FIVE TIPS TO BECOMING A WORLD-CLASS NEGOTIATOR!
I find negotiation an interesting topic because it is something that is integrated into everyone's lives and it is something everyone encounters multiple times a day, however, there are a lot of people who literally cringe when the topic is brought up. I think, to some people, negotiation brings up feelings of awkwardness and conflict but this is not what a good negotiation should entail.
A good negotiation is a fantastic growth experience where all parties will learn and all parties will win in some way. On top of this negotiation is an absolutely necessary skill if you want to have a fruitful, happy and successful life!
Below I have included five tips to help you grow and become a better negotiator:
1. DO IT!
As with most things in life you will never improve as a negotiator if you don't practice! There are opportunities in every day for you to negotiate and practice your skills. You don't have to be brokering a big deal at work to negotiate, it can be as simple as deciding who cooks dinner with your spouse or what to watch on TV. You should try to see every opportunity as a chance to practice your skills but it is important to remember you want to negotiate NOT argue, you should approach all of your practice with a kind demeanour and remember the idea is to persuade the other person to see things your way, not to force them to do something unwillingly.
An easy way to incorporate this practice into your life would be to stop answering yes and no to things and start negotiating.
Partner - "Are you ok if we go see my parents this Saturday"
You - "Ok thats fine but can we go here on the way" Or "The game is on Saturday, how about we take them out to dinner on Monday instead?"
2. Set your limits and do not break them.
It is really important when you are developing yourself as a negotiator that you build the right ideas and mental constructs so that you develop good habits and not bad ones. One key idea that you should develop is to set your limits and to never break them, this will help make sure you don't get sucked into a potentially bad deal.
The best way to do this is to do your research in detail before you start negotiating and workout what you believe the value of the home is. Once you have this you can set your maximum (or minimum if selling) price and you then know at what price you are happy to walk away from the deal. During the negotiation you may get emotionally charged and want to break your limit but you need to remember you set that number for a reason and it might be time to walk away.
3. Develop a list of tradable items.
I always like to go into a negotiation with a list of items or conditions that can be traded against price. This gives you options to negotiate with that are not going to continue to reduce your sales price. Tradable items could be anything ranging from offering to leave the fridge in the home to giving an extra few weeks until settlement. If you are a buyer you might offer shorter unconditional terms.
People will often forgo far greater value than the tradable you are offering because it still feels like a win to them. For instance a buyer may be asking for a $10,000 discount to the price and you offer to get the house internally cleaned and painted, which they accept. You spend $4000 and save yourself $10,000 in deductions.
4. Always go for a win/win.
The only successful negotiations are those that end up in a win/win for both parties. If you go into a negotiation with the intent of trying to take absolutely everything and give nothing then you may get want you want but even if you win you have left a bitter taste in the other parties mouth and potentially burned bridges for the future. From a real estate sales point of view the goal is always to get the best possible price for our clients but we always want to make sure the buyer is also happy and excited for their new home. This is the best way to make sure a contract is carried through to completion and does not crash.
5. Try to get the other party to offer first.
It is always better to try and get the other party to display their chips before you do. If you can get them to offer a price first then you can review the offer and strategise how to counter offer. It is also a rule of thumb that the person who offers first will end up further away from their target price than the person who offers second. See the example below.
Property is for sale as "Expressions Of Interest"
Buyer offers $820,000
Seller price target is $850,000 - Seller counter-offers at $890,000
Buyer counter-offers at $850,000
Seller counter-offers at $865,000 and buyer agrees
In the above situation if the seller had displayed his price of $850,000 then the buyer would have know that this was the price the seller wanted. It would have been very difficult to push the price above this and the buyer likely would have offered less.
As an addition to our five tips, I have also included a few negotiation tactics for you to keep an eye out next time you are discussing a deal.
1. The Vice
This is when a person continuously tries to pressure the price down with phrases such as "you will have to do better than that". If you notice someone doing this then bring your trade-ables into play, "I will do that if you do this". If it gets too much be very clear and ask them what the figure that they think is "reasonable" if it is too low don't be afraid to walk away.
2. The Salami
This is when you continually ask for lots of little things that add to the deal. A good example is buying a car and asking for a slightly quicker delivery, complimentary clean, slightly lower price and maybe a couple of extra seat covers. The best way to respond to this is simply to tell them if they want this extra then they can't have the previous request. They will quickly realise they are going in circles and stop.
3. Product Knocking
I think we have all experienced this in some way or another. Maybe you are selling a couch on GumTree and the buyer comes in and picks apart the couch. It's a bit old, the fabric is worn, there is a mark on the leg.....they still want it but they will only pay a discounted price. When people start to pick the product apart simply respond with "that is why the price is so reasonable" as long as the product is reasonably priced this will get you around this tactic.
4. Reluctant Seller/Buyer
This is an interesting strategy because sometimes they are being honest but usually it is just a tactic. This party will say something along the lines of "we would normally prefer XYZ but if the price is really good we will buy from you" there is not a straight forward way to handle this tactic so just remember where your walk away price is and try to come to a figure with the other party. If they want a price that is too extreme. Walk away, there will always be another deal.
Hopefully these negotiation tips will help you develop your skills and build your confidence as a negotiator.
Thank you so much for reading! As always this article is based on our experiences and point of view and should always be read as such!
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Have a great day!