Ron Karp, David Gold and Mox TanTwo-party, multi-issue real estate negotiation between representatives for a buyer and seller, where BATNAs are important
Downtown Realty, Inc. owns the historic Bullard Houses, a set of 51 attached brownstones in the city of Gotham. The Houses, occupied for decades by the city’s wealthy elite, have fallen into disrepair and are currently occupied only by a few low-income families. Downtown Realty has been prevented from demolishing the Houses by the Gothic Landmark Commission. Consequently, Downtown is eager to sell the property, and has several offers on the table. One offer proposes to convert the Houses into apartments, another into townhouses, and a third into a sophisticated marketplace. Downtown has not yet seen the offer of a fourth developer, Absentia, Ltd. Absentia is unfamiliar with Downtown’s other offers, but is confident that its offer will be appealing, although it is unwilling to reveal its exact plans. Each of the four offers presents a quite different financial package, each of which must be evaluated by Downtown in terms of present value. Both sides must take into consideration financial needs, tax implications, personal interests, and future dealings with the city Zoning Board. The negotiation involves attorneys representing Downtown Realty and Absentia, Ltd.
You can see students practicing the Bullard Houses negotiation game in this free video:
Bullard Houses was also used in a recent study at the University of California, Berkeley on the role gender plays in negotiation. The study focused specifically on whether the stereotype of women being more easily misled than men, was actually true. You can read more about the study and it’s findings here.
This case is essentially a one-on-one negotiation, but can be run effectively using teams of two. Individual preparation takes several hours, and involves extensive, but simple, present value calculations. Playing time can run from 40 minutes to one hour. Debriefing time should not be less than 30 minutes; substantially more is possible, up to 90 minutes.
For all parties:
- General Instructions
Confidential instructions for:
- All of the above
- Teaching Note
Attorney/Client relations; BATNA; Confidentiality; Information exchange; Lawyering; Message analysis; Misrepresentation; Objective criteria; Political constraints, dealing with; Preparation; Quantitative analysis; Undisclosed principles
One of the main issues in this case is whether to settle at all. The complexity of information exchange may impede settlement in a single negotiation session. This situation brings up the general point that the best outcome of a negotiation sometimes is not to reach an agreement.
Several interesting questions of confidentiality are raised here, since the sellers have promised one of the developers not to reveal information about their offer, and the buyer’s agent is under strict orders not to discuss his principal’s plans. Under what circumstances, if any, can the attorney reveal information, and what other ways are there to avoid suspicion?
This case requires careful analysis of the available information both before and during the negotiation. Beforehand, negotiators should work through a variety of simplified, but reasonably realistic financial structures (bonds, mortgages, loans, etc.) to make a judgment about the relative worth of the various offers and possible alternatives. During the negotiations, while much information cannot be revealed, what can has important, probably unforeseen, but not obvious implications for the other side.
Bullard Houses Attributes
- Time required:
- 1-2 hours
- Number of participants:
- Teams involved:
- Agent present:
- Neutral third party present:
- Teaching notes available:
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Ordering copies for multiple participants
If you wish to order multiple copies of a role simulation for use in a course or workshop, simply enter the total number of participants in the box next to “Participant Copies.” There is no need to calculate how many of each role is required; the Teaching Negotiation Resource Center will calculate the appropriate numbers of each role to provide, based on the total number of participants. For example, if you wish to order a 2-party role simulation for use with a class of 30 students, you would enter “30” in the box next to “Participant Copies.” You then would receive 15 copies of one role and 15 copies of the other role, for use with your 30 participants. As another example, if you ordered 30 participant copies of a 6-party role simulation, you would receive 5 copies of each role.
In the event that the number of participant copies you order is not evenly divisible by the number of roles in the simulation, you will receive extra copies of one or more roles. Participants receiving the extra roles may partner with other participants playing the same role, thus negotiating as a team. So, for instance, if you ordered 31 copies of a 2-party role simulation, you would receive 15 copies of the first role and 16 copies of the second role. One of the participants playing the second role would partner with another participant playing that same role, and the two would negotiate as a team.