Buying things is usually a pretty straightforward affair nowadays. You go to a shop, see the price of something, and that is what you will pay. And that’s all. And while this is convenient, there are still places where one has the ability to haggle their way into a lower price. Places like certain car lots, garage sales, flea markets, a pawn shop in ft lauderdale, etc. So it would definitely pay off to have some skills in the art of getting more for less.
Now, since this is something that most people are now unaccustomed to, some gaining or sharpening of skills is in order. Below is an excerpt from an article from http://www.moneycrashers.com which offers good advice for how to negotiate for a better price:
Rules of Successful Negotiation
1. Do Your Homework
You need to know some important things about the service or product you want to buy before you begin negotiations:
- How Much Do Competitors Charge? If you can tell the seller you know the item is available for a lower price, it puts a lot of pressure on them to lower their offer. Furthermore, it lets you know that you don’t have to accept the seller’s offer. You can walk away from negotiations and still get what you want.
- What Is the Cost to Your Seller? It’s useful to know the margin between the seller’s costs and asking price, especially when buying a new car. Research the invoice price that new car dealers pay the manufacturer – then you know the absolute lowest that they can go and still turn a profit.
- Is the Seller Facing a Deadline? If a seller has to get rid of a product before a deadline, they are more motivated to sell at a lower price. Making money on the deal may not be the most important goal when a deadline is involved, as the consequences of waiting too long could be costly. Home sellers often have a deadline, as they may need to sell their property by a deadline so they can purchase another for which they are under contract.
- Why Is Your Seller Selling? You don’t always buy from a business – sometimes you negotiate with sellers who aren’t even most concerned about making money. For example, someone who is moving may be willing to accept a very low offer for a large piece of furniture, just to be rid of it. Knowing why an item is for sale can give you an idea of how much money you need to pay.
2. Make the Other Side Name a Price First
By allowing the other side to name its price first, you may get a chance to counter with a number that is lower than what you would have offered initially – even if you do relinquish the opportunity to set the “price anchor,” which is the starting price point from which it can be hard to move. Of course, the initial price named by the seller may anchor you at a higher price, and this is where doing your homework can help. By knowing the competing prices, you may be able to significantly lower your anchor before negotiations start.
Michael Soon Lee, president of EthnoConnect and author of “Black Belt Negotiating,” is adamant about this point. He says naming a price first limits how low you can go in negotiations – even if you’re trying to establish a low anchor. After that, every counteroffer will be higher.
Lee states that you shouldn’t ever name a price. Once you do, the seller could agree to it and end negotiations – and it’s possible that the seller would have been willing to go lower.
3. Don’t Be Reasonable
The classic model of negotiation is that two parties offer different prices, eventually settling somewhere in the middle. Lee rejects that because the middle is too high of a price.
If you are going to make the first offer or name a price in a counteroffer, make it ridiculously low. Not only does it set the price anchor very low, but it puts the seller on the defensive. If they have a negotiating plan, it’s unlikely they will follow it after a ridiculous offer. They instead focus on getting a price higher than what you offer, and not what they want. The end result is a much lower price than what is considered reasonable.
This can be difficult advice to follow, as you may be afraid of being considered a jerk. Many sellers know that ridiculous offers are part of the negotiating process and are very unlikely to refuse to make the sale. Instead, they’re going to counter.
Furthermore, studies show that when faced with a ridiculous offer or counteroffer, a negotiator gains satisfaction from getting concessions from the other party. Therefore, if you offer $1,000 for that high-mileage used car in need of a brake job, the seller will feel like they won something by convincing you to buy it for $1,200 – even if it was worth more money than that.
It’s up to you to decide what is more important. Do you want to be liked, or do you want to save a lot of money? Remember, the two options aren’t necessarily mutually exclusive. You may not be judged as harshly as you think, and paying a reasonable price doesn’t really make you more likeable.
4. Know the Limit
You need to gauge what is important to the seller. If they need to make a certain amount of money, they’re not going to budge. While you’re not trying to be reasonable, you need to let the seller walk away feeling they got something out of the deal.
As mentioned before, knowing a car dealer’s invoice price is powerful information. You know the truth when a dealer counters your offer with “I can’t go any lower.” Of course, while offering an extremely low price may work as an anchoring tactic, be prepared to settle for a price that allows the seller to make money.
Stick around as soon we will be releasing part 2 of this article with ever more tips and strategies for bringing sellers down to the lowest possible price.