From August 6, 2009
Negotiating Secrets: How to Get
the Best Deal
on Everything – Every
Time
By Selwyn Gerber, CPA
There are few ways to make money faster than by negotiating. If five minutes of haggling knocks $100 off the price of a new car, you have made money at the rate of $1,200 an hour. Hotel rooms may be one of the most negotiable purchases you can make. And just imagine your hourly earnings rates on real estate - if you can get the price down.
Whether you're buying a car or a house...asking for a raise...or trying to get a discount on a hotel room, you can learn to negotiate successfully.
Here are the strategies I teach to help people become better, more successful negotiators...
• The single most important word in power-negotiating is "if." Never switch from tentative to affirmative until you're ready to close. It's a sure give-away to the other side that they can move ahead with more demands. And be sure to watch for language indicating a commitment to close the deal by the other side, which gives you the opportunity to hang tough.
• Ask lots of questions. The more you know about the other side's position the more empowered you'll be in the negotiation. Most people will talk freely when invited to do so, with some great open-ended questions. One of the great opening lines for questioning is: "Help me understand..."
• It's no coincidence that "listen" and "silent" are composed of the same letters. Develop a strong ability for active listening – where the object of listening is to understand rather than to respond. Never interrupt or add while the other person is speaking – rather use body language such as a nod, or a reflective comment like "I see" or "how fascinating" to reinforce the stream of monolog.
• Try to distinguish wants from needs. People tell you what they want. It helps enormously to understand why. Once you understand the key motivating forces and real underlying needs, the negotiation is likely to be far more effective. And be sure to share your real needs too, thus creating a better environment for a quid-pro-quo type negotiation.
• Get the other side to commit to a price first. Start negotiations by immediately asking for the other side's best offer.
Example: If you're buying a car, tell the dealer that you don't want to haggle. Say you just want to see if a deal is possible and that you would like to know his/her best offer up front. The best line in a situation like this is: "I'd like you to give me your very best price and within an hour I will respond with a single word." Whether it is "yes" or "no" is in your hands.
Aim: Push the other side to make concessions without your having to make any in return. By using this strategy, you haven't said, I'll buy from you if you give me such-and-such a price. Instead, you have pinned down the other side to a price in case you do buy.
• When you make a statement also be sure to tell them the basis for your position. For example, when making an offer on a house the discussion might be: "We will offer you $1m because the house just down the street sold for $1.1m last week and this is on a smaller lot without a pool." That sets the tone for a "here's what and here's why" dialog.
• Never say yes too quickly. Whether you're buying or selling a house...or negotiating a new job, a fast yes raises two thoughts in people's minds...
(1) I could have done better. This has nothing to do with price. If one party immediately says yes, the other thinks he got taken and could have done even better.
(2) Something is happening that I don't understand. An immediate yes raises suspicions on the other side. Is the product damaged or inferior? Once suspicions are aroused, negotiations can stall over minor points.
Better: Whenever possible, respond to that first offer with the following strategy. Simply say, I'm sorry, but you'll have to do better. Then say nothing. Silence typically brings a second, better offer. Great negotiators are never afraid of silences – they relish them.
• Mastering the flinch. You make an offer to buy a car, and the other party makes a counteroffer. Whatever the counteroffer, react with mild shock and appropriate body language.
Reason: In most cases, when the other party puts a proposal on the table, he doesn't think you'll accept it. If you don't flinch, the other side will assume you're weak or naive, and he'll hang tough. The flinch should bring a more realistic counteroffer.
Don't worry if the other party spots the flinch for the bargaining device that it is. It only means the other party knows something about negotiating. You're always better off negotiating with someone who knows how to negotiate.
Don't let the flinch or any other gambit lead to confrontational negotiating. Then you may not be able to agree on anything.
Be wary of establishing rapport with the other side. It may help you to win concessions, but you are more likely to make concessions you don't want to make.
• Always give yourself options. Don't enter into a negotiation feeling that you can't afford to lose.
Example: If you absolutely love a house and will accept no other, you must agree to whatever the other side asks.
You will be a tougher negotiator if you have Plans B and C in case you can't work out a deal on Plan A.
Example: If you find one house you love, find two more almost as good. Be prepared to buy either of them if negotiations for the first house don't pan out...or be willing to buy another car if you can't get the deal you want on the first one...or be ready to look for a new job if your boss won't give you what you want.
• Be prepared to walk away. Options only work if you are prepared to walk away from negotiations that aren't going your way. If you say, That's my final offer, and continue to bargain, the other party will immediately recognize that it has the advantage.
Helpful: If possible, combine the walk-away with the good guy/bad guy strategy. Having someone negotiating with you who has a different temperament or personality lets you double team the other side.
Example: A husband and wife go car shopping. The husband greets the salesperson's best offer with an angry walk-away. The wife stays behind and tells the salesperson, We're really not so far apart. I'm sure I can get my husband back if only you will be a little more flexible.
• Never offer to split the difference. Splitting the difference may sound like an easy way out.
Example: You want to sell something for $50,000, but the other party offers only $45,000. The other party says, Let's split the difference at $47,500. Don't do it. There is a better way to proceed that can bring you more money.
Helpful: Be the one who first proposes to split the difference, subject to your getting approval from some "higher authority" to accept the split. The higher authority should remain vague – but it can be your spouse, another family member or a friend.
Example: A $47,500 split is proposed. Say you have to run it by your spouse. The other side agrees. Now the other side has committed itself, but you still have an out. A day later you return and explain that your spouse won't take $47,500 but will split the difference at $49,000. The other party probably will go along. After all, the other party agreed to split the difference – which you are doing, but your take is now far higher.
• Always ask for a trade-off. Never make a concession without getting something in return. It doesn't have to be a concession of the same size, but it must be a concession. Counter every offer with, If I do that for you, what will you do for me?
Example: You'll agree to the seller's price for the boat but say you expect him to include the inflatable dinghy.
As long as you keep swapping trade-offs with the other side, you are a negotiator. When you stop doing that, you are a pushover. You'll never know if you got the best deal until the other side walks away and means it.
• Make it easy for the other side to say yes to you. If you give away too much, then you're a poor negotiator. If you don't give away something, the deal won't get done. Position the other side so that he feels good about making concessions to you.
Strategy: Keep small concessions in your pocket to be offered at the last minute to clinch a deal. Say, If you do this, here is something else I'll do for you. The concession should be just enough for the other party to say, Fine, if you do that for me, I'll go along with the deal. You didn't give away much... just enough so the other party doesn't feel that he lost.
