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Why Itís A Mistake To Offer To Split the Difference
In this country, we have a tremendous sense of fair play. Our sense of fair play dictates to us that if both sides give equally, then that's fair. If Fred puts his home up for sale at $200,000, Susan makes an offer at $190,000, and both Fred and Susan are eager to compromise, both of them tend to be thinking, "If we settled at $195,000 that would be fair, because we both gave equally." Maybe it's fair and maybe it isn't. It depends on the opening negotiating positions that Fred and Susan took. If the house is really worth $190,000 and Fred was holding to his over-inflated price only to take advantage of Susan having falling in love with his house, then it's not fair. If the house is worth $200,000 and Susan is willing to pay that, but is taking advantage of Fred's financial problems, then it isn't fair. So, don't fall into the trap of thinking that splitting the difference is the fair thing to do when you can't resolve a difference in price with the other side.
With that misconception out of the way, let me point out that Power Negotiators know that Splitting the Difference does not mean splitting it down the middle. Just split the difference twice and the split becomes 75 percent/25 percent. Furthermore, you may be able to get the other side to split the difference three or more times. I once negotiated with a bank that had a blanket encumbrance over several properties that I owned. I had sold one property out from under the blanket, and our contract entitled them to a $32,000 pay-down of the loan. I offered them $28,000. I got them to offer to split the difference at $30,000. Over a period of weeks until this four-unit building closed, I was able to get them to offer to split the difference again at $29,000; and at $28,500 and finally they agreed to $28,250.
Here's how that this Gambit works:
The first thing to remember is that you should never offer to split the difference yourself, but always encourage the other person to offer to split the difference.
Let's say that you're a building contractor. You have been working on getting a remodeling job that you bid at $86,000 and for which they offered $75,000. You've been negotiating for a while, during which time you've been able to get the owners of the property up to $80,000, and you've come down to $84,000 with your proposal. Where do you go from there? You have a strong feeling that if you offered to split the difference they would agree to do so, which would mean agreeing at $82,000.
Instead of offering to split the difference, here's what you should do. You should say, "Well, I guess this is just not going to fly. It seems like such a shame though. We've spent so much time on this proposal, and we've come so close to a price with which we could both live. It seems like a shame that it's all going to collapse, when we're only $4,000 apart."
If you keep stressing the time that you've spent on it and the small amount of money that you're apart on the price, eventually the other people will say, "Look, why don't we split the difference."
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Copyright© 2002, Roger Dawson
Copyright © 2002, The Negotiator Magazine