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Background

A relative of mine, whom I'll call Tania, owns the larger bedroom of a two-bedroom apartment in Moscow, Russia, while the other bedroom is owned by a guy completely unrelated to her, whom I'll call Oleg. This kind of situation is common in Russia: it was a communal apartment, that is, an apartment given by the Communist government to unrelated families for share between them. Tania and Oleg are descendants of those families. Tania currently leases her bedroom to other people and lives elsewhere, whereas Oleg inherited his bedroom just a few months ago and hasn't leased it yet. Like Tania, he lives elsewhere.

A month ago Oleg sent Tania an email suggesting it was to their mutual benefit to resolve this awkward situation, and offering to buy the bedroom Tania owns.

Negotiation

Tania was eager to resolve the situation, too, so she asked for details: (1) how much he was prepared to pay, (2) how much he himself would agree to sell his bedroom to Tania for, and (3) whether he would agree to jointly sell the apartment for as much as they could get, and split the money in proportion to the area of each bedroom.

In response, for Tania's bedroom, Oleg offered an amount that is about 40-45% of the market price of the entire apartment, despite Tania's bedroom being larger than Oleg's. For his own bedroom, Oleg quoted practically the same figure and referred to it as a "ballpark figure" he "might discuss." He added that a joint sell was "possible," but didn't say anything about splitting the money in that case.

Tania responded that she wasn't interested unless Oleg was prepared to negotiate on the basis of the areas of the bedrooms. She explicitly wrote the following formula: Tania's share = Market price of the apartment * Area of Tania's bedroom / Sum of the areas of the bedrooms. Tania emphasized that according to that formula, her share is 55%. She asked what objections Oleg had against that formula.

In response, Oleg sent an email that can be summarized as follows:

I agree that if a joint property is sold to a third party, the money is split in proportion to the area of each bedroom. But our situation is different: I am offering you money for your bedroom. You can't find anyone on the market who'll buy your bedroom for more than X roubles. I'm offering you Y roubles, so it's more than a fair deal for you.

The numbers X and Y in his email are about 30-35% and 40-45% of the market price of the entire apartment, respectively, with Y coinciding with Oleg's original offer.

Oleg's offer is clearly unfair in the sense that if Tania agrees, Oleg then can then sell the entire apartment and thereby end up having more money than Tania despite initially owing a smaller bedroom. So Tania is stuck as to how to deal with such an offensive offer.

Situation analysis

First of all, the market price of the apartment is about 200,000 USD, which is roughly 20 median annual salaries in Moscow, so it's a high-stakes negotiation, and thus Tania has to choose her words and arguments carefully.

Apart from the two bedrooms themselves, the apartment has some common areas: a kitchen, a hall with no windows, a bathroom, and a toilet room. On paper, Tania owns those common areas in proportion of the area of her bedroom, and she gets bills accordingly, with her share of the common areas explicitly shown in bills. There's a logic behind that share of the common areas: since Tania's bedroom is larger, it can accommodate more people. And more people will use the common areas more. Oleg himself explicitly admitted that if a joint property is sold to a third party, the money is split in proportion to the area of each bedroom.

However, while Oleg emphasizes he has enough cash to buy Tania out, she doesn't have enough cash to buy Oleg out. She might be able to get a sufficient bank loan, but that's hard and complicated. If Oleg then changes his mind about letting Tania buy him out, Tania will face a considerable loss, although this might be possible to prevent by signing a special contract with Oleg in advance, if he agrees to sign such a contract at all. Oleg obviously tries to exploit the fact that he has enough cash.

At any rate, Tania owns a separate apartment and is no need of money, so she can afford saying NO to Oleg's offer --- and will definitely prefer doing so to living knowing she was ripped off.

Goal

Tania's goal is to reach any deal in which she gets the fair share, that is, 55%, now or at any point of the future. To reach that end, she must decline Oleg's current offer, but do it properly and thereby keep the negotiation open towards her goal. The question is how to do it. If Tania's response provokes animosity, the matter may become very personal and thus especially hard to resolve, but a too wishy-washy response might fail to get the point across.

