Business Negotiation January 27, 2014

Escalation-A Cheap Shot That Will Catch You Unawares Sooner or Later

Many years ago, I bought a new sailboat so I was selling my old one.   What happened on this small deal happens to business people in multimillion dollar transactions...

Many years ago, I bought a new sailboat so I was selling my old one.  What happened on this small deal happens to business people in multimillion dollar transactions.

I placed an advertisement in a newspaper offering my old sailboat for $750 ($7500 in today’s money).  My asking price was below market because I wanted to move it.  After two weeks of no response, a hot prospect called and wanted to see the boat immediately.  I agreed to meet him at the marina in an hour.  I got there on time, but he didn’t.  Just as I thought he would never show up, he arrived with his wife.  They asked to be taken on a short sail to get a feel for how the boat handled.

Frankly, I didn’t want the hassle of putting up the sails but I agreed. After a 45 minute sail, he offered $675, which, after a bit of haggling, I accepted.  Reluctantly I took a $25 cash deposit and we agreed to close the sale in a few days when he would bring a certified check for the remaining $650.

On Wednesday, he called and said his wife saw a tear in the sails.  We met and I laid out the sails and he inspected every inch of them and found no tears.  He did not have the check and explained that the check would have to wait for his paycheck to clear.

On Saturday, I met them once again and then they wanted to know if the outboard engine worked.  They insisted that I put it on the boat and try it.  After much hassle and thirty pulls on the cord, it finally kicked over.  Then they wanted another cruise.  After we returned to the dock, he gave me a certified check for $600 instead of the $650 promised.  I pointed out the mistake, but he replied that was all he could get.

Do you think I accepted it?  Yes.  After all that work, I think I might have taken $500 just to get the boat off my hands.  I had been “escalated.”

Why would the seller take a reduction in price? The reason I did it is because I was sick and tired of the whole thing and wanted to have the boat out of my hair.

Is there a good defense against escalation? There is but I did not take the necessary action.  The best way to handle an escalator is to call his or her bluff.  The escalator is counting on you to give in as I did.  What I should have done was to recognize that the escalator probably had as much work and emotional equity in closing the deal as I.  They were testing my resolve to stand firm.

From now on, when in a negotiation anticipate the possibility of escalation.  Protect yourself against it by practicing what you will say and do if the other side escalates.  The probability of escalation can also be reduced by obtaining a big deposit or by writing a jointly signed memorandum of agreement.  That’s what I didn’t do, and it turned out to be a mistake.

 

 
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