Whether you are negotiating a big contract, a relationship, a business deal or a personal situation, the negotiation principles you use are all the same. They might be applied in a different manner, you may use some strategies and not others but the strategies used are basically the same. For instance, preparing in advance for a negotiation for a big contract might entail something different (analyzing costs, technical proposals etc) than preparing in advance for a relationship discussion (what you need to resolve in order to feel better about an upsetting situation), but it’s still preparing in advance.
One of the principles in the Think Like A Negotiator book is “Fair and Reasonable.” In a nutshell, fair means a proper balance of conflicting interests and reasonable means not extreme or excessive. When you are presented with a proposal or a price, term or condition, your first thought should always be – is this fair and reasonable? Once you’ve determined that, then you can determine what to do next.
To illustrate this, let’s take a college student in California, out on her own for the first time in her first apartment with no roommates. A little studio apartment, 500 SF.
Not a big place. She got her mother to cosign with her in order to get the apartment. It required an $800 security deposit. She lived there for a year and decided to move to an apartment in a gated complex for safety and closer to school and work.
She had the landlord do a pre move out inspection so she knew what she had to do in order to get her deposit back. The landlord did the walkthrough and said she just needed to do a good cleaning. The purpose of a pre inspection walk through is to determine what repairs if any are needed in order to return the place to acceptable condition and get your deposit back. Having been given no instructions regarding that, it could be reasonably assumed no significant deductions would be coming (you know what they say about assuming….)
She had the place professionally deep, move out cleaned at $130. When the landlord came to do the final walkthrough when the place was empty, he said he would maybe have cleaned the baseboards a little better but that’s about it. She waited for the deposit to come back.
Much to her surprise she received a letter outlining deductions in the amount of $708! That’s right, she only got back $92 of the $800 deposit! Is that fair and reasonable?
Now in a negotiation of any kind, you have to look at and analyze what is and is not fair and reasonable and whether or not you are going to dispute it. Negotiation is all about offer and acceptance or offer and counteroffer. In a negotiation mindset, you would look at this as the landlords first offer and make a determination to accept the offer or counteroffer. Now if the offer is as bogus as this, you have to determine what steps you are going to take in that regard. If the offer was actually fair and reasonable but not within what you thought should be acceptable, you determine that up front. In this case, this deal was not fair and totally unreasonable.
Take a look at this again. 500 SF. Here are some of the charges he assessed against the deposit. There were no receipts for any of the materials (required by law), there was an estimate for repairs that had not been done yet (illegal), there were numerous excessive charges including a charge for13 1/2 hours of cleaning a 500 SF property when the final walk-through didn’t indicate there was not a problem and she had it professionally move out cleaned!, $100 charge to “clean” 3 blinds, $65 to clean that little bit of carpet in the photo, full price charges for “in stock” supplies (must be charging every tenant the same thing) and much more.
The next thing to do in any negotiation is to consider whether you will accept the offer or if you will make a counteroffer. In this case, there will definitely be a counteroffer. In negotiation, you are basically calling someone on their stuff. A counteroffer is simply challenging the offer and providing an alternative offer. When determining your counteroffer, you have to think about what you bottom line is, whether its price or terms and conditions. What is the minimum you will take, what is your walk away point and how far are you willing to go with it? Many people could be more successful in their negotiation if they are willing to push the envelope a little harder. In other words, not taking pushback from the other party as a final answer or being willing to get a little in someone’s face so to speak during the negotiation. You have to think about these things when considering your strategy/counteroffer. Negotiation is often times viewed as confrontational which is why many don’t like to negotiate. It feels uncomfortable at times.
In this case, the guy owned a lot of property and rented to students all the time. It could be assumed that he has done this many times and gotten no pushback. There is an assumption out there that college students are easy to get one over on because they may not have a lot of life experience. Bad assumption in this case.
So she first did some research (preparing in advance) of the Landlord Tenant code for the state of California and also called the LA County Department of Consumer and Business affairs office to get their opinion on her case. They said she had valid points and it was worth challenging. She also discovered in the law that if it’s taken to court and the judge finds in the tenants favor, the judge can award up to 3 times the security deposit. In this case it would be $2,400 plus court costs. The guy could lose out big time. You have to determine if you are willing to go to court in your situation. If you decide that and make that part of your counteroffer, you have to go through with it or you won’t be taken seriously. Decide that before you make the counteroffer. Do your research to see what it will take in your state. Most of these cases are considered small claims which typically don’t require an attorney but it’s good to get some legal advice.
Being armed with an arsenal of information, the college student prepares a letter refuting each charge and gets an expert to look at it (always advisable to have an expert take a look). She points out that he didn’t indicate any of this during the pre-inspection or the final walk through, didn’t provide any receipts and that these charges were excessive and unreasonable. She concluded the letter with a request for the full deposit back and indicated if she did not hear from he she was going to take it to court. She sent the letter certified and waited for a response.
The landlord called her three weeks later and left her a message. He said he was surprised to get that letter. Yeah, I bet he was! And that he wanted to talk to her.
She called him back several days later, she wanted to gather her thoughts for the impending negotiation. However, there was no negotiation. When she called him back he had already sent the full refund because she didn’t call him right back! He must have been worried about being taken to court. He told her that according to her letter he saw that she was unwilling to negotiate and returned the full deposit!
She told him that the letter said she wanted to hear from him. He then said, are you willing to negotiate then? She said no, not at this point. You already sent the check, I’m considering this matter closed. He says to her well, I see how you really are then, I lost a lot over this. Really? We see how you really are by the way you attempted to hose this student to begin with. Did the guy not remember who the cosigner was?
By now, you may realize I’m talking about my daughter.
I met the landlord when I cosigned the lease and had an extensive conversation with him about what I teach people. He must not have been practicing the Effective Listening negotiation strategy in the Think Like A Negotiator book!
Whatever you are negotiating, the first thing to consider is whether or not it is fair and reasonable. If it is not, prepare in advance for your counteroffer by doing research to see if you have a valid argument. Establish your position and what your walk away point is and then step into the negotiation. Again, whether it’s a multi-million dollar deal or a landlord tenant dispute or something in between, the strategies are all the same, the only difference is the complexity of the situation which drives how much preparation, research and how the negotiation will be executed.
I help my clients be better negotiators and get the best deals possible for themselves. Email me at Eldonna@ThinkLikeANegotiator.com for help with your negotiation.