Postulating on Negotiating — 13 Tactics and Tips for Negotiating Like a Pro

How to sell anything, how to buy anything and how to win at everything. These are the promises of most books written on negotiation. Negotiation is a nasty word, mostly because I associate it with people who think that the only way to get ahead in life is at someone else’s expense, or that “getting ahead” is the point at all. This article won’t solve all your problems and make you millions or get you whatever you want whenever you want. It will however give you a few practical ideas on perspective, empathy and how to get the best you can from your interactions with other people; without any stupid maxims like “whoever speaks first loses.” If a catchy line or two do come out of this though, then hey, I’ll take them. I will use property sales as examples because it is what I know best and, for most people, they are the largest transactions they will deal with in their lives. A great property decision can set you up for life.

Unlike chess, you can’t necessarily see all the pieces on the board, find as many as you can to negotiate better

Delusion 1 — He who speaks first loses

This old adage has been kicking around for a while now, certainly since before my time and definitely far too long. It is true that often in a negotiation the person who concedes does speak first when there is a silence at a critical moment, but that is NOT because they have made a mistake, it may be that they simply want to get the deal done and move on with life, or they may already have what they want. Often people who give more in negotiations can actually end up in a far better position than those who try tough tactics, the kind they heard from an older parent, friend or family member, these advisers are usually angry, sometimes helpful and always right. They think by being “tough” they can walk away with more of the pie, what they don’t understand is if you are better prepared and better positioned you can end up being the one actually baking it. I think this saying should be updated to, “He who asks the least questions loses.” The more information you have from the other party the better. In most situations one party doesn’t necessarily have strong feelings about the same key elements as the other party. Most are focused on the highest price, some sellers need to move quickly as they have already bought another property and need the money to pay for it. Some buyers are looking to purchase but are happy to lock in a deal now and pay a large deposit with the rest in 12 months. You never know what is important to people until you ask them. Ask better questions and you will have better information. If you have better information you will get a better deal.

Give me six hours to chop down a tree and I will spend the first four sharpening the axe…

Preparation is everything, make sure you sharpen the axe before swinging it

Be Prepared

The trick is not to hold your ground all the time or to compromise all the time, the real skill in negotiation is going into it with a plan of what you want, how important each item is and what you are willing to negotiate. Even in a simple property transaction there are a multitude of terms which can be discussed and added to the deal. Think price, settlement and terms, in the that order.

1. Price
2. Settlement
3. Terms

Price is obviously the most important and the settlement date or time-frame is the second most important (when am I getting my money?). The last item, terms, are everything else — and they are underrated. You can agree on almost anything and add it to a contract of sale or business deal. Don’t be afraid to be creative, have you heard of the guy who traded a red paperclip for a house?

One red paperclip - Wikipedia

This is called “Growing the Pie.” Don’t get bogged down on one or two details, be proactive and think about how you can add value to the negotiation. Don’t stress too much about the price the vendor wants if you can negotiate access to renovate the place during settlement. If you are selling your house don’t decline a long settlement straight away if you are happy to negotiate terms whereby the purchaser rents the property back from you at an agreed market rent during settlement. The worst thing you can do is be inflexible. Before any negotiation just think carefully about what is important to you and how you can grow the pie. Here is an example of a short list of things that might be important to you in a negotiation, let’s pretend we are buying a house shall we? It is an old house, the hot water service needs replacing but it is exactly what we are looking for, the asking price is $1,000,000.

