13 Negotiation Stratgies

February 18, 2017 | Filed under: Real Estate, Success

Here are 13 tips and tricks you can use to strategize a successful negotiation

1. Good Guy/Bad Guy

One of the oldest tactics in negotiation is the good guy/bad guy routine. It can be done when you have two negotiators-a team of negotiators. One negotiator acts overbearing, aggressive and pressuring while the other acts compassionate, flexible, and open. They take turns negotiating with the opponent. Often the good guy acts as if he is on your team. Another version of this strategy is the indication there is a bad guy, but there really is not.

You will hear comments like:

• “The manager will never go for that.”

• “My financial partner says we cannot do that.”

• “I am on your side, but the company will never allow us to do that.”

You may want to request to meet the bad guy. If they exist, they’ll show up; if they don’t, you will hear some fast backtracking or excuses.

2. What If?

If you are interested in reducing the other side’s position, you may want to concentrate on the “what if” question. It is very powerful in uncovering the bottom line. For example, if you are trying to purchase one unit, ask “What if I bought 2, 5, 25, 50? What kind of discount will I get?” This helps you to determine your opponent’s margin of profit. If, at 50 units, you get a 25% discount, you know they are still making money, so go for two units at the 25% discount.

3. Exposed Information

You’re sitting in the buyer’s office. All of a sudden, he excuses himself. You’re looking around the room picking up clues as to the type of person the buyer might be. On the desk you notice a quote from the competition, the price is highlighted in bright pink. Also, there is a yellow notepad next to the quote with some notes. You see your company’s name on a note:

• Good company

• Great service

• The price has to be $1.07 per unit for us to do the deal

The buyer comes back in and shuffles the papers. After a short conversation, you, without being asked, drop your price to $1.07.

4. Bogey

The bogey works on the theory of legitimacy. The negotiator will refer to some document, budget, or expense account. They say, “The budget is only $100,000. That is the maximum we have to work with.” Even though they could spend more if the value was shown, but because the amount is in print they believe the figure to be inflexible.

5. The Eleventh Hour Squeeze

Eighty percent of the concessions in negotiation will come in the remaining 20% of the time available before a deadline-at the last minute or in the eleventh hour. The pressure to give more concessions as the deadline approaches is consistent in all negotiations. The better you manage yourself during the last few days, hours or minutes, the better the deal you will receive.

Here are some suggestions:

• Know your opponent’s deadline and what their pressures are.

• Confirm the deadline as true; fake deadlines are often used.

• Do not reveal your deadlines to your opponent, if possible.

• Know who has the leverage position as you come closer to the deadline.

• Do not get emotional. Panic has ruined more than one deal.

• Do not give more concessions as the deadline approaches.

6. Fait Accompli

Fait Accompli is the strategy of assuming a discount, add-on or additional concession after the negotiations are complete. The negotiator just took one more piece of the pie. If you are good, you won’t let it happen. If you let it happen, it will happen again and again. You just spent three months negotiating a complex and time-consuming deal. The company sends you the check, minus a 2% early payment discount. Do you take the check for 98%? Most people will. They will not even ask for the 2%. They just accept the discount. If it happens to you, ask for your 2% or give them 98% of the product.

7. The Stall

The stall is a great tactic if you have the leverage position, or if you know the other team is under pressure. Just keep putting them off or stalling them. The pressure will build for your opponent, which increases your leverage position. During an actual negotiation, the stall can be effective in giving you breathing room, creating pressure on your opponent, or evaluating your opponent’s position.

Common stall tactics are:

• Refusing to answer questions until later in the discussion.

• Adding information or considerations into the discussion that are not important.

• Asking for time to access information.

• Belaboring a point that is not important.

• Asking for proof of their position (reports, statistics or data).

• Negotiating a non-negotiable point for hours.

8. Salami

If you are trying to negotiate a big deal, break it down into a series of smaller pieces. People do not mind giving up a little piece of salami at a time. They hate to give you the whole salami. The same holds true for anything. Keep asking for all the little pieces and eat it one slice at a time.

9. Bait and Hook

The bait is usually a key benefit, need, or point in the negotiation. “Yes, we can do that. We’ll work out the rest of the details later.” The bait often happens when there are multiple suppliers.

The fisher hooks you with the bait, gets rid of the competition, and then plays you on all of the other negotiable points. They know that once you have taken the bait, you are not very likely to get off the hook. The best defense is to ensure you get a complete understanding of all the negotiable items and ask for a complete proposal that includes all of the details.

10. Withdrawal

Withdrawal from the negotiations is a confrontational strategy. It indicates to your opponent you do not need them and creates more pressure on them to find a way to give you what you want so that the deal can close. A good negotiator’s response is to pay, wait and see. A poor negotiator who charges after the individual who withdrew is guaranteed to lose money.

For example, you sign a contract on the purchase of a home, with a contingency upon it passing inspection. When the home inspector finishes the inspection of the home, he tells you that the addition that was built on to the home does not have a permit and there isn’t an air vent going into the addition for the air conditioning and heating unit to pump air into the addition. It’ll cost you thousands of dollars to bring the addition up to code and you are already paying more than you can afford on the purchase price of the home, so you walk away from the deal.

The seller of the home comes back with an offer that he’ll knock the amount of money it is going to take to being the house up to code off the purchase price of house or he’ll pay for the corrections himself. In this case, the withdrawal technique landed you the home you wanted to buy and corrected the code problem so that you could proceed with the purchase.

11. Crunch

Another confrontation strategy is the crunch. It is not good for long-term relationships, but is effective in short-term relationships. You simply state your terms, conditions, and position and then tell them to take it or leave it.

It is often followed with statements like:

• “This is your only chance for business.”

• “If you do not, we will never do business together.”

• “That is the best you will get.”

• “Do not bother to call if you cannot beat this price.”

12. Distraction

The distraction tactic is a form of deception. The player picks an unimportant or less than important negotiation point that they know they cannot receive. It may be non-negotiable because the demand is completely unreasonable. The negotiator harps on the point and demands satisfaction. He/she never moves off the topic. Then, at the last minute, he/she trades the point for many other concessions. Because you could not give them anything on the original point, you feel obligated to give more on the other or many concessions they follow up with.

The conversation usually goes something like:

“Beth, you know how important it is that we get one-hour repair service (unimportant point). We must have that level of service to make the deal work, but we also know your company’s limitations. We would be prepared to lessen our request if we can get “X, Y, and Z.”

13. Limited Authority

You enter the negotiation ready to bargain and to strike a good deal. The player across from you knows his material, covers all the bases, but does not seem to be able to approve anything. He doesn’t have the authority to make a decision because you keep hearing statements like:

• “I’ll have to get back to you on that.”

• “Let’s review that later.”

• “It looks OK, but I will have to get approval.”

• “You are right on, but we will need to check on it first.”

This is called limited authority. The person may or may not have the authority to agree to the deal but always postpones the final agreement. However, he/she asks a lot of questions and agrees to everything that is favorable to their position. The first time you hear, “I need to check on it,” ask with whom and when. Stop negotiating until you have that individual in the room or have an agreement that the current negotiator

 

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