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Negotiation Examples in Real Life

Updated: Jul 30, 2021

Real estate business based negotiation examples – How value is to be created and Conflict Management engaged with?

Although majority of the articles discuss on the latest research and negotiation theory, at times, when providing advice and tips on negotiation, real life negotiation examples are also discussed. It is related to real estate bargaining that the following instance is based upon, a scenario that could be faced by many in our lifetime.

Real life negotiation examples – Relocating to any New Town

It could be that you are moving to any new place with your family and residing on rental basis. You may have come across that perfect house that you desire to purchase. Unfortunately, the seller is found to be reasonable.

The house market price is about AED 600,0000. However, according to the researched offered by the broker states it to be overpriced. The fair price, as per your estimate needs to be AED 500,0000. However, as that amount is offered, the seller does not counter and finds the amount ‘not close enough’. The housing market prices in your town probably could be affected a bit by the slump, which the seller may deny, according to your opinion.

Sellers generally look at prices that are paid few years ago for the neighbors’ houses. The buyers on the other hand, have been trying to compare transactions of the last few months for getting that ‘fair price’. A creative strategy may be considered for cutting through the standoff. You should begin by understanding that purchase of the house typically becomes a ‘tight’ deal, as a particular buyer is being committed to by the seller, where, (legally) the house cannot not be sold to anyone else, even though, a significant higher price is being offered.

A way forward, in this particular circumstance can be had with a ‘loose’ deal format. Imagine a higher offer is being made to the seller, say about $525,0000 for that ‘perfect’ house. A 60 day window period is to be offered to the seller for shopping the house. At that time, if any better offer comes, a ‘breakup fee’ would be paid to you by the seller to acquire the right of walking away, say about AED 25,0000 or even less.

Value based upon various beliefs with regards to the house value is created by this deal structure. This is what you will be effectively saying the seller, “According to you, AED 600,0000 is the worth of the home, however, my offer of AED 525,0000 is much better, something that you would not get. Being confident on my opinion, I am ready to provide you with a window period of 60 days for proving me wrong. In case, a better price is found, then I will keep on searching for that perfect house. If a better deal is not found, then you agree to close at my price in 60 days.

Even though, in the UAE, such deal structure is not much common, it is a norm in the UAE. Formally, the home owner could have an offer accepted from a buyer, but still be open to getting competitive offers until closing. Gazumping is the term that is generally used for describing what take places as a deal is jumped by the 3rd party. ‘Gazumping Insurance’ can also be purchased by the purchaser against being gazumped.

Until closing, sales of real estate in the UAE, is free-for-all. As a matter of fact, people’s lives can turn chaotic due to gazumping. The impasse could possibly be cut through with creative deal structuring in few cases.

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