Negotiating is an important skill to have, but many people either don’t develop their negotiating skills at all or assume that they simply aren’t cut out for it. That’s a big mistake when you’re buying a home, negotiation can get you the best deal on your biggest purchase.
The goal of negotiation should always be to reach a reasonable agreement. You can improve at negotiating if you put in the effort. When you focus on being reasonable, and you know a few basic concepts you'll find that negotiation can be fairly easy.
Know Your Situation
The backbone of your negotiating skills is your knowledge of the situation. Specifically, you need to understand the value of what you’re negotiating, including what has value to the other person. If you know things that the other person doesn’t want you to know, that puts you at an advantage. For example, when buying your home, if you know that the other person wants to sell within the next week, then you know that they value their time heavily. You may be able to get a better deal if you can make the purchase right away.
You need to know what your unique differentiators are and determine how you can leverage them to get a better deal. One key differentiator you always have when you’re involved in a negotiation is time. When you’re there negotiating with the other person, time is in your favor because you can make a deal then and there. If the other person makes a deal with you, then they don’t have to wait for someone else. Identify your other key differentiators, as these are your advantages over everyone else.
Understand what is detrimental to both you and the other person. On your end, decide what detrimental possibilities you can handle, and which are deal breakers which will cause you to walk away. Consider the same possibilities with the other person. You obviously can’t predict with 100-percent certainty what will cause them to walk away, but you can figure out what they’ll find detrimental, which are things that could make it harder to reach an agreement.
Be Patient & Reasonable
During the negotiation, assure the other person that all you want is a reasonable deal, and that you want to reach an agreement. When you seem agreeable, it makes other people want to negotiate with you. If you present an aggressive demeanor, it causes people to dig in their heels and not give an inch, countering aggression with aggression.
Patience is one of the most important traits an effective negotiator can have. When you present your offer, be quiet and give the other person time to think it over. This demonstrates confidence. If you get anxious and overeager, your offer isn’t going to be near as effective. Be willing to give the other person time to think about your offer. Let them sleep on it if they choose. Again, this shows them that you’re confident.
Even though you want to get a deal done, be willing to walk away if the other person will not negotiate. Being able to walk away is the most powerful tool in your arsenal. If the other person wants a contract and they know that there’s a possibility you’ll walk, they’re more likely to give you their best offer. If the negotiation isn’t going fairly, don’t be afraid to leave without looking back. You may find that the other person becomes much more willing to work with you.
While you want to get a good deal when you negotiate, you should always be looking for win-win situations where both you and the other person are satisfied. When a deal is fair for both parties, they’re more likely to accept your offer.
Summarize Your Perspective
Before you go in for the negotiation, think through everything you know. Write down the list of your unique value, your key differentiators, and the obvious risks of someone walking away from your offer. From this list of factors assign a reasonable dollar value to everything you know. That's all you need to do to figure out a fair change in price based on everything you know.
Once you know a fair price change, it's good to pad the number a little so the other person can negotiate down, and you still reach a reasonable agreement. When you sit down with the other person, you can talk through your list, explaining exactly how you arrived at the price you did. The other person is likely to take your offer seriously when you give them concrete reasons for why you're asking for a better price. That’s really all it takes to negotiate effectively.