Lesson in Negotiation: The Louisiana Purchase

Fredrik Stanton: The Louisiana Purchase not only was probably the best real estate deal in history, it was also one of the formative events in American History, and it really defined the country as we know it today. France owned the Louisiana Territories, which was a vast expanse of wilderness at that point along the banks of the Mississippi River and extending all the way to the Rockies and beyond.  It was about 800,000 square miles of territory.

The United States was very concerned because the Port of New Orleans, through which half of America’s trade flowed out as a port of entry from the Mississippi had been cut off to the Americans. It sent America into its first major crisis since the Revolution.

Napoleon sold it to the United States because he was worried that he might lose it anyway if a war broke out with the British, which imminent and eventually happened. The U.S. bought the Louisiana Territories for $15 million. And it forms the basis for the majority of our states today. 

Question: What lesson does this teach us about everyday negotiations?

Fredrik Stanton: The United States was aware that France and Napoleon was about to go to war with England. He needed money for the war and he was worried that he would lose Louisiana anyway. So the American negotiator successfully used this to their advantage and one of the lessons we can draw from that is, if you understand what motivates the person on the other side of the table from you, whether in a real estate negotiation or a business negotiation, you will discover factors that don’t involve you directly, but that push the other side under pressure to make a deal or provide leverage that you can use.

For instance, if you’re buying a house, you may discover that the other side is selling the house because the family has gotten a new job elsewhere and needs to move by a certain date. That gives you leverage in a negotiation because they’re under pressure to sell. There maybe other factors that are involved, but if they have to sell, then that gives you additional leverage that you can use to lower the price, to improve the terms, to do any number of things. 

Recorded January 18,2011
Interviewed by Max Miller
Directed by Jonathan Fowler
Produced by Elizabeth Rodd

 

In 1803 the U.S. negotiated probably the best real estate deal in history, taking advantage of Napoleon's need for cash to fund his European expansion.

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