Buyer‐Seller 

Negotiation 
Exercise
MBA‐58
16‐17 August, 2021

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Exercise – Hamilton Real Estate
• Reservation value – point at which you are indifferent about the deal
• BATNA
• ZOPA 
• Information
• Asymmetry
• Controlling the frame
• First offer or not?

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In the process…
• Making opening offer
• ZOPA
• Your target
• Your need, context
• Aggressive offers
• Separate cognition and emotion
• Re‐frame and Re‐anchor
• Anything beyond the norm
• Preparation, Preparation for questions you don’t wish to answer

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Lies and deception
• Reality
• Handling is the key
• Ask direct question
• No answer to the question/Non‐response
• Difficult to lie on the face
• Bring in contingency to safeguard 
• Impact of lying on “relationship”/image

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Section (All)

Row Labels Count of First offer by Average of Initial Offer Average of Deal at (amount) Average of Variation

Buyer 59 41.116 48.501 ‐19.454
Seller 58 52.226 48.052 7.366
Grand Total 117 46.623 48.278 ‐6.158

Section B

Row Labels Count of First offer by Average of Initial Offer Average of Deal at (amount) Average of Variation

Buyer 21 41.345 49.824 ‐21.599
Seller 20 51.940 48.415 6.461
Grand Total 41 46.513 49.137 ‐7.911

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Section (All)

Row Labels Count of First offer by Average of Initial Offer Average of Deal at (amount) Average of Variation

Buyer 59 41.116 48.501 ‐19.454
Seller 58 52.226 48.052 7.366
Grand Total 117 46.623 48.278 ‐6.158

Section C

Row Labels Count of First offer by Average of Initial Offer Average of Deal at (amount) Average of Variation

Buyer 19 39.616 46.132 ‐17.864
Seller 20 52.250 47.850 8.041
Grand Total 39 46.095 47.013 ‐4.580

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Section (All)

Row Labels Count of First offer by Average of Initial Offer Average of Deal at (amount) Average of Variation

Buyer 59 41.116 48.501 ‐19.454
Seller 58 52.226 48.052 7.366
Grand Total 117 46.623 48.278 ‐6.158

Section A

Row Labels Count of First offer by Average of Initial Offer Average of Deal at (amount) Average of Variation

Buyer 19 42.362 49.408 ‐18.672
Seller 18 52.518 47.872 7.624
Grand Total 37 47.303 48.661 ‐5.879

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 2021 data – 117 Pairs (as it is) 2021 data – 99 Pairs (Deal In ZOPA)

0‐10 54 46.15% 10 44 48.35%

11 to 15 23 65.81% 15 18 68.13%
16 to 20 14 77.78%
20 13 82.42%
21 to 25 9 85.47%
26 to 30 7 91.45% 25 7 90.11%
31 to 35 2 93.16% 30 7 97.80%
More 8 100.00% 35 2 100.00%

2020 data – 114 Pairs (as it is) 2020 data – 99 Pairs (Deal in ZOPA)

bin Frequency Cumulative % bin Frequency Cumulative %
5 25 21.93% 5 22 22.22%
10 28 46.49% 10 24 46.46%
15 14 58.77% 15 12 58.59%
20 17 73.68% 20 14 72.73%
25 4 77.19% 25 4 76.77%
30 7 83.33% 30 6 82.83%
35 4 86.84% 35 3 85.86%
More 15 100.00% More 14 100.00%

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 2019 PGP Data 2018 PGP Data (Anchor ZOPA – 86)
Interval Frequency Cumulative % Interval Frequency Cumulative % Ulim Frequency Cumulative % Ulim Frequency Cumulative %
5 24 26.09% 5 24 26.09% 10 54 62.79% 10 54 62.79%
10 23 51.09% 10 23 51.09% 15 11 75.58% 15 11 75.58%
15 22 75.00% 15 22 75.00% 20 7 83.72% 20 7 83.72%
20 9 84.78% 20 9 84.78% 25 6 90.70% 25 6 90.70%
25 4 89.13% More 8 93.48% 30 0 90.70% More 6 97.67%
30 2 91.30% 25 4 97.83% 35 2 93.02% 35 2 100.00%
More 8 100.00% 30 2 100.00% More 6 100.00% 30 0 100.00%

