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The Art of Negotiation - Lawmakers FAIL

By
Real Estate Agent with RE/MAX 100

 

The Art of Negotiation

In many lines of business negotiations are an everyday occurrence. Sometimes deals are struck quickly without much deliberation and other times it takes many back-and-forth's to find just the right accord. Once the deliberating parties agree, generally terms are recorded in writing and signatures appended. It's imperative to keep a cool head, remain focused and leave emotion at the door. It's a process that involves give and take and usually one or both parties compromise.

 

Moving Forward and Performing With Great Expectation

Once a deal has been struck, terms have been recorded in writing and signatures appended, parties begin to perform according to the terms of the agreement. Time lines and specific actions are detailed. Often, as actions or terms are met, addendum are signed by both parties. Expectations on both sides are realistic as set forth in the written and signed agreement.

 

Defaults and Enforceability

While expectations may be realistic and terms may be clear, sometimes things don't work out. So, what happens if one party defaults on the terms and is unable to perform? How is the agreement enforceable? The answer will vary according to the terms of the agreement, but "any agreement where parties have necessary capacity to contract and the contract was not trifling, indeterminate, impossible or illegal. Remedies can be provided."

 

Lawmakers rip Fed's 'bait-and-switch'

I came across an article in the Washington Times from this past Friday. (hat tip Delusional Duck)

Here's the opening two paragraphs:

Angry lawmakers Friday accused the Treasury Department of pulling a "bait-and-switch" as it implements the $700 billion Wall Street rescue plan approved by Congress last month.

Treasury Secretary Henry A. Paulson Jr. earlier this week confirmed that the bailout funds would be used primarily to re-capitalize banks and other financial firms through direct stock purchases, not to purchase "toxic" mortgage and other assets from lenders as the Bush administration originally intended.

Unrealized Expectations

An Obvious Disconnect

There's obviously a disconnect between the lawmakers and the Treasury Department. But, that's not what bothered me. What bothered me was the lawmakers inability to implement and execute an agreement according to their expectations.

The lawmakers expected the bailout funds to be used to "buy toxic mortgages and other assets from lenders". Instead the bailout funds are primarily being used "to re-capitalize banks and other financial firms through direct stock purchases".

Politics aside or whether you agreed with Government intervention or not, there is a lesson to be learned from this.

 

The Lesson?

While I am not an attorney and I am not offering legal advice I do suggest the lesson here is:

  • Get the agreement in writing
  • Understand what is written
  • Make sure what is written is enforceable
  • Expectations are realistic and are based on what is written
  • Assume nothing
  • And when needed seek competent legal counsel

 

It's My Business

I'm a Realtor and my business is listing and selling houses. I don't know the intricacies of lawmaking, but I am familiar with contracts to list and sell Real Property. That's a large part of my job. I visualize my contract as my tool box. I do know what's in my tool box, how to use those tools and I also know my limitations with each tool.

 

What's This All About

We're in tough times, times I've never seen before. Some say this is the worst Global Economy in 20 years, others compare this to the Great Depression. But, while relevant, that's not my point.

Lawmakers are well-educated and many of them have been in Congress for some time. They have experiences far greater than many of us, so I don't think it's a question of ability. Call me the eternal optimist, but I also don't think it was malicious or self-serving. I do believe, collectively, their intent was good and meant to bring positive change.

Because of the magnitude of the crisis and in their haste to devise a solution, I think lawmakers lost focus of the art of negotiation and made decisions based more on emotion than logic.

 

What say you?

Comments(8)

Patricia Kennedy
RLAH@properties - Washington, DC
Home in the Capital

Craig, all I can say to this one is "Duh Uh!"  This is getting absolutely nuts - the kind of stuff that taxpayer revolts are made of.

Nov 16, 2008 04:34 AM
Debby Porter
Soultions Real Estate - Gilbert, AZ

Get the agreement in writing

didn't they get it in writing? 471 pages...

From what I understand only one paragraph actually pertained to real estate and the loans involved.

Nov 16, 2008 05:08 AM
Craig W. Barrett
RE/MAX 100 - Hughesville, MD
Hughesville MD Real Estate

Hi Pat - It is nuts isn't it? Somehow we all knew this was going to happen.

Debby - Apparently they didn't get what they expected in writing. Either that, or what lawmakers got is unenforceable.

Nov 16, 2008 05:45 AM
Matt Stigliano
Kimberly Howell Properties (210) 646-HOME - San Antonio, TX

Craig - Great comparison and way to make today's news relevant to real estate (even though it involved real estate to begin with, you really tied the two concepts together well).

Nov 19, 2008 01:55 AM
Craig W. Barrett
RE/MAX 100 - Hughesville, MD
Hughesville MD Real Estate

Hi Matt - Awesome, thanks for your contribution. I'm so glad to hear you liked and appreciated the post. I read your A|R and AG blog, your writing is excellent.

Nov 19, 2008 05:19 AM
Matt Stigliano
Kimberly Howell Properties (210) 646-HOME - San Antonio, TX

Craig - Thanks.  I need to learn to relate issues together a bit more like this.  Its the kind of stuff I always enjoy reading and always have that "a-ha!" moment after seeing it so clearly put.

Nov 19, 2008 11:42 AM
Anonymous
Steve

Fortunately, there are still some Americans who have jobs and are still making a good living and are able to meet their financial obligations. And yes, there are many who say, why should I care about  other people when I still have a job and I still pay my mortgage on time?  Problem is, it is very likely that  if the Depression continues to worsen, you too will be out of a job and then what?  Looks like we can either help the banks, and we all know that has not worked, or get to the root of the problem and help the people who are having trouble making ends meet so they can make their payments.  People with a family, medical or dental bills, or children in College have a hard enough time making ends meet let alone saving $20,000 for a down payment on a house!  The Fed could use the "Bailout/Stimulus" money to pay down, or refinance individual consumer's personal debit including one single family personal dwelling, and if unemployed or under employed at the time give those people 6-12 months to make the 1st payment.  The Banks would be paid off and now have money to loan, consumers would now have manageable debit payments and feel confident spending again!  The Fed is currently lending to Banks at around 2% interest right now!  They could lend to the American Taxpayer at 3%, 30 or 40 yr. fixed rate, and might actually make a profit.  Some say why, I say Why not?

Jan 29, 2009 04:10 AM
#8
Craig W. Barrett
RE/MAX 100 - Hughesville, MD
Hughesville MD Real Estate

Steve - I agree, let's put the focus of the attention and help on the consumers. You've touched on a few things and I'll comment on two. No doubt Banks want to get rid of toxic mortgages. Loan modifications keep terms afloat, but are Loan Mods just putting off the problem for a later date? Second, this market will bear little traction until we get folks help that are upside down on their mortgages. In my opinion, negative equity is a bigger problem than what's being reported.

Jan 31, 2009 11:23 PM