What negotiation tactics can negotiators take away from hyper competitive bargaining situations? Multiple Equivalent Simultaneous Offers (MESO) strategies for negotiators include creating value at the bargaining table by identifying multiple proposals of equal value and presenting them to your counterpart simultaneously. By making tradeoffs across issues, parties can obtain greater value on the issues that are most important to them. But how can you be sure you’re making the right offer?
With home sales heating up (again) in some parts of the United States, homebuyers are facing competition they haven’t seen since before the real-estate bubble burst back in 2008, and it’s showing up in the form of packed open houses, multiple bids above the asking price, and all-cash offers. What can we learn from this case study involving the 2013 New York City real estate market (a market that, according to a recent report in the New York Times, continues to shatter records in terms of condo prices)? As always, things in the Big Apple are larger than life.
For example, to take an extreme case, in New York City, low condominium inventory combined with low mortgage rates drove up prices by 12% in 2013, from $829,000 to $930,000, wrote Michelle Higgins in the New York Times. Real-estate agents capitalized on the frenzy with tactics like one-day-only showings and tight deadlines for bidders to submit their best-and-final offers.
In such an environment, MESO negotiation, or any negotiation might seem futile. After all, if a seller has 20 offers, how could you possibly stand out – other than, perhaps, by overbidding? In fact, there are other ways to separate yourself from the pack, while also ensuring that you make smart financial decisions for yourself.
MESO Negotiation Examples in Real Life – Buying an Apartment in Manhattan
1. Understand Their Interests
Whether in real estate or another realm, it pays to gather as much information as you can about the market, the seller’s motivations, and your competition. After learning that the seller of one New York townhouse had inherited his property, Robert Dankner, president of Prime Manhattan Residential, advised his clients to not try to amend the contract based on the fact that the property needed a gut renovation.
“We were actually the third-highest bidder,” Dankner told Susan Stelling of the New York Times, “but we got the property” as a result of addressing the seller’s desire for an uncomplicated sale.
2. Improve Your Appeal.
Betsy Messerschmitt, a senior vice president of the Corcoran Group in New York, told Stellin that would-be buyers with solid credentials can stand out by submitting a financial statement along with their offer, one listing assets, liabilities, and sources of income. She has also been known to write sellers a letter on behalf of her clients that personalizes them and explains why they love the property.
“The seller has to know you really want it,” according to Messerschmitt. Other buyers’ agents advise their clients to write “love letters” of their own to sellers, sharing information about themselves and detailing their regard for the home.
3. Fall In Love with Two
You will also want to have a strong sense of your own interests and limits in a home sale, including your best alternative to a negotiated agreement, or BATNA.
How long do you plan to stay in the home? How important is location to you? What can you afford?
The best way to improve your BATNA in such negotiation situations, according to Harvard Business School professor Max H. Bazerman, is to fall in love with two homes rather than just one.
If you can manage to find two or more houses that are equally appealing to you, you should be able to lessen your odds of bidding more than the home is worth – and more than you can afford. The knowledge that another desirable home is waiting in the wings will naturally make you more cautious and rational in your negotiating skills and negotiation tactics.
Related Dealmaking Article: Win-Win Negotiation: Managing Your Counterpart’s Satisfaction
MESO Negotiation: The Benefits of Making Multiple Equivalent Simultaneous Offers in Business Negotiations
MESO: Make Multiple Equivalent Simultaneous Offers to Create Value in Dealmaking Table
Originally posted on August 2013.