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Improve Your Negotiating Skills: Know What Power Negotiators Know

We all negotiate every day. The way that we conduct ourselves in a real estate negotiation can dramatically affect the outcome. Whether you are a buyer, seller, landlord, tenant, broker, or salesperson, knowing and understanding five Power Negotiating techniques will help you reach your goal in the transaction. (I) Get the other side to commit first Power Negotiators know that you're usually better off if you can get the other side to commit to a position first. Several reasons are obvious: Their first offer may be much better than you expected. It gives you information about them before you have to tell them anything. It enables you to bracket their proposal. If they state a price first, you can bracket them, so if you end up splitting the difference, you'll get what you want. If you to commit first, they can bracket your proposal. Then if you end up splitting the difference, they get what they wanted. The less you know about the other side or the proposition that you're negotiating, the more important the principle of not going first becomes. Doing your due diligence before entering into any real estate related transaction substantially empowers your ability to negotiate what you want out of the deal. Knowledge is power when engaging in any negotiation. This brings us to the second point. (II) Act dumb, not smart Power Negotiators understand you're better off acting as if you know less than everybody else does, not more. The less informed you act, the better off you are unless your apparent I.Q. sinks to a point where you lack any credibility. There is a good reason for this. With a few rare exceptions, human beings tend to help people that they see as less intelligent or informed, rather than taking advantage of them. Of course there are ruthless people who will try to take advantage of weak people, but most people want to compete with people they see as brighter and help people they see as less bright. So the reason for acting dumb is that it diffuses the competitive spirit of the other side. A negotiator who lets his or her ego take control during the making of a deal, and tries to comes across as a sharp, sophisticated negotiator, commits to several things that work against a negotiator. These include:

A fast decision-maker who doesn't need time to think things over. Someone who would not have to check with anyone else before going ahead. Someone who doesn't have to consult with experts before committing. Someone who would never stoop to pleading for a concession. Someone who would never be overridden by a supervisor. Someone who doesn't have to keep extensive notes about the progress of the negotiation and refer to them frequently. The Power Negotiator understands the importance of retaining these options: Requesting time to think it over so that she can thoroughly think through the dangers of accepting or the opportunities that making additional demands might bring. Deferring a decision while she checks with a committee or board of directors. Asking for time to let legal or technical experts review the proposal. Pleading for additional concessions. Using Good Guy/Bad Guy to put pressure on the other side without confrontation. Taking time to think under the guise of reviewing notes about the negotiation. Power Negotiators know that acting uninformed diffuses a competitive spirit and opens the door to win-win solutions. (III) Think in real money terms There are all kinds of ways of describing the price of something. Power Negotiators think in real money terms. When that supplier tells you about a 5¢ increase on an item, it may not seem important enough to spend much time on. Until you start thinking of how many of those items you buy during a year. Then you find that there's enough money sitting on the table to make it well worth doing some Power Negotiating. A favorite tool of real estate salespeople is to say to a prospective home buyer that is considering a purchase beyond their target price, “Do you realize you're talking 35¢ a day here? You're not going to let 35¢ a day stand between you and your dream home are you?" Meanwhile, that 35¢ a day over a 30-year life of a real estate mortgage can be more than $7,000. Here are some other examples: Interest rates expressed as a percentage rather than a dollar amount. The amount of the monthly payments being emphasized rather than the true cost of the item. Cost per brick, tile, or square foot rather than the total cost of materials. An hourly increase in pay per person rather than the annual cost of the increase to the company. Insurance premiums as a monthly amount rather than an annual cost. The price of a purchase expressed as the monthly payment. Businesses know that if you don’t have to pull real money out of your purse or pocket, you're inclined to spend more. It's why casinos have you convert your real money to gaming chips. It's why restaurants are happy to let you use a credit card although they have to pay a percentage to the credit card company. When you're negotiating, break the investment down to the ridiculous because it does sound like less money, but learn to think in real money terms. Don't let a negotiator use these techniques on you unknowingly. (IV) Concentrate on the issues Power Negotiators know to concentrate on the issues and not be distracted by the actions of the other negotiators. When you're negotiating, understanding what affects the outcome and what doesn’t is crucial, and it's easy to be thrown off by what the other side is doing. It's inconceivable that a full-time professional negotiator would walk out of negotiations because he doesn't think the other side is fair. He may walk out, but it's a specific negotiating tactic, not because he's upset. Can you imagine a top arms negotiator showing up in the White House, and the President saying, "What are you doing here? I thought you were in Geneva negotiating with the Russians." "Well, yes, I was, Mr. President, but those guys are so unfair. You can't trust them and they never keep their commitments. I got so upset, I just walked out." Power Negotiators don't do that. They concentrate on the issues, not on the personalities. You should always be thinking, "Where are we now, compared to where we were an hour ago or yesterday or last week?" It's okay to get upset when you're negotiating, as long as you're in control, and you're doing it as a specific negotiating tactic. It's when you're upset and out of control that you always lose. (V) Always congratulate the other side When you're through negotiating, you should always congratulate the other side. However poorly you think the other person may have done in the negotiations, congratulate them. Say, "Wow - did you do a fantastic job negotiating that. I realize that I didn't get as good a deal as I could have done, but frankly, it was worth it because I learned so much about negotiating. You were brilliant." You want the other person to feel that he or she won in the negotiations. However harmless it may seem, be sensitive to how you're reacting to the deal. Never gloat and always congratulate. It the ultimate courtesy for the conqueror to congratulate the vanquished. Power Negotiators always want the other parties thinking that they won in the negotiations. It starts by asking for more than you expect to get. It continues through all of the other techniques that are designed to service the perception that they're winning. It ends with congratulating the other side. If you let these five principles guide your conduct when you're negotiating, they will serve you well and help you become a Power Negotiator.