How To Negotiate Like An Expert When You Buy Your Next Home

Whether you are buying or selling a home, you want the best price you can get. Of course, price is one of many negotiable terms, and you want a clean transaction that closes as soon as possible. Buying or selling a home is not like going to a garage sale where you might get that used paperback for 50 cents or 75 cents, but either price is acceptable. A typical 3 bedroom, 2 bath home can easily be priced at $325,000 or $600,000, depending on the location and the market, and the price you ultimately negotiate involves big stakes, perhaps the biggest you have ever played.

Knowing how to negotiate the price and each term of a transaction could mean 10 to 50 thousand dollars to you. This is no time for a garage sale mentality. The last thing you want to do if you are representing yourself as a buyer or seller is to go up against someone on the other side who has 20 or 30 years of experience negotiating. You will lose, although your opponent will make you think you won. By the way, if you have a real estate agent representing you, don’t assume your agent is a master negotiator. Most are not. It takes years of experience to acquire the skills.

One of my favorite movies is the classic, “The Princess Bride.” Early in the movie the two stars face each other in a thrilling sword fight. They are both extremely good, and leap and dance with grace and skill that is delightful to watch. At one point in the battle, one of the swordsman asked his opponent why he is smiling, and the response is, “Because I know something you don’t.” “What is that?” The answer from the left handed swordsman is, “I am not left handed. I am right handed,” at which point he quickly tosses his sword into his right hand, and the battle continues.

A master negotiator will smile while he negotiates, but he will not reveal he is a master negotiator. In fact, he may have practiced a bit of a stutter or slow talking, and he will appear so average. He learned not to seem too smooth. He also knows something you don’t. He knows how human nature negotiates. He knows the patterns. He’s seen the pattern hundreds of times, and your behavior is quite predictable, although you don’t even know that he knows how you will respond and counter.

You may say, “No one knows how I will negotiate. Even I don’t know yet.” Oh, but he does know. He is often able to predict with an accuracy of 70% to 90% how negotiations will proceed and what the final outcome will be. But of course, he will not reveal any of this to you . . . ever.

Here is a simple example, which actually occurs regularly, but there are many nuances that an expert negotiator learns. The nuances are a function of the parties’ motivation, experience, and financial status.

A home is listed for sale at $425,000. The actual FMV (fair market value) is only $405,000, but the seller thinks that he has to start high to negotiate down. Almost all sellers make that mistake. A lot of real estate agents do, too. The buyer happens to have an expert negotiator in his corner, and knows the FMV is in the range of $395,000 to $410,000. The buyer is not going to pay more than FMV, and would prefer a little lower price since the market has stalled and prices may drop a little in the months ahead.

The buyer’s negotiator writes the offer at $380,000. The buyer is willing to pay more, but his negotiator knows the seller will typically meet them halfway in a counteroffer, $400,000. While the seller is having all kinds of discussions at his end about how this is his lowest price, yadda yadda, the buyer’s negotiator doesn’t care, because he knows something the seller doesn’t know. He knows the seller typically will come down again.

Buyer’s counter now meets the seller halfway again at $390,000, and seller (after agonizing) counters at $395,000. Buyer’s negotiator had already prepared his client for this eventuality, so this has all played out just as planned for the buyer. Unfortunately, the seller thinks this is all new ground, and that he has everything under control. That’s precisely what the buyer’s negotiator wants the seller to think.

Are we done? No. The buyer’s negotiator had a discussion with his client in the very beginning about the carpet in the living room. The buyer would like new carpet. Continuing to implement their original plan, the buyer now counters one last time, accepting the price of $395,000, provided the seller gives the buyer a $2,500 credit for carpet in the living room. The seller now exhausted emotionally by this whole process, and having already gone through the negative experience of having his house on the market for 216 days with no offers, is not going to kill the transaction over $2,500.

The buyer wins, and the buyer wins precisely as his negotiator had coached him. To this day the seller still does not know how this was orchestrated, or even that it was. The seller found the whole experience very stressful, and of course it would be, because one of the greatest sources of stress is uncertainty. The buyer had a very pleasant experience throughout, because he knew what to expect and what he was willing to do, and he knew the outcome he wanted. He got that outcome, and so the buyer lived happily ever after.

Do you have a master negotiator in your corner? I hope so.

