Slice And Dice-A Real Estate Broker Shares His Technique

Recently I was reflecting on the disputes I have mediated. I looked for commonalities throughout the array of cases. In all of these cases, whether private Commercial Mediations or Court Mediations, I recognized that, for the most part, I utilized the Commercial Mediation Model with its Four Functional stages:

• The Introduction
• The Joint Session
• The Caucuses (as many as it took), and,
• The Agreement.

I noted in each case that the power of the Mediation Model operated as a dynamic force. I searched for other commonalities.

Suddenly I spotted it. I was doing something else. I was using a Real Estate negotiation technique I had developed many years ago to identify areas of Agreement, Non-Disagreement, Non-Agreement and Disagreement between the parties. I call this technique, “Slice and Dice.” Viewing mediation as an assisted negotiation, the slice and dice technique becomes a powerful tool for the Mediator.

TERMS DEFINED

• Agreement: the conscious acceptance of a specific provision contained in an offer.
• Non-Disagreement: the conscious withholding of disapproval of a specific provision contained in an offer.
• Non-agreement: the conscious withholding of approval of a specific provision contained in an offer.
• Disagreement: the conscious rejection of a specific provision contained in an offer.

Generally speaking, negotiations for the sale and purchase of Real Estate follow this sequence:

1. A property is listed for sale with a Broker specifying the price and terms.

2. An Offer is submitted on behalf of a potential Buyer.

3. The Offer is presented to the Seller and is Accepted, Rejected, Counter-Offered, OR, the Seller may not respond at all effectively “pocket vetoing” the Offer. There can be and often are multiple Counter-Offers made between the Seller and Buyer.

4. An Agreement is reached which is acceptable to both Seller and Buyer, OR, NO Agreement is reached and negotiations cease.

Slicing and Dicing begins when a written Offer is received and a “good faith presentation” is made to the Seller.

In California, the most frequently used standard Offer to purchase has 32 sections and most sections contain subsections. I will spare you an explanation of each item. The reader need not have an understanding of the form.

When I present the Offer, I systematically discuss each section with the Seller. As I discuss the offer item by item, I listen very carefully to the seller’s response. Take note that I use the word, “listen.” The socialization process teaches people to disguise their facial expressions in negotiations. It is very difficult to disguise one’s voice. I carefully listen to tone of voice, rate of speech, and nervous tendencies such as clearing the throat, word choice, tempo and timing. I take careful note of silences. There are silences due to hesitation, silences due to reflection, silences due to an effort to control anger, elation, frustration, joy and rage. Non-verbal sounds such as shuffling feet often indicate nervousness. These auditory observations allow me to mentally evaluate the level of response and thereby assist me to move the negotiations forward more precisely than I would otherwise be able to move them. Page One deals with:

• Selling Price If the Seller says, “The price is too low, do they think we are nuts?” I interpret that as a point of Disagreement. I calmly say, “Let’s move on and come back to that one.” If the Seller does not indicate his or her opinion concerning the price Offered, I treat their response as either Non-Disagreement or Non-Agreement. If the price being offered is Acceptable to the Seller, I actively confirm that fact with the Seller, “The purchase price is acceptable, lets go through the rest of the Offer.”
• 
  The Buyer’s Deposit
• The Amount of Financing required
• The Cash Balance of Purchase Price to be placed into Escrow prior to close of Escrow
• Escrow Closing Date: the Buyer wants a certain date and the Seller indicates other dates are preferable. I note that and say, “We will counter that point.”
• Transfer of Possession: I note the date preferred by Buyer and Seller.
• Escrow Holder: Use of shorthand codes is common in the Real Estate Profession. A few common terms of art are: “50-50 Normal Escrow”, “any reliable” and “any reliable-Seller’s choice.”
• Title Insurer
• Pest Control Operator
• Allocation of costs: including Escrow, Title, Pest Control, Inspection, and minimum government retrofit charges.

For each item I ask, “Is that acceptable?” If the Seller agrees, I confirm that fact and mentally note page one as Agreement OR, if the Seller is NOT in agreement with the Offer, I mentally note the level of the Seller’s response as Non-Disagreement, Non-Agreement or Disagreement. My goal is to identify for the Seller, the key areas of Disagreement or Non-Agreement so that we can focus on those areas. Careful attention to the level of response is very helpful in moving the negotiating process forward.

Page Two contains entries made by the Offeror or his agent. If the second page is completed as I would, I make a mental note to simplify the presentation. If there are any variations, I point them out as I review the second page with the Seller. Usually, this is a very brief process.

The entire Offer is presented in this systematic way. After the “good faith presentation” is made, I review the points of Agreement, Non-Disagreement, Non-Agreement and Disagreement with the Seller. The process of categorizing each item in the Offer is the “Slice” and the analysis that follows is the “Dice”.

• Areas of Agreement are confirmed with the Seller.
• Areas of Non-Disagreement are discussed further to confirm the Seller’s negotiating position.
• Those areas of Non-Disagreement are further refined.
• Those that may be classified with the areas of Agreement and those that are OTHER THAN Agreement are further refined.
• Items classified as Agreement are trailed.

At this point I may still have different issues in each of the four categories. Most times there are fewer items in the “Non-Disagreement” category. The procedure is repeated for the category of items in “Non-Agreement” and discussion follows on each item. More re-categorization ensues and a fifth category is generated as a result.

The fifth category is “Items-To-Be-Counter-Offered”. If the process results in very little to Counter-Offer, I point that fact out to the Seller. For example, “What we are really looking at here is the Home Warranty and whether the Escrow period will be 45 days, which is your preference, or, 60 days which is the Buyers preference. As close as you are to an Agreement here, is it worth fussing over a $400 Home Warranty that has benefits for you as a Seller and whether the Escrow is 45 days or 60 days?” I wait for the reply. Stated objectively, the Seller’s choices are simplified. As their agent, I must allow them to make the final decision. If they still wish to make a Counter Offer, I write it with them. I humbly offer the “Slice and Dice” technique to the Mediation Community. This technique cuts across a broad range of negotiations and has particular application to mediation. Feel free to use it often.

The author wishes to acknowledge Gregg F. Relyea, Esq. for his comments and suggestions as a reviewer of this article. Professor Relyea is a lawyer, mediator and law professor at Cal Western School of Law and the University of California at San Diego.

                       

Joseph Dean Klatt

Joseph Dean Klatt was born the oldest of four children in Fond du lac, Wisconsin.  After graduation from La Jolla High School, Dr. Klatt lost his eyesight in a freak auto accident in 1967 at age 19.  He has since become a father to two sons, Joseph Franklin Klatt and… MORE >