What you want:

• To buy the property at or under our budget of $1,021,000
• To move in before school goes back in two weeks
• To have the hot water service replaced
• To keep the large, timber bookshelves in the living area
• To pay a $20,000 deposit instead of 10%

You don’t get what you what you deserve, you get what you negotiate…

First Contact

Once you know what you want, now you need to go and get it for you. People get nervous about making first contact with the owner or agent, the easiest way to overcome this is to be “Question Based” in your approach. Ask the agent for as much information as possible before making you offer. An easy way to think about this in steps is:

1. A whole phone call dedicated to sharing information. Ask the owner the below questions, what is important to them and how you can help them get what they want.
2. Make a formal offer in consideration of the above
3. Offer accepted, offer rejected or counter-offer made
4. Review items on your list and theirs
5. Offer accepted or the house-hunting continues

The better your questions are, the better the information you will have. Remember, the asking price may be $1,000,000, but you don’t know what the vendor is thinking yet. No vendor has ever set their asking price below what they want, so what you are really trying to do is buy the property for the lowest price they are willing to accept. To find out how far above the lowest figure they are willing to accept the asking price is, you need to ask. A good starting point for how to position yourself in relation to the price, settlement and terms you want are with questions like this:

Price Question

We don’t want to waste anyone’s time, if we could only offer $950,000 would it be worth pursuing or should we look at something else? Make sure the number you use is close enough to the asking price so that you don’t offend anyone. You don’t want to get offside with the owner, you just want to see what their reaction is, this is not considered an offer. Don’t commit to anyone that you have a certain budget or that you are going to make this offer, just that you want to make sure you aren’t wasting anyone’s time. If you are pressed on what you are planning on offering, just let the owner or agent know you aren’t ready to finalise a price and terms yet as you are still working that out.

Settlement Question

We want to make sure our offer is competitive as possible, would the owner prefer a longer settlement or shorter settlement, what is their dream settlement date? The owner or agent may try and ask your preference first, this is so that they can get the best deal for the owner. If you are flexible in relation to the settlement it could mean the difference between buying the property or missing out. Find out what they want first.

Terms Question

Is there anything else we can do to put ourselves in the best position to buy the place? Would the owner be happy if we could offer a larger deposit or perhaps arrange an early release of the deposit, I’m not sure if we can do that yet but we just want to help the owner where we can… Make sure you never commit to anything until you have all the information at hand, remember, you are just in information-gathering mode. The terms you are looking for are things that are important or appealing to the owner that you can offer. These will be specific to every situation and they are critical to reaching an agreement. Think about the property, the owners’ situation and yours and be creative.

If you feel like you are in hot water, just pause the conversation to regroup

Safety First

Most people aren’t negotiating for millions of dollars every day. If you are nervous about saying the wrong thing or doing something to reduce your position, just remember you always have a way out of every conversation. If you are asked a question that feels like it is important and you aren’t sure how to answer it, the best way to get yourself out of trouble if you feel like you are losing your way is:

I just need to speak to my wife/husband/kids/father/financial advisor/mortgage broker first, do you mind if I give you a call back shortly?

The best part is, you can do all of this without being difficult or unreasonable and can part ways as friends with everyone you do business with.

Be Nice

No one enjoys doing business with people they don’t like, and if they are dealing with someone they hate they certainly aren’t going to help them get a good deal. There are only two reasons someone will do anything for you:

1. They want to
2. They have to

If someone doesn’t want to do something for you, they won’t. You also aren’t going to change someones mind if they have to do something for you, because if they have to do it, they will. What you can do is effect whether they want to or not. You can’t control people with some sort of negotiation voodoo or turn of phrase that just endears them to you immediately. My best advice to getting the best deal — Just Be Nice.

This also includes the Real Estate Agent (if you are dealing with one). One good way to put yourself in a terrible position is to get offside with the people who are in charge of communicating with the owner. While some Real Estate Agents are easier to deal with than others, remember they work for the owner and by extension are worth keeping on your side.

If you are prepared and are being nice to people then you are off to a good start. The next step is to have a strategy to make sure you get as much as you can from the negotiating table.

