I know… I suck… I haven’t been keeping up with posting here. In my defense, my boyfriend and I are in the middle of selling his condo and buying a house. In San Diego. In the middle of a pandemic. Which brings me to the theme of today’s post: you can’t control others but you have control over what you do.
Real estate transactions are one of the most stressful things in life. Several articles like this one point out that home buying ranks above planning a wedding, becoming a parent, or even losing a job, for being stressful. In San Diego, like other very expensive places, I think it is even more so. For example, we looked at a 1300 sq. ft. house the other day that was priced at $825K (like most properties here, it will likely sell for more, but not from us); its ceilings were practically falling in and its floors were warped from water damage, amongst other problems. Almost a million dollars for a fixer-upper. INSANE!
We did find a house we loved and submitted an offer. The owner countered in a totally greedy, irrational, and frankly insulting manner. First, we got pissed; then we remembered that we can’t do anything about how a seller acts. In this situation, we let go of the hurt feelings and walked away. Let someone else over-overpay. Now, we’ve found another and just submitted an offer. It’s likely we won’t get the house because the owners are flippers and will only care about making bank, but we submitted a generous offer with terms that both make it more attractive and yet still protect us in the process. Still, I suspect someone will out bid us and do so without an appraisal contingency and maybe even “as-is” and even without an inspection contingency. We can’t control the other offerors nor the sellers, so we’re not going to worry about it. Either we get this house, or not.
Leaving off contingencies makes an offer stronger in the seller’s eyes. However, what it does for the buyer is put them in an unreasonably risky situation. For example, the appraisal contingency protects you in case the house is overpriced. An appraisal is necessary so that the loan provider knows it can make money if you default on your loan by making sure it will hold enough equity in the house to make money on a foreclosure. See, if the house is sold at $800K but appraises at $750K, without an appraisal contingency the loan company will only fund up to $750K and you’ll have to make up the difference somehow… like in cash. If you make a large downpayment, a loan company may forego the appraisal and tell you it’s okay to waive the contingency, but that’s because it knows that it’s going to make money selling your house if you default because its loan to you was only $400K (50% down), not $640K (20% down) or more. But you are still overpaying for the house.
If our offer is countered with contingency removal demands, we’ll just say “no” and walk again. We may end up renting for a while, but we will not pay a huge sum for a house without protections in the process. It would not be good for us and we can only control what we do.
I bring all this up because what I’m hearing from sellers is just like what creatives hear all the time, and what creatives must learn to say “no” to. That is, you’re told “everyone does this” or “sure, the doc says you are assigning us your copyrights but we’ll let you use the work” or “it’s industry standard to have a 90 day pay window,” or “you have to get releases from everyone you shoot at this event or indemnify us against claims if you don’t,” etc. Whenever someone in a financial transaction with you says one thing but the paperwork says another, go with what the papers say. Always. Your clients, no matter how nice, are not on your side. They can’t be—they are negotiating for their best deal, not yours. You can like them, but don’t ever trust their word over what is on the page.
Moreover, the terms they are insisting on are good for them and they do use them, or the terms would not be there. Always. So when they are saying “oh, we never do this thing the contract says we can do” and they won’t take it out, then you know they want to do what they claim they never do, and will if they can.
If your client/buyer tells you “my way or the highway,” take the second option, for sure. Bullying and fear-mongering is pervasive in the creative industries. Threats about not getting work are just manipulative bullshit. You didn’t have the gig and lose it by saying “no,” they just wanted to scare you into accepting a bad deal. Walk away. Use the time to get a better client.
But don’t bother trying to fix them or teach them the errors of their ways. Like the real estate situations mentioned above, you can’t control what your clients/buyers do and you’ll drive yourself mad if you try. But, you can control what you do.
The first thing is to know where your boundaries are. You can negotiate lots of things, but you should always know what lines you will not cross and respect those limits. You set your own limits; and you should do it before any negotiations so that you know what they are. Write them out like a list if that helps: will never sell copyrights; will only indemnify for my own actions; will not lower my price without getting something in return (besides the gig); etc. Once you have your limits defined, then you can respond rationally to whatever demands are made. So, for example, if a client insists on owning your copyrights created for the project, you can say “No” if you’re line is ownership, or “Not at this price—if you want full ownership, that will cost $X” if you’re willing to sell but for the right value.
You can use your list for contract negotiations of all kinds: time to pay, deposits, usage license terms, indemnification clauses, you name it. You set your limits. You have that control. Stick to them because they are best for your business.
Saying “no” to bad terms and bad deals does not make you a jerk, it makes you a smart businessperson. And, although standing up for your rights and what is best for you and your business is not always easy, it is vital.