Become A Master Negotiator

Summary: Attempting to change the outcome of a negotiation after the counterpart thinks everything is settled.

Have you ever been involved in a negotiation and thought you had concluded a deal, only to learn that the other person was just getting started? This is known as The False Alarm.

Example

While you’re purchasing a commercial building, you negotiate with the owner and agree on a price of $940,000. You’re convinced that you have a deal. Later that day, the owner of the building calls to tell you he has presented the offer to his business partner, and his partner reminded him that although the sale price of $940,000 was accurate, he had forgotten that there would be an additional $6,500 in loan charges on the property.

Counter

There are several possible counters. First, when the owner tells you about his partner’s increase in price, you could use the tactic of the Withdrawn Offer. Tell him you shared the deal with your business partner and she will not let you pay more than $935,000. (This also employs the tactic of the Higher Authority.) Second, you could expose the owner’s tactic and say that the deal you struck is good only for twenty-four hours. If he does not take the deal right away, you will have to start the negotiations over again. Third, you could employ These Boots Are Made for Walking . Finally, you could utilize the Trade-Off Concession, saying, “Yes, I will pay $940,000 plus the additional loan charges, but only if you paint and re-carpet the entire building.”

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Breaking the price up into small increments to lessen the impact of the total amount.

With this tactic, you break dollars and cents down into such small amounts that your counterpart doesn’t realize he is dealing with large sums of money.

Example

Last year, at the San Diego County Fair, I was intrigued by a vendor selling ceramic knives. When she finished expertly cutting up everything in front of her, I made the mistake of asking how much the knives cost. Her reply was, “Peter, these knives have a full guarantee for a period of ten years. Over those ten years, they are going to cost you only about eighteen cents a day.”

What this saleswoman did was break the total price down into the daily cost. Obviously, almost anyone can afford eighteen cents a day. I am still kicking myself for falling for the Funny Money close.

Car dealerships are masters of the Funny Money tactic. They try to get the buyer to think only about the monthly payment and keep him in the dark about the total price and interest rate until the deal has been struck.

Counter

In both examples above, the buyers should do their homework and spend some time working out the total price. If their counterparts are unwilling to provide a full disclosure of all terms, the buyers should simply walk away from the deal.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Making a ridiculously low or high offer.

Example

You’re trying to sell your house for $289,000 when your agent brings you an offer of $260,000 from a couple who saw the house over the weekend. If your house is competitively priced, this would be considered a lowball offer.

Lowballing is effective because it tends to lower a counterpart’s aspirations. If you counter the couple’s offer with $180,000, their next offer of $275,000 won’t seem so bad. If they had originally offered you $275,000, you would probably have countered higher than $280,000.

Counter

If someone lowballs you, you have three options: (1) Do not counter! Utilize These Boots Are Made for Walking and move on. (2) Counter by repeating your asking price. (3) Using the tactic of the Withdrawn Offer, counter with a figure higher than your asking price. Explain that the couple must have misunderstood the actual price, and then counter their ridiculous offer with an even more ridiculous price.

If someone highballs you, you also have three options: (1) Do your homework to find out whether the price is competitive. (2) Use the Power of Competition. Demonstrate with a competitive analysis that the price is unreasonably high. (3) Ask for a price breakdown.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?

Summary: Taking back an initial offer to keep from being taken advantage of.

Truly withdrawing your initial offer may be in your best interest in some situations. This tactic can be used when you feel you are being taken advantage of or put in a position where you can only lose.

Example

Joseph is selling a house that he owns jointly with a partner. The asking price is $226,000, but the buyer is a very tough negotiator. By using the Salami tactic, the buyer manages to reduce the price to $221,000, have the escrow extended to ninety days, and stipulate that Joseph and his partner will carry back a $20,000 second mortgage at 9 percent. Joseph thinks the deal is finalized… until the buyer brings his wife into the picture.

The buyer’s wife says she hates the kitchen and will not allow her husband to pay any more than $219,000 for the house. That is when Joseph says he has bad news for the buyer: Joseph’s partner has decided that they should not sell the house for any less than $223,000. Since the buyer really does want the house, he spends the rest of his negotiating energy trying to get the price back down to $221,000.

Counter

First, rather than scrambling to get the price back down, the buyer could utilize These Boots Are Made for Walking. If Joseph really wants to make the deal, he will come back. Second, the buyer could use Apparent Withdrawal, giving the appearance that he is quitting, to regain control of the situation.

Have you used or encountered this tactic in your negotiations? If so, how’d it go?