotional aspects of negotiation play a definite role. Here are a few:
Anxiety is a state of distress in reaction to unfamiliar situations that have the potential for undesirable outcomes. Anxiety flips a switch that makes people want to exit the scene. Patience and persistence are often desirable when negotiating. The urge to exit quickly is counterproductive.
Harvard University experiments have found that anxious participants did not discount advice from someone with a stated conflict of interest. Subjects feeling neutral emotions looked upon that advice skeptically. Anxiety suggests that people who express it are more likely to be taken advantage of in a negotiation, especially if the other party senses their distress.
Bringing anger to a negotiation is like throwing a bomb into the process.
Like anxiety, anger is a negative emotion. Instead of being self-focused, it’s usually directed toward someone else. Many people believe it will help them win a larger share of the pie.
Showing anger in a negotiation damages the long-term relationship between the parties. It reduces liking and trust. Anger can create authentic feelings of anger, which in turn diminish trust for both parties.
There is a tendency to view negotiations in competitive terms rather than collaborative ones. Limited experience of one of the participants can show up in a negotiation when he or she assumes negotiation is a zero-sum game in which their own interests conflict directly with a counterpart’s.
Negotiating is an interpersonal process, so be observant. Perceiving how other people are feeling is a critical component of emotional intelligence, and is particularly key in negotiations. Tune in to your counterpart’s body language, tone of voice and choice of words.
Asking pointed questions based on your perceptions of the other party’s emotional expressions will make it easier for you to understand his/her perspective.
It will also make it difficult for a counterpart to lie to you. Evidence suggests that people prefer to tell lies of omission about facts rather than lies of commission about feelings.
There’s a relationship between anger and disappointment. Both typically arise when an individual feels wronged. It is useful to understand how one emotion can be used more constructively than the other.
Research shows that one cause of disappointment in a negotiation is the speed of the process. When a negotiation unfolds or concludes too quickly, participants tend to feel dissatisfied. The obvious way to lessen the likelihood of disappointment is to proceed slowly and deliberately.
Someone feeling regret is looking a little more at the upside, at the course of actions that led to this unhappy outcome, and thinking about the missteps or mistakes that created the disappointment.
Research shows that people are most likely to regret actions they didn’t take, the missed opportunities and errors of omission, rather than errors of commission. Information is king and learning should be a central goal. One way to reduce the potential for regret is to ask questions without hesitation.
Post-settlement settlement strategy recognizes that tension often dissipates when there’s a deal on the table that makes everyone happy. Sometimes the best negotiating happens after that tension is released.
Instead of shaking hands to end the deal making, now that we know we’ve reached an agreement, let’s spend a few more minutes chatting to see if we can find anything that sweetens it for both sides. When handled well, a post-settlement settlement can open a pathway for both sides to become even more satisfied with the outcome and stave off regrets.
There are two lessons for negotiators. First, be considerate. Do not let your excitement make your counterparts feel that they lost. Second, be skeptical. Do not let your excitement lead to overconfidence or an escalation of commitment with insufficient data.
Prepare your tactical and strategic moves before a negotiation. You should invest effort in preparing your emotional approach. It is time well spent.
This article is based upon legal opinions, current practices and my personal experiences. I recommend that each potential buyer or seller conduct his/her own due diligence and review. Studies referenced are from work by Alison Woods Brooks published in the Harvard Business Review, 2015.