Negotiating the Even Split

Real Estate Sales Representative with Coldwell Banker Graham & Assoc.

How many times during a negotiation have you settled for the "meet in the middle" compromise? Is the Even Split or meeting in the middle the best option? I think that a lot of people fall victim to that way of thinking when negotiating. Sometimes we will enter into negotiations hoping to achieve this outcome.

We have all seen the commercial where two boys are arguing over the last piece of bread with peanut butter. The mom in her infinite wisdom decides that the fairest course of action is for one boy to cut and the other choose his half, which produces an almost even split. This is fine when you are negotiating over a peanut butter sandwich, but most of the time, when we negotiate; the stakes are a little higher than that.

This reminds me of the story of Solomon settling the dispute between two women as to which lady a child belongs to. Solomon decides that the best way to settle this dispute was to cut the child in half. That way, both women would have an equal part of the child. Problem solved right? This decision of course prompts the real mother of the boy to forgo her half so that the other woman could have the whole child, thus sparing the child's life. At this point Solomon realized who the real mother was and awarded her the child, which of course was his plan all along. In this situation, the even split was not the best possible outcome.

So how do we avoid the even split trap? We avoid it by communicating our goals and interest with our negotiating counterpart.

Consider this scenario. Two sisters are arguing over who gets the last orange. After a heated debate they decide to split the orange in half. After receiving their halves, the first sister discards the peel and eats the fruit. The second sister discards the fruit and uses the zest of the peel for baking a cake. Clearly if the sisters would have communicated their reason for wanting the orange, they would have decided on an outcome that would have been more beneficiary to each other.

A lot of times during negotiation we feel that if we open up about what it is we want, we will be giving the other party the upper hand. We think that by communication our goals, we will divulge information that will put us at a disadvantage. This is not necessarily true. Communicating our goals may allow us to get more of what we want while satisfying the other party as well.

I believe that a lot of us enter into a negotiation with the mind set that there has to be a winner and a loser, a win-lose scenario. In this scenario, we of course want to be the winner. Therefore we keep tight lipped about what it is we want to not risk "exposing our hand." A lot of times, however, we stay mute at the expense of our own interest. We often forget that both parties actually have a common goal; to negotiate an agreement.

When selling a home, both parties have something the other party wants. The seller wants the buyer's money and the buyer wants the seller's house. It is just a matter of how those things will be exchanged. And in this negotiation, a lot of times we will get hung up on the price. After several offers and counter offers, we may decide to just meet in the middle. In doing so, we could actually be leaving money on the table or giving up some aspect of the deal that would better fit our needs.

Consider this next time you get hung up on a price; the buyer may be will to pay more for the house if the incentives or financing options were better and the seller may be willing to offer better incentives and seller financing if the buyer would increase their purchase price. A lot of times, buyers make their offers based on monthly mortgage cost and closing cost more than actual purchase amount. Sellers don't worry so much about the buyer's monthly mortgage as they are just trying to get the most they can for their house. You can see how, by communicating each others goals or interest, they may be able to strike a deal that would suit their needs better than just splitting it evenly down the middle.

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Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Nick, negotiating is a skill … both science and art. Most agents learn to negotiate “on the job” so to speak. It’s all about understanding the needs/wants/goals of the parties and finding a win-win for all. Thank you!

Aug 06, 2010 03:51 AM #1
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