Individual Economics in the Age of COVID-19

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So it’s time to discuss a new lease with my apartment complex. I’m in Philadelphia, and people are leaving cities for suburbs. We’re in a pandemic, unemployment is high, and 32% of the country just missed their rent/mortgage payment - more missed rent, of course. My best guess is about 25% of the building is vacant.

They opened the discussion by offering me a 38% rent increase lol… I might stay for the same or a slight increase, but I was expecting the negotiation to range from them offering a slight increase to me countering with a decrease. I was floored when I saw the offer.

It might even be pointless to negotiate if that’s where they’re starting. This country, man. Corporate America might legitimately be completely clueless as to what is coming in the back half of 2020 with this pandemic/recession. They’re going to go out of business if they try to charge what they offered me.

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Cuse, I previously negotiated software agreements for a financial services firm (sick middle management brag). Buy a book called “Never Split The Difference” and read it cover to cover. Pay special attention to the section where author walks through an apartment rental negotiation and also the section on how to determine your offers during the negotiation. At times, the book is going to feel “Jedi Mind Tricks 101” but I promise you, the author is legit and the content is very effective.

Also, feel free to reach out via PM if you want to discuss your pending negotiation in detail. You are most likely in the driver’s seat. Let’s make this happen!

Spitballing: In this environment without knowing your numbers, I would give a friendly chuckle at their offer, and ask “How do you expect me to do that?” and then be quiet and LISTEN a lot. Continue to ask open-ended questions, “How will that work” “What needs to happen” and frequent use of “How do you expect me to do that?” They will drop clues and you will use these clues to determine their wants, needs and concerns and begin structuring the right deal for YOUR needs. Using this approach, you don’t need to be aggressive or posture (unless that is your natural negotiation style). Be yourself.

From there, your initial counteroffer will be 50% of your current rent. Your anchor will work to reset their expectations, just as their 38% initial offer is an attempt to anchor you. The book will provide you with all the steps and how to best proceed. And again, feel free to use me as a resource. I enjoy negotiation strategy and planning.

In this climate, I would expect to reach an agreement below your current rent. Right now, they are legit scared of you leaving. Based on the details you provided, I think you have significant leverage.

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Wait them out. My lease was up May 1st in Florida. I knew I wasn’t going to renew. But they tried to raise my rent $100 on a new 12 month lease. A month before I left, they said they wouldn’t raise the rent. A week before I left they offered me a discount lol.

Oh and I strung them along the entire time. I said I’d think about it but wasn’t sure. I didn’t tell them no until I gave them the keys.

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Isn’t there a law that caps rent increase?

Like 105% or 110% of previous years rent?

Friend of mine lives in the Sydney CBD which has tons of vacancies as former airbnb places are returning to long term rentals. She is paying $600 a week and asked for a rent decrease and the landlord didn’t respond at all. Next email she sent was her notice as there are multiple free units in her building for less. Landlord immediately replied offering a $500 lease for 12 months which she accepted. Pretty sure she could have gotten an even better deal. Landlords have no idea what is about to hit them in the coming months here with no international students, no tourists and the covid subsidies running out.

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You need to go out and get 4-5 options and make your current place bid against them. They have zero leverage here, and it’s very likely that you’re going to want to move out. There’s about to be a huge shortage of tenants that can actually pay any rent at all, and landlords are about to cough up most (and in many cases all+) of the gains they received over the last 10 years. You don’t need to convince your current landlord of this, you just need to find one landlord who desperately needs a tenant… and you need to start working on finding that person ASAP.

To be clear I’m saying I think that the fair offer on your place (assuming it’s in a desirable area of Philly where rents have gone up dramatically since 2009) is very likely 25-40% less than you’re currently paying. This is work worth doing, particularly since you’ve lost live poker as an income stream for the forseeable future.

And if the market hasn’t absolutely cratered in Philly yet you should offer your landlord month to month at the current rent and stall until the crash actually comes… because until something dramatic passes it’s a mortal lock.

You’re a poker pro and you have the nuts basically. You’re TRYING to get to showdown here. There’s absolutely zero reason to settle for anything but a stupid good deal here unless the $ isn’t worth the time… and honestly I think this is less than 30 hours of work and the payoff is probably 25-40% of your annual rent cost. I would say you’d better be playing some awfully high stakes, but since the cost of your home generally tracks your earning potential pretty tightly for most people I’m not even sure of that.

Seeing the showdown = signing the longest lease you possibly can after the market is lying at the bottom of a smoking hole in the ground. If you have good credit you should also be looking at the condo market for the opportunity to just outright buy a place. There are going to be deals out there for that too.

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Commercial real estate guy here.

