Negotiation is an art. It must be practiced. From coming to an agreement with your kids to dealing with service providers, you have daily opportunities to sharpen your negotiation skills. I’ll clue you into mastering scenarios like The Wince, The Vise, and Funny Money, and other common negotiation tactics.
First, let’s understand the purpose of a negotiation tactic. You’re trying to create an action that will move the other person from his or her position without you having to shift from yours. As a professional negotiator, you should be prepared for the many ways that a buyer will negotiate a deal with you. Memorize these tactics. Learn their applications—when, where, and why—and also learn how to deflect a buyer’s tactic when it is used against you.
The Wince is an overreaction to something the buyer says or does. For example, your buyer makes a statement, such as, “The builder in another community is selling his home for $25,000 less than you are.”
You make a face (wince) and say, “$25,000! Wow! I don’t understand their business strategy. I’m curious, why do you think they would do that?”
Remain perfectly silent and let the buyer respond. In this way, you put the burden back on them to substantiate such a price difference. You force them to consider why the other property is less expensive. Is it cheaper materials, a less desirable location, fewer amenities? Just let the buyer ponder for a moment rather than respond by offering a concession.
Here’s the unspoken rule about first offers: Never accept them. When the seller accepts the buyer’s first offer, the buyer thinks, “That was too easy. I could have done better” or “Hmmm, is there something wrong with the home?” The seller is left feeling that they left money on the table.
Counter Tactics to The Wince:
- Plan your concessions and always start high on price. By pre-arranging your concessions and knowing in advance how far you are willing to drop, you will still get what you want even if you end up at your ultimate fallback position.
- Silence. Let the airwaves fill with concessions. Wait them out.
This tactic is an attempt to clamp you into a seemingly immovable position. The Vise backs you into a corner to force you to concede on an issue. Whenever a negotiator employees this tact, it can be identified by one of these three approaches:
“You’ll have to do better than that.” A general negotiation rule says that whoever states his or her position first, normally loses. Rather than saying what they’re willing to pay, the potential buyer will get you to make a concession to see how far you are willing to go. Then she will respond with The Wince, which will likely lead to another concession.
- Respond with, “How much better would As a professional negotiator, you should be prepared for the many ways that a buyer will negotiate a deal with you. have to be?” You get the buyer to state their position, and then you wince.
“Let’s split the difference.” When you are asked to split the difference, assume that, if you have the buyer to the point where he is willing to split the difference, he will go further.
- “What a shame. We’ve come this far.” Employ the “walk away” and revert to higher authority, which will allow you to reinitiate a new negotiation using the time-tested “Good Guy/Bad Guy” tactic.
“This is a limited offer.” The buyer has countered with an offer and is creating urgency by stressing that the offer won’t stay on the table indefinitely. That might be true, but most often, it’s a ploy to push you to concede to the lesser offer.
- Don’t be bluffed or pressured. Say, “If I have to make a decision now, then my answer is no. However, if you can give me a bit more time, my answer may be yes!”
Your buyer isn’t convinced that the price is within their reach. Your prospect says, “I don’t know about this. We only wanted to pay $1,500 a month for our mortgage and, with this house, we’ll be paying $100 a month more.”
You respond by breaking it down to a daily amount. “The difference is only a little more than $3 a day—the price of a cup of coffee. Are you really going to let $3 a day stand between you and what you really want and deserve?” Stretching the price over an extended period makes the payment appear nominal and ridiculous.
- Multiply the aggregate over the period of time. Suddenly, the difference in the monthly payment doesn’t seem as much.
In order to come to mutually agreeable terms and conclude the negotiation, both sides need to have decision-making power. Limited Authority happens when the buyer tells you a final agreement cannot be reached without a third-party approval, like the spouse or a lender.
Counter Tactic to Limited Authority:
- Reschedule when all parties can be available.
- Gain commitment by saying, “I understand, but you will recommend they accept, won’t you?” or “You can’t make this kind of decision alone?” The buyer then takes your offer to the “nonexistent” absentee party. He’ll then return and say, “I’m so embarrassed. I felt certain they would go along and, if it were up to me, I would accept; but this is all they would agree to.” (He now remains silent, waiting for a concession from you.)
Then, you withdraw the offer. “Don’t be embarrassed. I’m actually relieved. After consideration, I’ve discovered it would not be advantageous for me to honor the original agreement anyhow.” Expect the buyer to then defend his original agreement, and you can play reluctant seller.
There are lots of other negotiating strategies for new home sales. Stay tuned for more insight on achieving “Yes”.