Data from 773 Pairs of First Year Students of IIM Calcutta
Ulim Frequency Cumulative % Ulim Frequency Cumulative %
(From 2012 to 2018) 10 55 46.22% 10 55 46.22%
15 16 59.66%More 17 60.50%
10% or Lower Adjustment 48.5% 20 9 67.23% 15 16 73.95%
25 14 78.99% 25 14 85.71%
Adjustment between 11% to  26.9%
30 1 79.83% 20 9 93.28%
20%
35 7 85.71% 35 7 99.16%
More 17 100.00% 30 1 100.00%
 Some interesting conditions this year
10 upfront; 35 on completion
Hamilton property sold for commercial purpose
Plot is going to be used to build luxury condominium.
Estate One will pay an additional 10.8 to Pearl Investments if
and when converted to a commercial property
if zoning laws change seller will get 30 % of buyer's profit
Seller bluffed to start negotiations at 55 Millions.
Collaborate with buyer for one deal and get a profit for 7+
millions
Cash payment
The buyer and seller agreed for 10% extra price
We will be able to have a good association with the buyer
firm and will be able to leverage all their political contacts for
our own benefit in the future
No pertaining issues from zoning committee, this is to be the
first ever commercial development in Hamilton
Give us deals for next 3 contracts
Additional charges expected to convert land use to be
absorbed by Seller & Cost of registration estimated to be 3M
is expected to be split between the two.
Not building a luxury condominium in the space, else pay
20% extra value
45 would be paid within a week, rest Payment would be done
in 10 days, if not 1 million extra after 10 days
buyer is interested in buying other projects at 1.6 of the
original residential price for future projects
there will be no luxury condominiums on the property
Good relationships and priority over others when the next
deal is done from One Estate
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Power difference in negotiations

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Relative power in negotiations (ten bases)
1. Alternatives – the more the better
2. Legitimacy – who is negotiating
3. The ability to take Risk
4. Commitment to a position and your demonstration of that commitment
5. Knowledge of
i. What you are negotiating about
ii. The negotiation process
iii. The other party
6. If no knowledge, bring Expert
7. Ability to reward or punish
8. Time power or Deadline
9. Perception of power (not deception)
10. Relationship – focus on building relationship (long term view vs short term)
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Concession making & Concession getting

• Give room to negotiate (low ball or high ball with reasoning)
• Best time to get a concession is when you are asked for one
• Don’t make a counter offer for an unrealistic offer (step back, let 
silence prevail)

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Mid‐process guidelines
• Make people work for concessions 
• Don’t assume you know what other side wants
• Find out what they want
• When making concessions
• Make them small
• Make them slowly
• Make them Progressively Smaller

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Closure guidelines
• Close quickly – remember to throw something in at the closing time 
for the benefit of the other party – wins you…
• Don’t offer to split the difference
• Principle of relative value – give things away that don’t cost you much 
(time, effort, money…)
• CHALLENGE ‐‐‐ GETTING THIS LIST READY

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More tips

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Skilled & Average Negotiators
Negotiating Behavior Skilled  Average 
Negotiator Negotiator
Use of irritating phrases (such as “generous offer,” “fair price,”  2.3 10.8
“reasonable arrangement” per hour of face‐to‐face 
negotiating time that reflects favorably on party and 
unfavorably on other
Frequency of counterproposal per hour 1.7 3.1

Percent of negotiator’s time spent responding defensively and  1.9% 6.3%

attacking opponent
Test for understanding through active listening 9.7% 4.1%

Questions as a percent of all negotiating behavior 21.3% 9.6%

Average number of reasons given to back up each argument 1.8 3.0

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 Planning Methods Skilled  Average 
Negotiator Negotiator
Outcomes options considered during planning (per  5.1 2.6
negotiation issue)

Comments about areas of anticipated agreement or  38% 11%

common ground
Planning comments about Long Term consideration  8.5% 4%
of anticipated issues
Sequence planning All at once Linear

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Process of negotiation
Bargaining &  Closure & 
Define Ground  Clarifying &  Implementation
Prep & Plan Justifying case Problem Solving
rules
Clarify what  Agenda Clarify interests Focus on  Summarize 
you want, Why Set criteria Use frame to  problem, not  agreement
BATNA persuade people Review key 
Agreement 
Get script in  point Use questions Focus on  points (to 
place interest, not  ensure 
Discuss what  Share relevant  positions understanding)
will not be  information 
accepted that supports  Look forward Draft 
your case Create options  agreement in 
for mutual gain writing
Keep objective  Sign agreement
criteria

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Verbal negotiation tactics that can be used
1. Self disclosure
2. Question
3. Promise (conditional, positive)
4. Threat (conditional, negative)
5. Recommendation
6. Warning
7. Reward (unconditional, positive)
8. Normative appeal
9. Commitment
10. Command

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India‐Specific Features
• Element of time
• Signed deal vs. relationship
• Sanctity of contracts
• Wealthier party expected to provide more concessions

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 

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