Settle vs Compromise

Many people seem to use the words settle and compromise interchangeably If they want something and in “negotiating” with someone else they end up with something different, they think this is something they settled of compromised upon.

In my mind, there is a BIG difference between settling and compromising, if the compromise is done properly.

To settle frequently is used to mean accepting less than hoped. For example, a house seller wanted to sell a house for X and the buyer wanted to pay ½ of X so they “settle” for ¾ of X. Both the buyer and the seller feel they settled because the buyer paid more than they wanted while the seller received less than they wanted.

The alternative is when the two sides compromise and understand that a compromise doesn’t have to be zero sum. The example above is a zero sum in that every dollar the buyer paid above what they wanted to pay, the seller received. Effective compromise frequently results in a win/win situation for all involved. Again, using the real estate negotiation as an example, while many people would look at it as either the buyer wins or the seller wins, if done effectively, both can win. The real reason the seller might want a lower price is because they can only afford a certain monthly mortgage payment. While it’s true that lowering the price might result in a lower monthly payment, there are other ways to do this as well. Instead of lowering the price, the seller might agree to owner finance at a lower interest rate or they might agree to go with the same interest rate but financed over 35 years instead of over 30 years. If they choose to go with the same price but with owner financing over a longer period of time, the buyer gets the monthly payments they can afford and the seller gets more money over the long run.

Another example would choosing a restaurant for dinner. One person might recommend a Mexican restaurant while another might recommend an Italian restaurant. If, in their negotiations they think those two are the only options, one will win and one will lose. At best, this would be a settlement. However, if the two sides were to discuss why each recommended the restaurant that they did, they might find that the person who recommended the Italian restaurant likes it because of a certain wine they serve. The person who recommended the Mexican restaurant might know of a Mexican restaurant which serves that same wine. If this is the case, they can compromise and go to the Mexican restaurant that has the wine and now both sides win. It might actually result in them each getting more than they originally asked for.

Finding ways to compromise so that both sides benefit usually requires communication and open minds. Always look to compromise in a way that benefits all as opposed to settling for less

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Have a great day!

Lawrence

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