Make sure you call the agent or owner to explain what you are going to do and why, keep them in the loop…

The Best Solutions are Simple, Yet Unexpected

When trying to get what you want invariably you will run into trouble, there will be someone that wants the same thing or is unable to give you what you want. Once you have your list of items it is time to sort them into “DealMakers” and “DealBreakers.” DealMakers are those things that you are happy to give up that you know the owner wants or things that you want that you are happy to negotiate back in the owners’ favour. DealBreakers are those items which are likely to cause issues. You may have a strict settlement date you are working towards or a pricing point you simply can’t exceed. That could be a DealBreaker. Once you know what you can and cannot do for the owner, it is time to take your first offer to them. Positioning yourself as the first person to make an offer is usually a good idea. Have a quick look at your list, make sure you have a pen and paper handy and give them a call or meet face-to-face and ask for what you want. Sometimes it is that simple, yet unexpected. If your dream reality is to buy the house for $500,000 on a longer settlement of four months with a smaller deposit of 5%, ask for it. You only risk offending the owner if you are seen to be inflexible or too far away from the ultimate selling price. When working out your first offer, make sure you you do the following:

• Know your values, for more information on valuing property, see here:

How to value property

• Know what the owners wants first, if you know they can’t do a longer settlement, don’t offer one
• Be reasonable, the best deals are the ones where both parties have a win

Once you have made your first offer, the owner will have three options. Either they accept the offer, make a counter-offer or reject the offer. Whichever they choose the negotiation has now started. Make sure at this point you don’t change your offer until you have a clear response from the owner. The best strategy is to call the agent or owner first, let them know what you are planning on doing and why. Then make the offer in writing and wait patiently for the response. If you are dealing with an agent, make sure they take the offer to the owner and that they are clear in their response. Confirm that they have reached the owner and that the owner is aware of the offer, ask what their response was and then regroup once you have more information.

13 Tactics and Tips for Negotiating

1. Make sure you listen, the best negotiators talk less and listen more.
2. Don’t take it personally, some people when emotion can act unreasonably, give people the benefit of the doubt and forgive quickly.
3. Take your time, a night to sleep on it or a week or two for people to reassess their situation can make all the difference
4. Break down the pricing into % terms. If you make an offer of $550,000 and the owner wants $600,000, $50,000 sounds like a lot. In reality you are less than 10% away from their asking price. Let them know that you are 90% of the way to a sale
5. Be honest, life is too short to lie to people.
6. Believe people (if you trust them). After dealing with the owner or agent for a little while you should be able to work out if they can be trusted. Your gut feeling on these things is usually right. If they haven’t given you a reason to distrust them, then don’t. A good way to make sure is to get all responses from the owner in writing, especially if they are making a counter offer, get it in writing on the contract so you know they have committed.
7. You don’t need to answer every question you are asked, and whatever you do say can and will be used against you. If the agent asks you your budget or if you are willing to offer more before telling the owner about your current offer, just let him know that the offer you have put forward is the highest you can put forward.
8. Ask permission, ask first and answer later. Before you drill the agent or owner with questions, ask permission. It is amazing how much information you can get if you just open with, “Do you mind if I ask you a few questions?”
9. Realise the price point. If you are at a lower price point of $150,000, every dollar counts. An offer $15,000 away here is a 10% difference. At a purchase price of $2,000,000 it is only 0.75% off. If you really want to buy something, you can afford it and you are that close during a negotiation, is it worth missing out on?
10. If you can afford something and you really want to buy it, buy it. Properties come along for sale every week and every day, but ones you love don’t come along very often at all. Once you are happy, you have ticked all the boxes and done your due diligence, make it happen and live your life.
11. Be Australian, meet in the middle. Our great country was built on “splitting the difference.” If you start at $550,000 and they are at $600,000, chances are you will do the deal at $575,000. If you can’t afford the property at that price make sure you tell them early in the negotiation.
12. Say what seems obvious. If you want to buy it, tell them, if you like something about the house, tell them, if you like something about the owner, tell them! The more credibility and good-will you build, the better.
13. Say Thank-you

Be thankful, if you are buying a house you are already lucky.