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Preparing to Negotiate
ARE YOU THE FAVORITE OR THE FOOL?
By Derek Gaunt |August 28, 2023
Share
A few years ago, I was coaching a real estate developer client ahead of an
upcoming negotiation. His organization had been working on a prospect—a
potential tenant—for more than a year based on untested assumptions.
Because the potential tenant signed a letter of interest and expressed their
desire to sign a lease, my client figured everything was good, so he passed them
along to another department to finalize the contract.
What my client didn’t know is that the potential tenant had given a counterfeit
agreement and never intended to make a deal.
In other words, although the potential tenant expressed interest, that yes was a
no-in-waiting or a maybe at best. But how could my client have known?
USING THE RULE OF THREE TO TEST THE AGREEMENT
In any negotiation, there are three types of agreements : counterfeit,
confirmation , and commitment .
When my client heard the first yes—“We love the location and the terms. Let’s
move ahead.”—he should have used a Mirror™ (Move ahead?) or a Label™ (It seems
like you are happy with the layout of the building and what we’ve outlined in
the contract) to make sure the potential tenant really meant it.
If the prospect responded to the Mirror or Label in the affirmative by either
saying yes again or further explaining what he meant by “let’s move ahead,” my
client would have received the second yes, confirming the prospect’s intent. At
this point, my client should have paraphrased the entire conversation to get the
commitment. If I understand this correctly, you love the location, you love the
building, and you think the neighborhood is great. On top of this, you are also
happy with the terms of the deal and would like to sign the contract and get the
process rolling?
During his preparation, my client didn’t understand the value of testing yes.
Had he, he would’ve figured out that he was the fool of the deal—not the
favorite.
[INFOGRAPHIC] Download our infographic to learn the nine crucial negotiation
skills that will give you the edge over your counterpart »
ARE YOU THE FAVORITE OR THE FOOL?
Nine months later, the potential tenant told my client that their organization
produced an internal report that said the location wasn’t ideal for their
business. As a result, the prospect was backing out of the deal. As for the
consequences for my client? Lost time. He could have been negotiating with other
prospects and earning hundreds of thousands of dollars for his company.
Upon hearing this news, something didn’t add up for my client. He wanted to
learn more about the prospect’s motivation for changing their mind. Why would
they have agreed to do business only to back out at the last minute? My client
also wanted to ensure that the other side knew they would be hurting themselves
by wasting a ton of time on a deal that never materialized.
My client scheduled a meeting with the supervisor of the individual who signed
the letter of intent. During that discussion, my client used several Black Swan
tools—including an Accusation Audit®, Calibrated Questions™, and Labels—to
ultimately discover that there was never a deal in the first place.
It turned out that my client’s company was the “fool” in the situation; the
“favorite” was the prospect’s existing property owner. The potential tenant
simply engaged my client to get a better deal from their current landlord. Once
they used my client’s offer as leverage, they got a better deal on their current
location, signed a lease, and stopped taking calls from my client.
ALWAYS GET PROOF OF LIFE OF THE DEAL. ALWAYS TEST YOUR AGREEMENTS
Using The Black Swan Method™, you can determine the Proof of Life of the deal
and whether you’re the favorite or the fool. Next time you’re at the table, ask
your counterpart something along these lines: With so many widget manufacturers
to choose from, why do you want to do business with us?
The more thoroughly they answer that question—and the closer they come to using
your own value prop in their response—the more confidence you can have in the
deal.
Likewise, you can increase the chances that your counterpart will follow through
by testing your agreement with Calibrated Questions, Summaries, Paraphrasing and
Labeling.
To improve your skills as a negotiator and achieve better business outcomes,
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