What about some More Negotiating Tips?

HOW TO NEGOTIATE successfully is such a deep and wide subject.

There are a lot of things you need to do; and would require going into quite some detail.

But whether you’re looking to purchase a property, or buying a new car, or negotiate a new salary at work … everybody is a negotiator. And the reality is everything is negotiable.

You have to realise you need this as a skill. And although you may be learning it from a property perspective, it translates into every aspect of your life.

Buying a new television is an example of where you can use your skills as a negotiator. And as such, you need to consider the three key elements of a negotiation.

The first one is information, the second is time and the third is power.

Information

When it comes to information, there is an old saying “to be forewarned is to be forearmed”. This is never truer than in a negotiation.

People hesitate, because they know they need the information, but don’t know how to get it. What’s interesting is that BEFORE negotiations formally begin … is the time to seek the information you need – so as to learn more about the other side’s aspirations and needs.

Whether you talk with the vendor directly (which is unlikely) or the agent … they will be happy to share certain information with you, because they (more than anyone else) want to do with the deal.

You have to ask your questions as part of a normal conversation. If you show a genuine interest in them as a people, they feel much more comfortable about giving you with information you need.

And with a little practice, you will find it’s not hard to get most questions answered with straight answers.

The items you need to know will generally come up in the course of conversation.

They will includes things like: why is a vendor selling? This does not have to be direct question – it can simply be a casual query. Do they have family or personal commitments they need to meet? Are they moving interstate or overseas?

The Reasons vary

Maybe they have some settlements falling due. If they’re professional developers or investors, maybe they are getting close to the end of a 10 or 12 unit commercial project, only have 2 units left and are trying to wrap it up.

Maybe they’re prepared to do a better deal to help close the books on that project – so they can move on to the next one.

Maybe the vendors have a cash problem, or a cash-flow problem. You see, sometimes there are properties you purchase on what’s called a sale-and-leaseback.

This is where the vendor (having sold the property) will stay on as the tenant. It is important you determine whether the company does have a cash-flow problem. Because, they may be looking to release a large lump of cash and happily enter into a 5-year lease with multiple options.

The implication being they are there for the long haul. But they’re simply wanting to clear their debts now; and if things don’t work out after 3 years, then they are only exposed for a further 2 years’ rent.

That is important information you need to know going into that deal.

Taking this to an extreme … is the vendor being forced to sell? It does not have to necessarily be a mortgagee’s auction for them to be forced to sell. But with just a little probing, you are able to get the information you need.

What you need to know in a negotiation are the real limits of the other side.

The Agenda items

I must say in all of my time in negotiating over the years, I’ve never found my agenda (or my client’s agenda) to be identical to the other party’s.

Although there might be several similar items on both agendas … they will always have a different ranking, as far as importance is concerned.

You need to identify what is on their agenda, to be able to trade items – giving the other party the least important item on your agenda, which can often be at the top of their agenda.

It is important that you establish this at the outset; because it is not something that will be forthcoming as the negotiations unfold.

Negotiating is a Process

Many people consider negotiating to be an Event … whereas, it is actually a Process that happens over a period of time.

You’ve probably heard me talk previously about how important it is to have a number of balloons in the air, at any one time.

Because, once you get down to having just one issue to resolve … then someone wins and someone loses. And so long as you have multiple items under negotiation, you have the ability to trade.

Most negotiators are really one-dimensional; and that’s because they adopt that win/lose position. They are more interested in trying to maximise their share of the pie.

What you need to is a win-win philosophy; and in that case, your principal aim is to make the pie bigger – so that everyone can get what they want, by adopting a problem-solving attitude.

It enables you to have a negotiation where you get exactly what you want. Then, you give the other party what they want and everyone feels good about it when they walk away from the table.

Here’s a simple Case Study

Negotiating can be a fascinating process. And perhaps, here’s a quick example that probably best highlights the reason for not making it an Event.

Let us assume you’re wanting to help one of your children (or grandchildren) buy their first car. And you’ve seen something secondhand advertised in the paper.

You visit the older couple, who have decided driving is now beyond them; and they wish to sell their well-kept car.

You drive it around the block, and feel it would be just fine.

Their asking price is $4,500, the car is in good shape and is probably not overpriced. Anyway, you sit down around the kitchen table and they ask you what you think.

Having listen to some of my tips, you decide to lowball them, see what their response is and take it from there.

So, your opening proposal is $1,500.

The husband turns to the wife and says: “We were really expecting a little bit more than that. But what do you think we should do?”

The wife responds to him without missing a beat: “It’s up to you, but I think we should take it.”

What is it the first thing that crosses your mind?

Your first thought is probably: “We’ve paid too much”. If they accepted that straight away, maybe I should have offered less.

Your second thought is: “What is wrong with the car? Why would you accept that so quickly, if there wasn’t something wrong with the car?”

And you will have that nagging feeling in your heart, that somehow this deal happened too quickly.

There are many occasions like this, where I’ve had to slow deals down … because both parties become over eager to do the deal.

And I know (from experience) you’ll feel somewhat uneasy, if you don’t believe you extracted the best deal you could – even though the other party was happy with what you offered.

Quite often the deal will fall apart, because with a property, you not only have to negotiate the deal, but also document it. And a lot can fall apart between a handshake and actually signing of the contract.

Therefore, do not become concerned if the deal is protracted; because once it’s concluded, it is more likely to stick.

Time plays a Significant Role

You will find that Time can change everything. So don’t be surprised when you receive an initial rejection to your proposal.

“No” is a reaction it is not a position.

More often than not, what they’re saying to you is: “I don’t yet have enough information, to make the decision you want me to make.”

And so, with the passage of sufficient time and repeated effort on your part … every “No” can be transformed into a “Maybe” and more often a “Yes”.

Also, Deadlines are mostly fictitious and can normally be extended. But a change in position is generally made towards the end of a negotiation, not at the beginning – because the parties are trying to feel each other out.

You will find 80% of the concessions are made are made in the last 20% of the time available.

What you need to do is to find out the other side’s deadlines; and try to hold off making your concessions, until you enter that 20% period towards the end.

You’ll find Time can be vital – because power shift from one party to the other, as deadlines approach.

Anyway … if you wish, you can quickly become a Master Negotiator.

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