Part 2 –
N-Play, an assisted negotiation platform that just might change the face of real estate negotiations
Whenever I teach ODR, I assign students a search-and-report assignment, asking them to run down and discuss different types of sites and services. This combines their (assumed) interest in learning what is going on in ODR, with my own interest in staying on top of things. Of course, many students report on oft-discussed service providers who have been in the ODR market for years. Others report on new service providers who are just setting up practice (or, who have just set up their website). Finally, every now and then, more courageous reporters venture outside established ODR territory and share information on new online services being set up in industries far removed from the dispute resolution field. These last services, processes and platforms interest me a great deal, as I discussed in a recent post. I think that as industries and agencies develop them, embed them in their operations, become dependent on them and train the public to use them – ODR will benefit by having a more tech-savvy, less anxious and more trusting public as its client-base, with many of the traditional inhibitions against ODR a thing of their past.
A few weeks ago, I took this search-and-report method to the next level, asking readers of this blog (I wonder who you are! Let me know!) to fill me in on any sites/services they know of, offering processes which sound ODR-ish in their essence but which were not developed, or are not operated, as the mainstream dispute-resolution service-provider type that we are familiar with. And, most importantly, they don’t mention ODR at all.
So, feeling wonderfully Dave Barry-ish about this whole method, reporting information ‘sent to me by alert readers’, I’d like to begin by spotlighting a couple of examples of these hidden ODR processes that students have reported on over the past couple of months. I think these two are particularly important, as they show initiatives in two industries in which negotiation is a cornerstone, and from which (in my opinion) mainstream negotiation practice (to say nothing of the literature) has not learned enough: Car dealerships, and real estate professionals. I’ll start with the real estate industry, and I have some comments on car dealerships lined up for a future post. Keep those sites and services coming, Alert Readers!
Real Estate Transactions:
Transactions regarding real estate have always been regarded as involving tough negotiation, usually positional bargaining, often with a power differential involved. There is a great deal of tension involved all around, and the traditional negotiation process - involving two parties and one or two agents - has given this industry’s negotiations a distinct flavor. Nothing that can’t be discussed using good ole negotiation analysis terms, but still – a very distinct flavor, and a very distinct reputation, in practice.
The availability of free online advertising, comparison mechanisms, reviews and complaint venues have repeatedly shaken up the traditional power and interaction structures of these interactions. In an effort to maintain or improve their position in the market and in specific negotiation processes, brokers, agents, buyers and sellers have all embraced the Internet as a source of exposure, information and connection.
An agent posting a listing on a website with pictures of the garden and a phone number to call for information might be good advertising or property promotion; however, this has nothing to do with the type of processes we’re looking for. We’re looking for ways in which technology transcends offering information, and allows some degree of communication: buyers and sellers (or agents) interacting, exchanging offers and counteroffers.
The real estate industry has recently seen a platform called N-Play appear on the market, making initial inroads in markets across the US. N-play provides for a sophisticated assisted negotiation interaction. I’ll briefly describe how the platform works, and then provide some analysis of the ODR-significant elements.
The first thing that needs to be said about N-play is that it is not a platform aimed at creating an open-access community of buyers and sellers (such as the e-Bay platform). The platform is marketed and licensed to the business-end of those involved in real-estate transactions – agents and brokers.
Unlike e-Bay or any other online commerce site, the idea is not to spare the buyers the stage of getting out and taking a look at the property – it is to allow buyers and sellers to determine if their basic financial requirements might potentially match, before investing the stress and time necessary to get a house sale/purchase to first base.
The first part of the process is ‘traditional’: Buyers view properties through their agents, or through an agency’s website, just as they always have, with the difference being that they are then provided with a link to click into the property’s N-Play page. There, they can view the seller’s asking price as well as offers that have been made on the property by others including price, time-to-closing, their financing or payment method and other details. Here is how it looks to a buyer.
Buyers can then anonymously enter their own non-binding offer on all of these issues, for the seller’s consideration. You can take this stage of the process for a test drive, here.
What happens next? Here is where the info on the site and the demo become a bit vague, so wanting to make sure I understood fully I contacted the company. Within the hour I received responses from two of the companies managers (something that to me speaks well of this service provider’s business approach) and had a very detailed exchange with Mark Bloomfield, the company’s founder (much appreciated, Mark!), allowing me to share and analyze some of the ins-and-outs of this carefully thought-out system in close detail.
The seller receives all offers, and can choose to pursue any offer (regardless of its ranking order), or no offer at all. Offers can be accepted by the seller "as is" - but as the offers are non-binding, the buyer who made the offer needs to agree to accept the sellers agreement to the price, in order to move on to a binding stage (in other words – the buyer is requested to reaccept their own offer). Offers accepted by the seller "as is" must be accepted by the buyer making the offer - or that buyer is permanently removed from the offer grid and will not be permitted to make another offer on that property using the service. This is to prevent a buyer getting a ‘yes’ to their price, and then using that as a starting point to try and cut a better deal.