Negotiating With Creditors – Top 5 Tips

You could well be surprised at how much you can actually achieve without seeking the help of a debt management company. Many people have negotiated reduced payments with their creditors, sometimes even getting them to freeze interest and charges on their debts. If you have decided to go it alone, the following article will provide you with valuable advice on how to do this successfully.

When negotiating with creditors, there are a few key points to keep in mind. Follow the top 5 tips below for a better chance of negotiating successfully.

5 top tips for negotiating with creditors

1. Be polite. If you are respectful, calm and show a willingness to work with your creditors, your negotiations will be much more successful. It is good to remember that your creditors do not HAVE to accept your offer, they are under no obligation, so shouting the odds and being confrontational will get you nowhere.

2. Be honest. Explain your financial situation fully. Creditors are real people and they understand that everybody’s circumstances can change at any time for various reasons. Be aware though, that your creditors will ask questions and may require proof of your change of circumstances. If you have been ill – a doctors note, if you have been made unemployed or had reduction in income – wage slips…etc. If you are honest from the outset, there is no chance of your story coming unstuck and your negotiations stalling.

3. Do not let your creditors persuade you to offer more. Before you even contact them decide exactly what you can afford and stick to it, even if they are being difficult. If you agree to pay more than you can afford, you will only run into more problems in the future when you cannot keep up the repayments.

4. Importantly, you must ask your creditors to freeze the interest on your debts. Unless they do, your debt will carry on growing, meaning you will be paying them for longer and your debt will be harder to clear. Do not presume they will do this automatically.

5. Be vigilant. Sometimes you will need to contact your creditors several times before they agree to your offer. If, after numerous attempts, you cannot get them to agree, or you just don’t feel confident about negotiating with them, you can contact a debt management company who specialise in negotiating with creditors.

If you follow the above tips, you should have a much better chance of negotiating successfully.

Negotiation Is a Fundamental Selling Skill

Negotiation in selling is quite a complex subject matter if we decide to analyse it in any great detail. Today in this article I’m not going to reach those depths as I will attempt to break it down to the most essential elements that I believe count the most when it comes to getting results. We all want the “Perfect Sale” but this can’t really be achieved in most cases without some form of negotiation. Everybody uses negotiation in their everyday lives but some of us are better at it than others. Remember, in every negotiation there is always someone who comes out better. An expert sales negotiator can make a customer feel like they have “won” when in reality they haven’t.

1. Expected Outcome

We cannot go into a negotiation successfully without having a clear picture in our head of the outcome we expect. We need to know the exact threshold of compromise if this is indeed one of our options. On the other hand, if we are able to give concessions it would be a much better strategy to incorporate these into the plan beforehand, so they can become that “extra card up the sleeve” when needed.

2. Positive Attitude

It’s critically important to enter sales negotiation with a positive attitude in order to set the correct tone right from the outset. This can be helped by analysing all the competitive advantages and benefits beforehand which will in turn strengthen confidence in a successful outcome. Positivity is contagious and can therefore also influence the prospect’s general attitude, making it more difficult for them to be negative.

3. Reading The Situation

Reading the prospect’s state of mind and personality profile is probably one of the key factors in determining whether a sales negotiation will be successful or not. If you know how someone will react negatively or positively to certain behaviour you will be more likely to follow the flow of the surrounding energy. The one thing that you can never do in a sales negotiation is to contrast the prospect’s opinion, whether they are right or wrong. I see this a lot so it’s by no means obvious. Sales people often react instinctively when they don’t like what the customer is saying. In my mind, this is like running out of petrol while driving through a dangerous ghetto. You’ve got yourself into trouble, but how are you going to get out of it?

In an ideal scenario the best negotiator, like a good chess player, will be able to look one or two steps ahead. This will depend on “Insight” and the ability to predict behaviour from the other side of the negotiating table. Obviously we can’t always predict the outcome of the prospect’s reaction but even if we can predict 60 or 70% we already have a distinct advantage.

4. Patience

Never over-react to the reaction. In fact reacting during the negotiating phase is bad in general. It would be much wiser to “respond” with a solution rather than reply with “impulsive” or “emotive” reactions. The best poker player never shows emotions and all great sales negotiators should do the same.

One good example of this could be negotiating on price. If the customer asks for a reduction in price, any signs of a chink in the seller’s armoury could easily lead to a loss of control and a different perception of the overall value on the part of the prospective buyer.

So always remember that a little bit of brainstorming and planning before the sales negotiation will give the sales person the edge.