Cultural considerations

A huge complicating factor is that in the Russian culture, budging on an offer is generally tantamount to losing face, especially for men, and that's why Russian men are perhaps the toughest negotiators in the world. And we expect it to be especially true for Oleg, because his family and relatives are most likely closely following the negotiation, so he will avoid losing face in front of them at all costs. If Tania tells Oleg, directly or indirectly, that he is being unfair and trying to rip her off, he'll get offended and won't be motivated to budge on his offer, because doing so will imply his admission to having been unfair, which is tantamount to losing face. So Tania has to come up with something that Oleg might use as an excuse for budging on the offer. The argument "you are being unfair and should change your offer" simply doesn't work in Russia.

An example of what works in Russia is something like:

Oleg, what you say is very reasonable, but you just happened not to know one detail. The detail is that ... How do you think your offer should be changed in view of that detail?

But what could be that detail in Tania's case? Oleg is just being blatantly unfair and it's hard to come up with any excuse for that.

Current ideas

Tania and I have a few ideas, but feel that none of them hits the bull's eye. Here are some of them:

(1) Why should I agree to less than 55% if I can get 55% if we jointly sell the entire apartment? You said that the whole sell is possible, and confirmed that my formula applies for the whole sell.

(2) Well, if you say that my formula applies only if we jointly sell the apartment, let's jointly sell the apartment then.

(3) Can you confirm you are prepared to sell your bedroom to me for Z roubles? It looks like it's more profitable to me to buy you out and then pocket the whole sell rather than agree to sell you my bedroom for X roubles.

The problem with such responses is that they sound hostile and confrontational and leave no option for Oleg to budge on his offer without losing face. Moreover, such responses sound as if Tania wanted to get as much as she can get rather than reach a fair deal.

Another idea is:

My relatives told me they'll lose any respect towards me if I agree to less than my fair share of the whole sell. I'm so sorry for that, but I can't accept your offer. If, at some point of the future, you find it acceptable for yourself to pay me that share or jointly sell the apartment, let me know, and I'll be happy to make a deal with you. Otherwise let's just do nothing and pass the issue to the next generation. Hopefully they'll find a way to sort it out."

The tone of the message is perfect, but the excuse is rather weak and sounds made-up.

I hope you now realize how difficult Tania's task is, and that's why I'm asking this question.

Question

How to decline Oleg's offer, but avoid causing animosity and making him feel he'll lose face if he changes his mind?

  • The comments here were getting long, so I've archived the conversation in chat so people can still see where the massive edit came from. – Tinkeringbell Aug 26 at 8:37
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    I don't have the cultural reference for this to be an actual answer, but do you think it could be possible (culturally) to say "No" by saying "Yes"? as in, "Oleg I agree entirely and think that your idea to do a joint sell sounds like a great plan. How would you like to proceed with a joint sell?" – Onyz Aug 26 at 14:24
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    @Onyz Oh that would sound very awkward in the Russian culture. I can't even predict Oleg's reaction. He could, for example, respond a day later with, "I suppose you properly relaxed yesterday in a bar or restaurant and typed those lines after a bottle of excellent wine or something like that. I envy you and wish I could relax yesterday in a similar way. At any rate, my offer is to buy your bedroom for Y roubles, not to sell the flat together. Have a nice day, and when you are ready to get back to our matter, consider my offer. I'm happy to answer any questions about it you may have." – Sandra Aug 26 at 14:47
  • @Sandra I see. It's a good thing I didn't make an answer then, that is super confusing to me! I wonder why he mentioned that a joint sell was "possible" if he has no interest in it, is it just a cultural tactic of softening negotiations? Something like that? – Onyz Aug 26 at 14:50
  • @Onyz I don't know why he said the joint sell was "possible," but there are at least two possible reasons: (1) He didn't want to sound too unfair by outright rejecting the very idea of any deal other than buying Tania's bedroom, (2) He understands that if he can't talk Tania into selling him her bedroom, it will be in his interest to negotiate an alternative deal rather than just walk away, so he left this opportunity open, but was very vague on specifics, only saying that the joint sell is возможен (which means "possible" or rather "not excluded"). – Sandra Aug 26 at 15:15
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It is a good strategy to try to be diplomatic even when faced with offers that are borderline offensive. It is also a good economic strategy to avoid entering into an offer-counteroffer situation if you think the first offer is way too low. (It creates an Anchor) - The anchor creates a psychological bias that can make the outcome of a negotiation end up closer to the anchor than in a non-anchored case. Thus it is smart in and by itself to dismiss a "lowball" offer without counterarguing.

