Monday, September 26, 2011

learning from a real negotiation experience

My apartment-hunting last week made a text-book negotiation experience, one that finally made me believe something you learned at school can be put into real life. I know this would sound strange, but I was mentally replaying some jargons, frameworks and techniques that I got familiar with on MGBL885 Negotiation... Here's what worked:

1. Clarify Interests and Positions
I used to go into the ocean of rental market without a clear idea of what I'm really looking for and what I can afford. This time I made a quick list of the ideal features I'm looking for (like bright room, close to subway, having a swimming pool in building, etc.), and set a target budget even before doing any research. Though my final deal exceeded this budget, it clearly helped me a lot to get my decision-making in order.
You may think you know something, but you don't really know until you write them on a piece of paper.

2. Get to Know the Other Party
The landlord I'm dealing with is a Chinese immigrant family that just landed in Toronto. They are literally just moving into this North York Centre condo they bought as an investment, and renting out extra bedrooms. It would be Sam, a Grade12 boy, that will be living with me while attending high school in Toronto; his mom is here for a short stay, and will go back to China soon after things related to the new condo get sorted out. Of course, I can easily understand how badly the mother is looking for reliable and stable tenants. You want your son to be around good people when you are thousands of miles away.

3. Establish Rapport
I had two quick phone calls with Sam and his mom before going to meet them and check out the condo. I had the feeling I could get along with Sam. I knew there are certainly MORE things I could talk about (i.e. interest) with them than just a number for monthly rent (i.e. position). I understood their situations and concerns well.
While talking to Sam's mother, I called her "Nin您", a respectful Chinese word to address an elder person. Clearly, she appreciated it and thought I was a good boy (what good judgment). I asked things like where is the school Sam goes to, which universities he considers going to, what part of China they are from, and so on. In this situation I'd say these things are actually more than just random small talks, but a way to make them feel understood.

4. Offer Extra Interests and Facilitate Mutual Gain
As we spoke, Sam's mother showed me a few pieces of paper in English that neither she nor her son seemed to fully understand. Those are documents and forms from the condo management regarding utilities, garbage recycle, mail box, etc. She asked me what the papers said, and I explained to the best of my ability. "I would be happy to help with these matters after moving in."
I also mentioned that since Sam doesn't have a car, it would be no problem for me to give him rides on weekend grocery-shopping and other things. In fact, this is something I'd certainly do for my roommate anyway, especially if we get along well. There's no point NOT to bring this up in the negotiation, whether for the purpose of increasing the other party's perceived gain or merely as a gesture of good intention. Sam's mother smiled.

5. Don't Hurry to Settle
After I showed interest in taking it, we had some haggling on the price. I insisted on taking the condo bedroom AND their parking lot together, and expected to get a good discount, because I knew this would reduce their potential hassles as well.
My initial position was paying $900/m for it all: a room, a parking lot, all utilities. At this point, my offer was $920, theirs $940. A classic impasse situation: there seems to be a pretty good chance of a deal, but neither party wants to give in more. I restrained myself from compromising too soon, and said I would need some more time to consider. I told her I'd have to do more searching over the weekend to see if I could find more affordable offers, and assured I'd get back to them by Monday.
I was hoping the two-day buffer would at least cool down the tension and protect the relationship. I felt I possessed slightly more bargaining power because finding a decent roommate for her son was at least equally important as renting the space out. In other words, she wouldn't want to lose me as a candidate because of this $20. However, since she had already reduced her offer from $1000 to $940 on the same day, she would lose face if she gave in one more chunk. I totally understand how much this "face" thing matters. We are Chinese.
Plus, in case I happen to find some other good condo, I would have a better BATNA(Best Alternative To an Negotiated Agreement). That will mean more bargaining power.
"You are pretty good at haggling", she said with a smile.

6. Invent Options for Mutual Gain
Over the weekend, I was on a road trip to Quebec City. We hit the road 5am Saturday morning and planned to get back Sunday night. Admittedly, I knew I wouldn't have any time to "do more searching" when I told Sam's mom I was going to do so.
On the road, an idea flashed through my mind that I could buy my own furniture and ask for another cut on the rent. Sam's family did not furnish the bedroom yet but agreed to do so before I move in. Now if buying my own furniture would save me money at the end of the year, I should ask what they say.
I asked Erin (who just recently bought a bed and desk from IKEA) what she paid for her bed, mattress and desk. I did some math and quickly formed an option I could propose Monday. I wasn't sure if this would work out, but I was happy with my attempt to invent an alternative.


My buffer strategy turned out to have worked. Sunday morning, Sam's mother called me back and agreed to settle this deal at $920. They already bought furniture, so I did not mention my Plan B and just happily took this new offer. She said she discussed the rental issue with Sam's Dad the night before. She emphasized that it was Sam's Dad's idea that they should not care about $20 if the tenant is the right person. In my opinion, this is how she is trying to save face! Finding legitimate reasons and excuses to justify their compromise is very important for the Chinese, because we hate losing face. It took her 5 minutes to finish explaining why they finally decided to rent the room to me. By the way, it is fairly natural for a Chinese mother to refer to her husband as "Sam's Dad", instead of something like "my husband" or "John". If an English-speaking lady says "Sam's Dad", you would probably guess the couple is separated. Not the case here.
While she did the 5-minute speech, I listened patiently and said I really appreciated that. Of course I appreciate it sincerely, whoever the real decision-maker was in their family.

Special thanks to Mr. Rick Jackson, the gentleman that introduced me to the fascinating world of negotiation. The book <Getting To Yes>, which Mr. Jackson recommended, is an incredibly helpful coach too.