Chetan Dasgupta| 1810120008| MBA 2020| Quarter 5| STM620

RIGHT TO BE FORTHRIGHT

Introduction
Value creation in a negotiation is tough especially when 2 people are untrained. Or when one of them is
trained and that person’s commission depends upon the price at which the deal is negotiated. It also
requires people to be honest to that they can clearly speak of what they need and then not be taken
advantage of. One of the important things that we must not forget is that price is not simply monetary. It
can be cash, or it can be kind, or it can be something completely intangible. It is difficult for the parties to
recognize it as a price if one of the items exchanged is intangible.

The Negotiation
We were selling off a flat in Kolkata. It also did not serve any particular purpose. The money that was
supposed to come from it was not necessary. Except it would pay some of the expenses for my elder
brother’s marriage. The Timing along with the amount was very important. We started looking for a buyer
long before the marriage was fixed. There was a small complication in the name of a broker for him higher
the price better it was for he would receive percentage income from both the buyer and the seller. For us
during most part of the negotiations we were also looking for the highest monetary value. The usual
haggling had been going on with 4 independent buyers. We initially set a very high price for the flat though
it was not worth that much. We had set a price of 15 lacs for the property. Although it was too high, we
had decided that it would leave much room for us to negotiate. The response to the price was lukewarm.
Many people called with a very low (5 lacs) counteroffer. We rejected those offers and did not negotiate
further. After 3 months there were four parties that were left. Negotiations were carried out through a
broker in 3 cases (A, B & C) and for one(D), the buyer directly contacted us.

Claiming Value
For all the four cases it started with claiming value type of negotiation. The brokers were extremely polite
and insistent. They kept on trying to prove that the property was not of the value we claimed it to be.
They started on 7 lacs and kept on diminishing concessions starting from 1.5 lac. We made steady
concessions till 11 lacs after which we steadily offered lower concessions till 10.5 as we knew that we had
over valued the property and not discussed some associated issues. We figured that we did not need to
build a relationship with the buyer and/or the broker. After much haggling 2 of the brokers (A&C) gave up
as the BATNA for 2 buyers were more attractive than that at 10 lacs. One of them got another property –
smaller, but nearer to the main road at a little more than what we offered them. B and D kept on trying
to close the deal at around 9. Interestingly B the broker called “No-Deal” at 10. We got a call from his

Chetan Dasgupta| 1810120008| MBA 2020| Quarter 5| STM620

Chetan Dasgupta| 1810120008| MBA 2020| Quarter 5| STM620

principal afterwards that they are ready to close the deal. There was another roadblock. The broker came
and offered that we take 60% of the money in cash off the books. We disagreed saying that both my folks
are in service all their life they had been paying taxes in full. Suddenly they do not want any issue and they
would be happy to pay the taxes. Still in the view that we could make some of the payments during the
wedding in cash we held off the deal explaining that we needed time to decide.

Creating Value
We opened a channel of communication with the independent buyer. In the buyer’s case the
communication was being handled by his eldest son. We insisted that we wanted to talk to his father and
invited his over for tea. My father and him got talking. It seemed clear that both buyer and seller wanted
to understand why we were stuck on the figure of 9 and 10. During the pleasantries exchanged we learned
that the person who wanted to buy the flat wanted it for his youngest who had got a Job in IT sector in
Calcutta. We also learned that his father was planning for his marriage in which case the girl who would
be from the city would not like to stay so far in the suburbs. They really wanted to buy the flat. The
decision maker liked the flat for all the reasons other buyers disliked it (distance from the main road,
undeveloped area around it which may not get developed in the next 20 /30 years). We pressed these
points and then father explained that we would be using the money to fund the wedding. He commented
that how expensive everything was especially the wedding hall. They were charging around 1.5 lacs for 3
days. The buyer D agreed and mentioned that thankfully his ancestral house was quite big. They
sometimes lend it out for weddings. This has been a hard time for them as they didn’t have booking as
people were preferring the halls in the city. My father asked him that what would his charges be for a 7-
day period. He said it would be around 1 lac all inclusive. My father offered them that if they would pay
9.5 along with the use of the house for a seven-day period they can call it a deal. They countered that it
was too much and really, they could not pay more than 9.1 along with the registration and taxes. The
buyer honestly admitted that he wanted to pay the price even up to 10.5 but they had originally budgeted
8 for the whole deal and even 9.1 they were running over budget. They pointed out that they were already
giving us a discount of 10% on the rent of the house. We agreed on the deal.

Conclusion
The deal showed that how we can create value if we are forthright with each other in the deal. Although
initially and for most of the deal it was about claiming value at the end it was creating value that made
both of the parties happy. It also shows that how creating value can bridge the gap between 2 RVs to
create a ZOPA.

Chetan Dasgupta| 1810120008| MBA 2020| Quarter 5| STM620