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What is BATNA? (hint — If you’re in real estate you want to know this term)

BATNA. You’ve probably heard the concept before but maybe not the acronym. It stands for:

  • Best
  • Alternative
  • To
  • Negotiated
  • Agreement

So basically, it is your walkaway power. If your BATNA is better than the BATNA of the other side that you are negotiating with, then YOU have the power in the negotiation.

One example of this in real estate negotiations is:

A Buyer’s agent reaches out to a seller through their listing agent and says, “My buyer is interested in your wonderful house and would like to move forward, but there is another property that is intriguing as well that they would be satisfied with.

It’s that second part that is the BATNA.

Strong versus Weak BATNA

It’s not just about how strong your BATNA is, but really how strong your BATNA is in relation to the BATNA of whomever you are trying to negotiate within a real estate transaction. For instance, if you both have weak BATNAs (the seller needs to relocate for a job and therefore needs to move and the buyer doesn’t have much money and is therefore at the mercy of the seller) a deal can easily get done because both are desperate.

However, here is where a good negotiator can help everyone win. Taking everything into account, the collaborative negotiator can see that a “fast sale” is important to the seller while the price is more important to the buyer. They can compromise in the negotiation. But in this instance, both people don’t win the same amount (as you see in most negotiations typically in relation to price where they split the difference), but both get the thing they actually want – or need.

When both parties have a really good BATNA (an investor is selling a house and the buyer isn’t very picky) then a deal will be hard to get done unless they have something else in common (they are friends or family, etc) or everything aligns correctly. There just isn’t an incentive to budge off their position for either side.

This is why we teach getting the most information possible throughout an entire negotiation so you have the best BATNA – and very importantly have as good an estimation of the other side’s BATNA as well.

The more information you have, the better you understand both side’s BATNA you can create more power by ethically displaying a better BATNA and therefore being able to dictate terms that are more favorable to you and your client. However, as our teaching reminds you, you also need to at least somewhat satisfy the other side’s wants – otherwise, a deal won’t get done.

For more on Real Estate Negotiation check out our calendar for live two-day classes and if you’ve already taken a class, check out reniadvantage!