How to Negotiate Basics

Our normal lives include a certain amount of negotiation on a daily basis.  At night the wife wants to watch “Dancing with the Stars.”  Hubby wants to see “Monday Night Football.”  Somehow the two of them decide on a course of action for the night’s television viewing.  These kinds of negotiations go on in our daily lives on a continuing basis.  It could be over things like the choice of restaurants, movies, vacation destinations, what’s for breakfast, lunch, and dinner and selection of the family car. Without realizing it, you’re already a seasoned negotiator.

In negotiations, preparation is half the battle. to Improve your negotiating skills, you must first research and determine the market value of the item you are buying/selling. If you are the buyer you must determine the wholesale value of the item or the price the seller originally paid for the item. In the case of new car prices, these my be found at the Edmunds website and used car negotiating at the Kelly Blue Book website. Try to also get a feel for, what is your opponent’s motivation for selling/buying. Come up with your drop dead price. This is the maximum you’re willing to pay or the least price you’re willing to sell for. Other things to consider are any extras that could sweeten the deal for the buyer or seller. In the case of buying a home, extras may include closing cost, appliances, furniture, lawn equipment, repairs, and low interest owner financing. In the case of buying a new car extras may include optional equipment, taxes, dealer prep and interest rate. You need to be prepared to negotiate not only on price but also on the extra items. These items may make or break the deal for you. You also need to work on your mental preparation. Under no circumstances should you allow yourself to become emotional involved in the deal. Being emotionally involved prevents you from making clear intelligent decisions. You will need all the intelligent decisions you can muster. Under no circumstances should you ever allow yourself to fall for some sob story. You are not running a charity here. You also need to be tough enough to walk out on the deal if it’s just not working. When the buyer starts walking out on a deal, the sellers will usually be more motivated to rethink their position. Don’t slam the door on the deal as you leave. A simple “I need to think about this some more”, is sufficient.

If you’ve done your preparations, you will go into negotiations armed with the knowledge needed to get the best deal. Be bold and start low if you’re the buyer and start high if you’re the seller. Do not worry about insulting anyone if your first offer is too low/high. This is not a personal thing. It’s a business transaction with no room for emotions. Always negotiate on your price. Never negotiate on their price. If you negotiate on their price then you are validating the value of their offer. Make small moves and act as if they’re bleeding you to death with each counter offer. If you feel they have actually made their best offer, then try to negotiate for the extras to improve the deal for yourself. Never be afraid to get up and walk out on a deal if it’s obvious the deal is not working. If you’re offered a deal that’s better than your target price, make at least one more attempt to get an even better deal. Don’t forget you can also negotiate on extras.

The biggest deal most people ever negotiate is for the purchase of a home.  Home buying can be a really traumatic experience. First thing you should do is shop for a Realtor, You want someone that has several years of experience and specializes in being a Buyers Agent. Do not put up with a Realtor that does not return calls or does not provide you with requested information. They’re working for you. If they aren’t performing up to your standards, replace them. This is too big of a deal to settle for second place. If you are looking a foreclosed homes for sale or a short sale, make sure your Realtor has experience in these areas These types of deals may take 3-6 months to close. When you find the home you want, the first preparation you should do is ask your Realtor to find out what the seller paid for the property, when did they buy it and why are they are selling. This will give you a clue about how much they have in it and how motivated they are to sell. You may find out that it was purchased recently by an investor for a deep discounted price. Now they’re trying to flip it for a big profit. I personally have no problem with anyone making a profit but since I’m bringing the money to the table. I see no reason to not ask for a discount myself. Don’t forget to ask for extras. Your Realtor should already be on top of this. Good experienced realtors can do wonders helping you negotiate the deal.

In the case of buying a new car, the best time to buy is the last day of the month. At month’s end new car salespersons are paid bonuses based on the number of units sold during the month. If your sales person is one unit short of making a $2,000 bonus, he will be most negotiable with you. Even if your salesperson is not near a bonus mark, he will know someone who is close. He can negotiate giving someone else credit for the sale in return for a percentage of the bonus. As a last resort you can always get up and walk for the door. This will get a sales manager chasing after you with an even better deal. It can be really spooky about the amount of negotiating going on for your new car deal. This is the voice of experience speaking.

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