Published in the Star-Ledger, Tuesday, August 29, 2006
How to haggle
Getting the best deal isn't a matter of luck
-- it's about skill and effort
BY HOLDEN LEWIS
BANKRATE.COM
Fishing has been defined as a jerk on one end of a line waiting for a jerk on the other end.
Selling big-ticket items such as houses, cars, appliances and jewelry is a lot like fishing. Salespeople, including savvy home sellers, hook you and reel you in by using a variety of negotiation strategies. They use those time-tested tactics on you, whether you want them to or not.
Since you can't avoid the salesperson's negotiating ploys, your only defense is to recognize what he's doing. You then have the chance to use some of those tactics yourself -- becoming the fisherman instead of the fish.
It's called haggling. How well you do it could be the key factor in determining the price you agree to pay for a new home or car.
When consumers make major purchases, the most common mistake they make is to assume negotiating is not an option, says Steven Cohen, who dispenses advice online and in seminars as founder of Negotiation Skills.
In fact, he says, there is room for negotiation in virtually every purchase.
The second most common mistake: lack of preparation. "That can be disastrous," Cohen says. "If you negotiate without preparing properly, you can actually make your position worse."
A seller aware that you are guessing or bluffing won't likely give an inch. Haggling isn't unseemly, seat-of-the-pants horse-trading. It's more a freewheeling form of negotiation.
You prepare in three key steps, by:
- Determining exactly what you want.
- Researching to find out what constitutes a fair price for what you want to buy.
- Figuring out what's most important to you and to the seller.
For houses, find out prices paid recently for comparable houses in similar neighborhoods. Many real-estate salespeople willingly share the information about homes they've recently sold. Also, an increasing number of local property authorities let you search their databases of property sales via the Web.
For automobiles, find how much the dealer paid for the vehicle, then negotiate a price that includes a fair profit. Edmunds.com is a fine place to find out the invoice price of a car as well as how much the manufacturer has provided the dealer in holdback. Don't know what holdback is and why it's important? The site tells you.
Intellichoice is another option for automobile pricing information.
"People need to think in broader terms and think of negotiation as discovery," says Roger Volkema, a management professor at American University and author of "The Negotiation Toolkit: How to Get Exactly What You Want in Any Business or Personal Situation" (American Management Association, 1999). "I think it's a good idea, when you're making major purchases, to go to several places, shop around not only to make comparisons but to get some confidence."
But what if you discover that you and the seller share the same priority: You both want to get the best price possible? Then it's time for "power negotiating," says Roger Dawson, author of "Secrets of Power Negotiating" (Career Press, 2000).
You are a power negotiator, he says, if you get the deal that you want and the other person thinks he or she has won the negotiation.
POWER NEGOTIATING
Roger Dawson, author of "Secrets of Power Negotiating," recommends tactics smart buyers and sellers can use when haggling for big-ticket items. You might not feel comfortable using these tactics, but, experts say, they'll be used on you.
- INVOKE HIGHER AUTHORITY: This is when the buyer and seller arrive at a tentative agreement, then one party has to get someone to okay the deal. Anyone who has haggled w ith a car salesperson is familiar with this: You arrive at a price, then the salesperson has to get the sales manager's approval.
But buyers can use this tactic, too. The wife can say she loves the house, but apologetically explains to the real estate agent that her husband won't budge unless the price is reduced. Later, they agree to buy the house if an inspector (a higher authority) finds no serious defects and a bank (a higher authority) will lend the money.
- MAKE SURE TO FLINCH: The most common tactical mistake thata consumers make is to remain calm in the face of a proposal, Dawson says. It's better to flinch -- to appear shocked and surprised by an "outrageous" offer, even if it's not really unreasonable. You might think a stoic demeanor looks professional, but in the haggling business it will cost you.
- SQUEEZE YOUR OPPONENT: Dawson calls "the vise" one of the most effective tactics: "You say, 'I'm sorry, but you'll have to do better than that.' Then you shut up." Chances are that you'll get a more reasonable offer. Too many people, says Dawson, just can't stay quiet, they blink and fill in the silence with words that drain all the power out of their rejection.
- NEVER OFFER TO SPLIT THE DIFFERENCE IN PRICE: Always wait for the other side to split the difference: it gives your opponent a feeling of winning and, if you split the difference again, it'll be in your favor.
- MAKE A CONCESSION: Save a small concession that you're willing to give up at the end, so the other side can feel the satisfaction of winning something.
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