If the seller considers an offer too low – they can simply ignore that offer. However, if a seller considers an offer made by a buyer as being unsatisfactory yet in the right ballpark, they can initiate contact with the buyer, accepting the offer “with stipulations” (i.e., counteroffers regarding the price or other issues). The buyer is then in a situation where they can choose to accept the offer, or not. They need to keep their eye on the clock, as the seller may be contacting other buyers with counteroffers in the meanwhile. However, this is as far as the system supports direct negotiation between the parties. The buyer can’t counter with yet another proposal made directly to the seller, further modifying the counterproposal. If the buyer wants to make a revised offer, they need to do it through the public area where all offers made are public to anyone interested in the property – starting the process off again from the new point.
When agreement is reached – either as-is or through counter-offers being accepted – parties are immediately notified by email and the buyer is provided a link to accept the seller's invitation to move to binding negotiations and contract. If accepted, the service generates a nonbinding memorandum of understanding detailing the agreement reached online, which is emailed to all parties. Agents and clients negotiate any final points, using the nonbinding memorandum as the deal guideline, and enter into a binding purchase and sale agreement using state approved forms and processes. Any other buyers who are active on the offer grid are informed then informed that the property is off the market.
Mark acknowledges that the negotiation is not completed through the system – there will still be a face-to-face, at-the-table phase. There will always be small points not agreed upon through the system, and sometimes even the main points are finalized only at the table. A buyer might agree to a seller’s counterproposal, rather than enter a new (public) offer to counter it, preferring to raise their new counteroffer at the physical table when the parties get together. This is an accepted part of the process, Mark says, and the platform has still delivered the goods: “A buyer who accepts and wants to negotiate at the table is still a serious and worthy buyer to the seller”. The system has fulfilled an important purpose: Getting parties to realize that they are in the same ballpark, and close enough to one another to warrant investing the time to discuss final tweaks. Mark stresses that in any real estate transaction, negotiating some issues face-to-face is unavoidable. Price, time to closing and payment method (the three issues negotiation through the site) may be the three major issues in real estate transactions, but they are by no means the only issues; parties will always need to talk: “Real estate transactions are too complex to try to cover every detail of the transaction online (termite inspections, assets that are left with the home, etc.). Still, the online offer process can deliver a superior job of bringing the parties to the "agreement-in-principle" stage compared to traditional means in the offline world”.
Viewing N-play from an ODR perspective, what Fourth Party functions does the platform perform?
The process itself seems easy to grasp, for someone looking to buy / sell a property. The interface also seems intuitive. However – the million dollar question remains to be addressed: what do parties gain by using the platform?
Based on my observations and impromptu negotiation analysis, I’m left with these impressions: From the seller’s viewpoint, sellers can avoid negotiation with buyers they view as lowballing them, and only negotiate with buyers closer to their own range. The visibility of multiple buyers showing interest by means of offers on their property page may make the property appear desirable. Finally, buyers might engage, subconsciously, in bidding against the offers already on the site.
Do buyers benefit as much from this setup? One benefit they enjoy is the ability to make anonymous offers. In addition, they gain from their ability to make offers on multiple properties: offers made on the site are explicitly non-binding and it seems there would be no legal ramifications under good faith clauses for abrupt disengagement. In this way, buyers can work actively on setting up their BATNA by offering on one house even as they make an offer on another. In addition, insofar as they trust the systems’ safeguards keeping out shill bidders, buyers know exactly how much is being offered by others for the house and can’t be manipulated by the classic seller’s bluff (“I just want you to know, I’ve got a really serious couple coming to make an offer on the house this afternoon…”.
I asked Mark for his opinion on the number one advantages to buyers and sellers. His reply indicated that great advantages lie in overcoming the psychological barriers which hold up the real estate market: “For sellers, knowing there are no roadblocks for buyers to make offers. For buyers, the ability to immediately bypass the onerous traditional process required to take action and to gain deal intelligence.”
I had the hutzpah to asked Mark if he was aware of any other software platforms in the real estate business providing similar services, and he was good enough (and confident enough) to point me down the path towards some, which may find their way into an post in the near future. After having looked at other platforms, however, it is easy to see what makes N-play unique in the market: No other platform goes beyond being an offer conveyance mechanism; none incorporate the creation of a mini-marketplace dedicated to a specific property, allowing buyers to see what other buyers think of the property, how high their offers are, what the competition is like and so on.
Looking forward to hearing your comments, and receiving other suggestions for sites.