A tenant who is actually paying rent is a freaking unicorn right now. Many landlords have this business strategy, assuming they can juice rents on renewals because its so annoying to move. I wouldn’t even counter that absurd “offer.” And they wonder why people hate them.

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+1 to ‘fuck these people’ honestly. Your counter offer should be current -75%. When they act annoyed your line should be ‘my offer is significantly more reasonable than your offer though… I’m going to give you one opportunity to counter, which you should think about really hard because I’m either going to accept it or decline it based on where it stands against the overall market… there won’t be another counter offer.’ Then you drop the mic and wait. You’ll get their real bottom offer most of the time.

There’s no reason to even do that until you’ve already shopped though. You need to know what you’ll take and what you won’t before you force them to cough up their offer.

To be clear this line is for strong negotiation positions (like you have). Never ever ever do this as a bluff lol (if you actually need what they are selling this is a truly terrible line). This is negotiations answer to 5 bet shoving pre because you have AA/KK.

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This situation is similar to buying a car, they will act like they are in control when in reality you have all the leverage. They will also try to use emotional manipulation to get you to make a large financial mistake.

If you’re not comfortable being directly confrontational, I would just say “I don’t have infinity time to decide here. I’m going to get 4-5 quotes and pick one. I don’t have time to negotiate back and forth so please be respectful and make your best offer.”

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If Cuse wants to go less confrontational and be more polite that’s fine… but the villain in this hand is way way way out of line and has been significantly disrespectful with that offer. The smart offer from the villain in this spot was to offer to leave the rent flat… because that had the maximum chance of inducing a large mistake from Cuse.

Personally I negotiate for a living (I’ve had three negotiations this morning lol) and I would never answer this kind of a disrespectful offer in a respectful way. I’ve gotten exceptional results from nearly always mirroring the stance and attitude of the other side of the table. Often the best answer to someone making an insulting offer is to flip the table and ‘overreact’ to the insult of it. People with air usually snap collapse to their lowest offer when you do that.

I’ve also found that insulting offers are almost always air lol. If it wasn’t air it wouldn’t be insulting. It’s either a bad negotiator or a good negotiator who thinks you’re a bad negotiator. They are trying to anchor the negotiation in a very favorable way, but have overplayed their hand badly which means you can punish them.

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We have purchased two cars and each time has resulted in sales people screaming at me on the verge of tears because I took their “best offer” and used it to negotiate a better price somewhere else. For clarity, in each case these people offered me prices lower than their “best price” the instant I told them I had a better offer somewhere else. They literally had screaming meltdowns when I told they shouldn’t have fucked with me be lying to me in the first race about their prices.

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I’m honestly amazed at how many people (maybe it’s an exaggerared forum thing) seem to be ok with confrontrational, dick-ish communication. I would never say some of the things people suggest–and if someone said them to me, it certainly wouldn’t bring negotiations closer.

Maybe it’s just a style thing. It’s true that I generally avoid confrontation, and can go too far in this. But some of the suggestions (not just this thread, in pretty much all negotiation-esque situations) seem really over-aggressive and nuts to me.

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It depends on the context. I am nice, but only up to the point where the other side is obviously trying to pull on over on me.

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I’m usually with you honestly. I very rarely raise my voice or say anything dickish in a negotiation… but I’ve also usually done absolutely everything I can to signal that I have a strong position before we start. Reasonable guy with a strong hand is always the image I’m trying to have.

It’s important to note that this landlord is waaaaaaaaay out of line here. People like that only respect strength (they think negotiation is about being tough when it’s really about information discovery) so you have to project strength. It is what it is.

Using car buying as an example I generally tell them up front that I used to be a car salesman, and am now someone who negotiates for a living so let’s just do each other a professional courtesy and lay our cards on the table… and then I generally tell them my bidding process and ask them to make one. Works well and quickly.

Whenever possible you want to set the parameters of the game. I think the best example of this is Warren Buffett’s approach to acquiring companies. He asks the target to make him an offer which will be greeted with a final yes or no very quickly. It seems fair but it’s actually fiendish.

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Lots of people think two things that are generally wrong:

  1. Your first offer should be absurd because it anchors the negotiation in your favor
  2. You need to “take control” by being assertive or a flat out dick

Look at Warren Buffet. He makes one, generally fair but favorable to him offer, and that’s it.

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For the folks predicting the next great depression … is there a separate thread on this? Or source, or more info?

This is a really prominent misconception. All the successful negotiations I’ve been in were about trade offs. I can give you X if you give me Y. The trick is to find out what their X is that they want, not to scream Y at them all day.

Also “split the difference” is the dumbest negotiating tactic of all time but it still seems to come up over and over.

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Closing thing at the moment would be the personal finance thread.