“I can't understand why he stopped the negotiation,” the developer who sat across from me said, after we received an email from the lawyers of the contractor with whom we had been negotiating in recent months.
I brought the local partner into the call, and she explained that she had had a feeling in recent weeks that the contractor had reached the point of exhaustion. She added that the indecision on our side and the dragging out of the negotiation probably caused this.
Warren Buffett: “The difference between successful people and unsuccessful people is often simply the ability to make quick and decisive decisions”.
The truth is that if I were in the contractor's place I too would probably have stopped the negotiation. Our client came to every meeting with a new idea or a new structure for the deal. It started with a simple deal under which the contractor would build the project for him in phases (but there are no permits yet, and it can't be priced…), continued with the idea that the contractor would buy the land from him in parts, moved on to the idea of a combination deal (a land-for-units arrangement; but they could not agree on the combination percentages) and in the last round he proposed setting up a joint company under which they would carry out the planning, construction and sale of the apartments to be built.
Hours were invested in preparing paperwork, checks, calculations, and each time it was thrown in the trash when a new proposal arrived. In a conversation between me and the local partner we came to the conclusion that he enjoys the negotiation more than he wants to close a deal (but hey, he pays fees so…).
When he understood that he was about to lose the chance of doing anything with the land he bought about 20 years ago, and that so far no contractor had agreed to talk to him about it, he pulled himself together, called the contractor and we set a meeting for a week later.
This time he came to the meeting decisive. A combination deal. He insisted mainly on the percentages issue, and was flexible on all the other parameters, so that it was possible to reach agreements and move on to draft agreements.
A study published in 2023 by Harvard University found that the most successful real estate developers are those who were most decisive in negotiation. The study found that these developers were willing to walk away if they were not satisfied with the terms, and this helped them to achieve better deals.
- Be decisive: It is important to know what you want from your deal and to determine it in advance. Do not change your mind all the time, otherwise you will frustrate the negotiation and cause frustration to the other side.
- Be prepared to compromise: You will not always manage to get everything you want. Be prepared to compromise on some of your demands in order to reach an agreement.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית