Bat the BATNA out of the Park

on Tuesday, 07 October 2014. Posted in General

BATNA, the Best Alternative To A Negotiated Agreement, such a wonderful phrase, and quite simply the most important piece of information in any negotiation. This is the fall back position, it’s where you run to if the negotiation isn’t working and you know there is no way a deal can be made, so it’s the walk away from the table position.


But it is your greatest ally, it helps you steer the negotiation and to measure the outcomes, see previous articles on the power of BATNA. Simply put if the deal is better than BATNA, it’s certainly worth considering, if not then do not make the deal. However, you should look at your BATNA as a ship’s captain might look at a map, if he knows he can’t make his destination due to storms ahead or the risk he might lose his ship, he will seek another destination, a safe port from where he can try again. This is BATNA. 

BATNA will enhance your chances of making a deal

In the following simple example it is clear that weakening the other side’s BATNA will strengthen your chances in a deal. Imagine you are making a deal to buy your first home, the excitement at becoming a home owner rises and the adrenaline starts to flow, finally you will be able to provide a home for your family and have the security that comes with it. You’ve looked at two properties, one is in a perfect location, near the best schools, family and in a “des res” area, but it’s a bit of out of your league, price wise. It’s still your number one choice and it’s the home you’re busy making a deal on. Without a BATNA, with emotion running high you will start to redo the calculations, push the mortgage boundary as far as possible, sacrifice all other plans just to scrape together the payments. I’ve often seen it with young couples, who become so stretched financially that they have no life left in their new home and then trouble begins. What would happen if they had a BATNA, were looking at a second home, maybe in another area, not at exclusive but with better facilities like a garage, bigger garden, maybe a cheaper property that they could move into and refurbish over time. At least having a walk away, a BATNA they could say to the agent, look this isn’t the only house we are interested in so don’t push us too far. We have options.

Strengthening your negotiation porwer

So we can use our BATNA to strengthen our negotiating power, but what about attacking the other sides BATNA. The seller of the home in this example, she has a price beyond which she can’t move, she also needs to close the deal before a certain date so she can complete the sale of her next home. Her BATNA might be that she continues with the present agent, markets the house through more than one agency, either way she is still left with and unsold home and that affects her ability to purchase her new home. 

Weaken The BATNA:

Having shared your interests in the deal process you have gleaned some information about the seller’s interests and her BATNA. She, likely hasn’t told you up front that she needs the sale to close on another deal within a time frame, or that she needs a specific amount of money to manage the net purchase. But through interest sharing you’ve learned some information and now you can weaken her BATNA. What if you hold out on a decision, the closer the seller is to the time she needs to close out her new purchase the weaker her BATNA, because you know she can’t hold out for more money, she can’t afford to leave the house lying on the market. Maybe you’ve done more research on the market and you can use this to give her a new weaker BATNA, if the deal falls not only will she be left with the home on the market, but the market might be uncertain. Will another buyer will come along with the money soon? You could have some knowledge of the agents, you might be able to say, well you know you’re with the best agent around already, so what will a second one add to your chances of getting a sale. Already you are in a position to make your deal seem more attractive than her now weakened BATNA.

So with this new power, what can you do, you can move your offer, without cost to improve it beyond her BATNA, what about a deal to close quickly so she can go through with her purchase, maybe as part of the deal you close quickly but you’re happy to stay in your rental for an extra month to give her time to move so she might save on removal costs, might save on storage costs, what about if you agree to share lawyers to save costs. The point is now that you have weakened her BATNA your deal becomes more attractive and a small bit of movement or imagination from you might be all it needs to seal the deal.

Have you ever used your BATNA?

Have you been in negotiations where you have used your BATNA? Were you successful? We would like to hear your thoughts on negotiations and your feedback on the article above. Please share on social media websites such as Linkedin

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