Haggling down home
and car prices like a pro
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 homesellers, 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
your new home or car.
When consumers make major purchases, the most
common mistake they make is to assume that negotiating is not an
option, says Steven Cohen, who dispenses advice online and in seminars
as founder of The
Negotiation Skills Company.
there, if you can find it
In fact, he says, there is room for negotiation in virtually
Roger Volkema, a management professor at American
University, touts the Golden Rule of Negotiation: "People will
not negotiate with you unless they believe you can help them or
You can help the seller by buying, and hurt
the seller by going to a competitor or by wasting his time. So unless
you're buying something unique, like the Hope Diamond, there is
almost always room for negotiation.
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
will be unlikely to 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
Don't assume that the seller shares your priorities.
Yours might be price, but the seller's top desire might be a quick
sale. Or it might be something that you would never expect.
"People need to think in broader terms
and think of negotiation as discovery," says Volkema, author
Negotiation Toolkit: How to Get Exactly What You Want in Any Business
or Personal Situation.
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.
You are a power negotiator, he says, if you
get the deal that you want and the other person believes that he
or she has won the negotiation.
or be haggled
Dawson lists tactics that sellers -- and smart buyers -- use
when haggling for big-ticket items:
- Invoke higher authority -- In this
tactic, the buyer and seller arrive at a tentative agreement,
then one party has to get someone to OK the deal. Anyone who has
haggled with a car salesperson is familiar with this tactic: You
arrive at a price, then the salesperson has to get the sales manager's
Buyers 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
If the "higher authority" tactic is
used on you, return to your original position. For example: A refrigerator
is listed at $1,300. You offer $1,100. The salesman says he can
sell it for $1,200 if the sales manager approves. When the sales
manager says to you, "I understand that you're offering $1,200,"
your response should be, "No, your salesman offered $1,200.
I'm offering $1,100."
- Never say yes to the first proposal --
The seller will wonder if he set the price too low and whether
he is about to "lose" the negotiation. "You want
to ask for more because you want to allow the other person to
get a win," Dawson says.
- Make sure to flinch -- The most common
tactical mistake that 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
- 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.
- 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.
You might not feel comfortable using these tactics
but, the experts say, they'll be used on you.
When you plan to buy something expensive, you
might want to consider practicing on salespeople beforehand. Simply
being alert as you go from car lot to car lot, or house to house,
can educate you in a hurry. In addition to brushing up on your skills,
you'll get a good idea of what's a fair price.
|What you'll need
to haggle successfully
"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," says American University management
professor Roger Volkema.
"In the real-estate
business," he says, "they say the three most important
elements of selling a house are location, location, location.
The key to negotiation is information, information, information."
The most important thing
you need to know is what constitutes a fair price for what
you want to buy. For things such as appliances and jewelry,
you can get a good idea by visiting several stores.
For houses, find out prices
paid recently for comparable houses in similar neighborhoods.
For automobiles, find how
much the dealer paid for the vehicle, then negotiate a price
that includes a fair profit.
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.
is another option for automobile
-- Updated: June 24, 2004