Since October of 2018, my wife and I have been house hunting. We intentionally waited until the day after the first snow storm to begin scheduling showings. I reasoned that this would ensure that I would be an active buyer at a time when fewer people were in the market and this would help us secure a place at the best possible price.
For the most part, our strategy was sound and we found ourselves able to consider homes that would probably have been completely out of our reach during the Spring or Summer months.
However the number of homes on the market were significantly lower and given that we had a very narrow geography, we found it difficult to find one that was just right.
Ultimately, we settled on a property and made an offer. To be quite honest, I was not completely satisfied, but given the properties that were on the market at the time, and the time frame I had for moving, I was willing to compromise.
After the inspection the house turned out to have several issues. Some of these issues were simply the result of older systems that were still functional, but would soon need to be replaced. Others were clearly issues associated with poor workmanship and sloppy previous repairs.
I had plans for several renovations, so I was willing to accept the issues related to old (but functional systems). I did however ask the Seller to repair some of the more significant issues that were from poor workmanship.
I made a terrible mistake!
The Seller and I met at the house one day to discuss some of the repairs and he said to me, “I’m concerned that I will spend the money to do these things and then you might still walk away from the deal.” I had no intention of making anyone do work and then walk away, so answered honestly saying, “I have no intention of walking away”.
If you are a negotiator you probably already know what I did wrong.
I told him that I was going to stick through this deal and had no intention of walking away. This signaled to him that he could play hardball with me…and he did.
A few days later he told my Realtor that despite the work estimates for the repairs I requested coming in around $7000, he would only credit us $2000.
He delivered this message as a take-it or leave-it proposition. To reinforce their position, the Seller’s Realtor followed up with, “We have 5 other Buyers waiting in the wings if this falls through!”
Needless to say, I was beside myself.
How could I be so stupid? How could I have told him that I had no intention of walking away. I basically told him that he could do anything he wanted and I would just accept it, and with few other houses on the market, I might have to do just that.
That next day at church, our Priest read a passage from the bible that described the story of when Jesus turned water into wine.
“Fill your jars with water” Jesus told the servants. He then proceeded to perform his first miracle and turned the water into wine. Our Priest went on to repeat the phrase during his homily. As I heard those words, I was suddenly struck with clarity on what I had to do.
Right after mass I called my Realtor and said, “Send me a list of all of the properties that are currently on the market!”. Many we had already seen, but there were 3 new listings that week. I immediately requested showings and we began seeing what else was on the market. It turns out that those other three listing were better properties than the one we were about to buy and later that week another property came up that was even better.
I had filled my jar with water.
This gave me the confidence to tell the Seller that I would not accept his offer and we pulled out of the sale.
In negotiations, this is called a Best Alternative to a Negotiated Agreement or BATNA for short. Having a BATNA is a basic negotiation tactic which ensures that you never accept a deal that is unfavorable. I practice this for my Clients every day, but for some reason, I neglected to have a BATNA for myself.
By opening ourselves up to what else might be on the market, we created alternatives which gave us other options outside of accepting the unfavorable deal the Seller made.
We ended up making an offer on one of the new listings and we closed on that house last week. The house we ended up with is larger and in better condition than the one we were about to buy.
The first house did not get sold. Several weeks later we noticed that the property came off the market without a sale being registered.
This is why in procurement it is important to always have more than one quotation. Single source negotiations force you into unfavorable awards or into accepting terms you would not otherwise accept. Always have an alternative and if you ever find that you have put yourself in a situation without a BATNA, don’t be afraid to fill your jar with water.
Have you ever been in a single source situation? Did you accept an unfavorable contract or did you create a BATNA? Tell me your stories.
Thanks for reading. If you enjoyed this content, please feel free to browse my previous articles and please like, share, comment, and subscribe. This helps promote my content and is greatly appreciated.