Rules of engagement: How to negotiate a better deal
Those who manage to lock in amazing deals are often referred to as great negotiators. Effective negotiation requires plenty of preparation. It also requires time and information.
Here are some rules on how to be a more powerful negotiator and get the deal you want.
Rule #1. Almost everything is negotiable
Always keep in mind that most things are up for negotiation. However, doesn’t mean you are guaranteed to win each time. That said, if you don’t try to negotiate, you’ll never know whether you would have received a better deal or not. It is worth negotiating at any opportunity that arises, just in case you snag an unexpected bargain.
Rule #2. Know what outcome want
A good negotiator knows what they want to achieve before they start negotiating. Start with the outcome and then work backwards to determine the best way to get there.
Rule #3. Aim for a win/win
Win/win means everyone is happy. You get what you want whilst your opponent gets what they want too. Everyone should feel like they have won at the end of a negotiation.
To achieve this, building a rapport with the other party is crucial. If you build that rapport in the initial stages of your interaction, the deal will likely go further, faster.
Rule #4. Treat negotiating as a game
Why is it always easier to negotiate on behalf of a friend, but when it comes to negotiating for ourselves we freeze up? It’s important to not get emotionally involved in negotiations. You don’t want to lose your perspective and make an emotional decision rather than a rational and beneficial one.
Rule #5. Make a written offer
The best way to put yourself in a strong negotiating position is to put an offer in writing and attach a cheque to it. This shows you are all in and are willing to start the process. This is of particular importance in a property or new car negotiation, where you are trying to make a statement of intent to the salesperson.
Rule #6. Split the difference
Many properties are sold on the basis of a negotiation where they split the difference.
What usually happens is the vendor drops his asking price by a certain amount, then you raise your offer by a similar amount and after a few more rounds you agree on a figure somewhere in the middle.
As with any negotiation, your first offer will usually be rejected, but it’s just a starting point for your negotiations. If your offer is rejected, wait until the vendor provides a follow up figure. At this point you may be shocked at how low, the price has dropped.
Rule #7. Know when to bluff
Negotiation is all about perception. Who seemingly holds the power and who is in control of the negotiations? If you have done your homework and understand the local property market and pricing, you will feel confident. You will feel even more confident if you know there are no other buyers putting in offers. At this point you are negotiating from a position of strength. However the moment the agent tells you someone else has put an offer in, you feel all the power shift away from you and straight to the agent. So it’s all a matter of perception. This is the time to bluff. It’s your opportunity to try to win the negotiation. If you win, you win. If not, you haven’t really lost anything. The trick with bluffing is to always make sure the person on the other side of the negotiating table doesn’t know you are bluffing.
Next time you are about to negotiate on anything, keep the above list in mind and plan ahead by thinking about what you want to achieve.
Following these rules will help you to become a better negotiator.
This update is not financial advice. This article is general news and information.
Home Loans: The comparison rates are based on a secured loan amount of $150,000 and a term of 25 years.
Personal Loans: The comparison rates in this table are based on a loan of $30,000 and a term of 5 years unless otherwise indicated in the product name with^, in which case, the comparison rate is based on a loan of $10,000 and a term of 3 years. The comparison rates are for unsecured personal loans only for the relevant amounts and terms. The comparison rates for car loans and secured personal loans are for secured loans unless indicated otherwise.
WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Comparison rates are not calculated for revolving credit products.
The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements
InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.
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