Preparation to Negotiations
Welcome to my negotiation course!
Over the next 10 days, I’m going to tell you everything you need to know in order to be a great negotiator, so you can get bargains when you’re buying and hold on to great prices when you’re selling—the process is the same for both.
In this 1st lesson, I want to tell you about the 3 numbers to prepare:
• the deal you expect to get
• the deal you’d ideally like to get
• the deal you MUST get—or you’ll walk away
If you’re buying, the lowest number will be the best case, the middle number is what you expect to get (what you might call the going rate), and the highest number is the most you’ll pay—your limit or walkaway point. If you’re selling, then it’s the other way around: The highest is what you’d like to get and the lowest is your walkaway point.
The Ideal Outcome
Why do we need to know about the best case—the deal you’d ideally like to get?
Because that’s what you are aiming for, and that’s what your opening offer must be based on. If you think about it, you’ll never get that best case unless your opening offer is BEYOND it. For example, if there’s a house for sale for $450,000 and you think you might just get it for $400,000, you have to offer them less than $400,000. If you offer more, say $425,000, there is no way they are going to say, “Oh go on, you’re a nice person, have it for 400.”
So, your opening offer has to be beyond the best case you can imagine; that’s either lower than the best if you are buying or higher than the best if you are selling. The other party probably won’t like it, but that’s how it has to be. You are risking upsetting the 90% in order to try for a deal that the other 10% are going to give you. (That’s why you must always be polite when you open, and I’ll cover that in a future lesson).
What You Expect to Get
The middle of my 3 numbers, “expect to get,” is the least important—it’s really only there to help you think about the best you might get for your opening offer. If the house is 450, then your thinking process might go, “I’d expect to get it for 440, and I might get it for 410, so I’ll start under the 410.”
Your Walkaway Point
The 3rd number, your limit or walkaway point, is the most important of the three. You MUST set a limit and you MUST stick to it! This is rule number 1 of negotiating. This is because all your power in a negotiation comes from your ability to walk away.
And when the time comes that you do have to walk away from a negotiation, you’ll feel unhappy because you wanted a deal, but it’s okay because there will always be another deal, probably a better one just around the corner. But the main thing is that you have proved to yourself that you CAN walk away—you WILL walk away—and this makes you stronger for next time.
The next time you negotiate, the other person will somehow sense that you really do mean business. Sometimes, I almost WANT to walk away because I haven’t for a while, just to keep my strength up. So, even if the difference is tiny, if you are thinking of buying for over your limit or selling for less than your limit, DON’T! You must walk away instead (politely, of course).
That’s it for Lesson 1—I’ll be back tomorrow to tell you what to do and what you should NOT do when you first walk into a negotiation.
Bye for now!
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