While I have no direct experience with Russia - I have had some interactions with other cultures where "saving face" is an important driver of behaviour (specifically, Thailand and China). I have found that - both professionally, and personally, a "thank you very much, but no" without any arguments or justification is best. (In China, it is as I have experienced in fact rude to even say no. You would say "let us discuss it later" or simply decline (without using the word no) to discuss the matter at that point in time. You might even say "yes" with moderations to mean no! )

Any sort of justification can be construed as an argument or an attempt to haggle. It should be said in the friendliest manner possible. So my advice for Tania would be something along the lines of this:

Thank you for considering my room and making an offer on it. I am, unfortunately, not selling it [right now].

If said in person, it should be said with the same tone of voice you would have turning down a cup of tea. As-a-matter-of-fact and with a gratuitous tone. If written, it should be written as informally as available. "Hi Oleg" (I know that familiarity, nicknames and honorifics are pretty complicated in Russian, so i'll leave it to you to decide what is familiar enough...)

You may, if courtesy allows it, include the ending [for 200.000 $] instead of [right now]. That will be a bit more leaning on him to make a new offer - but it is also clearer in your lack of enthusiasm of the offer itself. Or you could omit the [right now] for nothing, but that could make it more final, that she is indeed never interested in selling.

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Moreover, such responses sound as if Tania wanted to get as much as she can get rather than reach a fair deal.

Value of things are always in the eye of the beholder. When you face an offer for a good, how honest is the offer is only about how desirable it is to make a deal given the information you have. What this value have for the buyer, is very secondary.

You indicate the two bedrooms would have 60% of the market value of the whole apartment. But currently, Tania only own one. And Oleg did offer more than the market for that. So Oleg's offer is not being unfair, it is something you could consider valid under some circumstances, it simply isn't because you have the information about the apartment value.

It could be that Oleg does not believe in the full apartment price figure given, it could also be that he is interested in keeping the apartment it for himself but doesn't have the money to make a better offer.

If Tania is not interested, I guess saying no like Stian suggests could do, and I agree with his idea to avoid bargaining, but this doesn't cover what Tania is really interested in : getting the biggest share in the apartment sell as a whole.

As such, my understanding is that it's a misunderstanding about the object of the deal : the deal is not about the bedroom. Oleg there would be guaranteed to be the highest bidder. You could argue, the bedroom isn't for sale. The deal is about trading the bedroom for a share in a joint sell.

I am sorry if I led you to think my bedroom was for sale. I do not intend to sell my bedroom directly for money. Instead, I would like us to joint sell the whole flat, and propose a X% share. In the case we wouldn't reach agreement, I intend to keep the bedroom.

This clarifies your positioning, going as easy as possible about the offer fairness, and avoiding bargaining.

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    If I understand correctly, the common areas are owned as a function of bedroom space. Rather than offering to buy just her bedroom and leave her some random portions of the common areas, surely he's hoping to buy the bedroom and what it entails, in which case his price is too low. Incidentally, maybe that can be the kind of extra fact Tania needs to bring up to move negotiations along. "Your price is reasonable for just the bedroom, but don't forget it comes with ownership of some of the common areas. Therefore, I don't see how I can value it at less than $x." – Euchris Aug 27 at 13:42
  • @Euchris this could be a good answer foe itself! – Allerleirauh Aug 28 at 6:02
  • @Euchris Yes, common areas are owned as a function of bedroom space, but you can't separate ownership of a bedroom from ownership of the corresponding part of the common space. If you own a bedroom, you automatically own the corresponding part of the common space. If you sell your bedroom, you forfeit your part of the common space. You can't own just a part of the common space and no bedroom. In Russia, it goes without saying that buying or selling a bedroom includes the corresponding share of the common area. – Sandra Aug 28 at 17:26
  • @Euchris So your suggested wording has to be tweaked like this: "Thank you, your offer is very generous, with your price being higher than what I could sell my bedroom on the market for. But there's one detail you seem not to know yet: I own a separate apartment and am thus in no need to sell my bedroom on the market, in the first place. As you are perfectly aware, selling my bedroom on the market would give me much less than my share of the value of the entire apartment. (continued below) – Sandra Aug 28 at 17:28
  • My financial situation doesn't demand making such a move at all, for I've already bought my first home and am in no need of cash. So I see no reason or need to sell my bedroom for less than my share of the apartment value. I understand you may have not known this or been unsure or wanted to check, but now you know. How do you think we should proceed?" – Sandra Aug 28 at 17:29

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