Negotiation · 4 min read

Before Anyone Talks About Price

Price is the last question, not the first. By the time I am discussing a number, I want to know what I am buying, how I will pay for it, what could move it later and who will write it up.

By Jeev Trika

Most negotiations I have seen go wrong went wrong before anyone mentioned a number. The buyer had not found out what they were actually buying, or how they would pay, or what could change between signing and delivery. Then the conversation started at the price, because that is the easiest thing to talk about, and the rest got settled by default.

My own emails show a fairly consistent order of questions.

What exactly am I buying?

In 2019 I was introduced to a developer raising money for a senior-housing project, and I asked an adviser to look at it with me. After the developer answered his first round of questions, mine went to the things that would decide whether the project worked at all:

One of the keys to success in the senior housing marketplace is the quality of the operator/management team. Who will you select and what is their experience?

Then the evidence:

I would also like to review the market study they you have received

and the costs:

How do we confirm the the project costs (can we review the general contractor bid) and other project costs in greater detail?

Nothing about returns, valuation or my share. Those numbers mean nothing until you know who will run the building, whether the demand study holds up and whether the budget is real.

How will I pay, and what can move the price later?

In 2021 I was considering a residence in a new development in Bangkok. Sales had not opened. Over many months, long before any price was agreed, I wrote to the developer’s sales executive with questions. Some were about what I would own:

Lease term of 30 years or an extra option of an additional 30 years can be tacked on at no additional cost?

Some were about how the money would move:

What will be the payments plans offered? Will the funds be required over 1 year / 2 years / 3 years? What will be the payment terms? Will the developer be offering any financing opportunities to Non-Thai owners?

And some were about what could change the price between launch and occupancy:

How many price escalations do you anticipate during the course from the launch date to occupancy date?

I also asked whether early enquirers would get a discount, and how the project differed from two competing developments by name. Earlier that year I had explained why I was asking about payment terms so early: “clearly this is not a small price tag and funds would have to be planned for.” When the authorities halted construction after an incident in early 2022, my first question was about the new timelines for construction, sales and completion.

Who writes it up?

I had Thai counsel looking at projects for me from early 2021. They were not negotiating the price. In August 2022, on my way to Bangkok, I wrote to them:

We have documents that are going to be presented very soon by the developer. The price has been negotiated. Pls have your team ready to review, edit, and then have me sign off.

The order matters. I negotiate the commercial terms myself. The lawyers turn those terms into a document and look for what I missed. Bringing them in before the terms are clear means paying them to negotiate; bringing them in after signing means paying them to explain what went wrong.

And then, read the draft

The 2012 purchase of office space in Naples began as a lease proposal. When the draft sale contract arrived, my first reply was about two numbers that did not match what we had discussed:

That’s one quick thing I see without even reading the terms.

When told it would be sorted out, I asked that we both stick to what we had agreed. That reply is the first example in What I Mean by Fair.

My notes for my broker the same day were a list of things to check, not prices: whether the escrow agent was “someone legit,” evidence of title as the seller’s obligation, and that the contract “is assignable.”

The order, in short

What am I buying, and who runs it. How will I pay, and on what schedule. What can change the price or the timing later. What are the alternatives. Who papers it, and when. Price comes after all of that, and by then it is usually the easiest part.

One footnote, for honesty. In September 2021 my Wharton programme included an executive negotiation workshop taught by Richard Shell. The Bangkok question list above was written five weeks later. I would not claim one caused the other. The habit was older than the workshop.