There seemed to be many misconceptions about successful negotiations. If you watch enough television, it seems like negotiations involve a lot of yelling, throwing of objects and a general scorched earth policy. Meanwhile, one of the most successful books on negotiations, Getting to Yes, has been criticized for not looking at the emotional aspects of the parties and negotiation, opting to rely too much of a clinic analysis of negotiations (to the authors’ credit, their next books addresses the emotional side of negotiation). Unless you are a lawyer, mediator or some other persons who negotiate on a daily basis, most of us don’t use this skill very often but it can be rather painless.

When I first starting practicing the law, a very senior lawyer said to me that the essence of a good deal is that neither side is happy. In other words, both sides gave up something valuable in order to reach a deal. The problem with trying to totally crushing the opponent in negotiations is that no one wants to play ball with someone who will not give anything up at the negotiating table and, after a while, you end up negotiating only with the most desperate and vulnerable which brings up a whole moral/ethical issue.

I am by no means a master negotiator but I have picked up a few tips over the years.

COME PREPARED

This sounds so trite but how many times have you heard of friends driving around town one afternoon, walking into an open house and then buying the place? Then, they are stuck with buyer’s remorse because they didn’t do their research properly and they over-paid for the place or the place is a dump etc.

There seems to be a correlation between the amount of preparation put into negotiations and the result. The less research and intelligence gathered, the more likely the unprepared will be taken. I may have linked to this post before but look at how the writer got the best price for a car by doing their research.

If you are going to make a big-ticket purchase, look at it one day, go home and do your research and buy it on another day. If you walk in never intending to buy and you did, you probably left money on the table.

PEOPLE ARE IMPATIENT- AFTER A WHILE, THEY WILL AGREE TO ANYTHING

When I was in undergrad, my brother called me asking me if I wanted to buy his old Honda. Turns out that he was in the car dealership for 7 (!) hours and, even though he never set out to buy a car, he thought that spending so much time there meant that he HAD to negotiate some type of deal to buy.

I once attended a sales seminar aimed at investment advisors (even though I am not one) and one of the key points was that a good investment advisor got an answer quickly. A “no” is a good answer. It allows you to move on to the next potential client. The worse answer a salesperson can get is “let me think about it.” The key was to force “yes” or “no” answer as quickly as possible. Patience is not key in sales.

The point being that negotiations are often wars of attrition. Whomever can wait out the other side the longest sometimes wins the point. If you don’t have to buy the car or house that day, then don’t. People will cut you deals rather than watch you walk since there is some certainty of sale with the person in front of them rather than the unknown (is someone else going to walk in tomorrow to buy?). Why do you think car dealerships make you wait in office after office; as your impatience grows, your desire is just to get the deal done regardless of whether it is the best deal or not.

On the flip side, tell a saleperson you want to think about it after they have spent some time with you- watch them make you a better offer than their “best” offer 10 minutes ago; you have occupied their time for a while, they don’t want the time spent, and their potential commission, to go to waste so they’ll cut a deal with you even if it is not the best one for them.

PRIORITIZE YOUR DESIRES

I work with a lot of salespeople as co-workers. Whenever we talk about a new project they want everything in the marketing materials- lot of information, lots of pictures, lots of sales language. However, we can’t fit that all into a small brochure. At some point in time, one of the more experienced salespeople will say that they have to pick one thing as a priority whether that be information, pictures or whatnot. At that time, the salespeople really begin to give you a sense of what they want and the conversation becomes much more focused and you hear a lot of: “yeah that would be nice but let’s focus on this…”

It is the same thing with negotiations. Of course, we all want everything but what one thing is more important than others? Use the other important but lower priority desire as a bargaining chip. For example, I watch a lot of these property virgin/1st time home-owner type of shows and everyone always wants everything: a reasonably priced home but with a finished kitchen, large back-yard, minutes from school, access to public transit, a 2nd/3rd bathroom and, oh, the house has to be barely lived in. Then, watch what happens- people begin to find out that they can’t have their cake and eat it too and they focus on the most important desires and give up the other things they want but are not deal breakers (for some reason, it is always the big backyard).

If you cannot prioritize then one of two things happens: you either end up paying a lot more than you wanted to since everything is important and you can’t live without it or you can’t cut a deal because you won’t give anything up at the table to get something of equal value back.

Take a piece of paper and write down the absolute deal breaker terms; it can’t be more than 3. Then write down the “it would be great” terms. These you negotiate as if they were deal breakers but you would willingly walk away from if you got something back in return. It is a good exercise in trying to figure out what the most important thing is for you. When I bought a condo, I threw away my desire for a 2nd bedroom for my priority of living in a great location; I always say I could use another 100 sq. feet but I would not give up my location.

….those are my three big negotiating rules. If you are gearing up for a negotiation of any kind, I would read Getting to Yes as a starting point. Anyone care to share any tips?