The 16 Rules of Negotiation
Many of these rules have been taken from Neil Jenman’s The Real Estate Negotiation Course. Learnings from this course completely changed the way I negotiate.
Negotiation is used in everything we do….in business, with our staff, buying and selling property, with our children, family, and friends and so on.
So I thought it was important to give you the lessons on negotiation I have been taught over the years that you can employ in your business and everyday life. Here are the 16 rules I use in negotiating:
1. KNOWLEDGE IS TRULY POWER
This is the MOST IMPORTANT negotiation rule of them all.
Knowledge is power!! The person or group who has the most knowledge is the one who almost always (80%) gets the best deal. This jumps to about 99% when that knowledge is actually about the other. You cannot negotiate effectively with anyone if you don’t have all the facts or what is motivating the other party.
Don’t rush any offer until you understand the motivation and desired outcome of the other person. What other key information can you learn about them? Are there health issues? What are their goals? How are they affected by timing? GET THE FACTS and keep asking questions.
This rule alone has saved me hundreds of thousands of dollars.
Always anticipate what the other side will do. You need to treat it like a ‘choose your own adventure book’. If they take a certain path, any path, you can be ready to respond.
Just don’t EXPECT anything. And never, ever assume!! Great negotiators anticipate!!! They don’t expect things will go the way they want them to go.
3. ALWAYS REFUSE THE FIRST OFFER
No matter what you are negotiating on, always say no to the first offer. It is a very powerful word. When you do say no you can add the twitch, or the ‘Oh my God!’ to let the other side know they have to sharpen the pencil a lot. Give it a go!!
4. HAVE THE BEST ALTERNATIVE OUTCOME
You must have a backup plan. The one that is willing to walk away is the one with all the power in a negotiation. You don’t of course want to walk away from all deals but you need to have a best alternative to your desired outcome.
5. GO STRAIGHT TO THE DECISION MAKERS
Only negotiate with the decision makers. If you don’t have them in the room shut the negotiation down.
6. THIRD PARTY IT
When dealing with someone I know on a personal level I try to have someone do the negotiation for me. This allows for considered responses as someone else is in between. It also allows you to maintain the relationship with the other party. I have been on the receiving end of this one and it was a valuable lesson!! Won’t happen again!!!
7. NEVER SAY NEVER
Be careful letting the word NEVER enter a negotiation. You lose power instantly if you don’t actually follow through with walking away. 95% of the time ultimatums don’t work. Personally, if someone gives me an ultimatum, I walk the opposite direction and tell them politely to $%@*@%!!!!
You also show how inexperienced you are as a negotiator when you say NEVER!!
8. GET OTHERS TO COMMIT FIRST
It’s one of the most commonly known and one of the most important rules in negotiation…get the other side to make the first move. So important is this rule there is a book on negotiation called Never Make the First Offer – Donald Dell.
9. LESS IS MORE
The less you talk in a negotiation the less they find out what your motivation is and what the outcome is you are after. Ask questions, questions, questions. The one that asks more questions and chats less in a negotiation controls the negotiation.
10. TAKE IT AWAY
If the negotiation is dragging along, it could be that they really want it and are actually not too bad at negotiating. Well, you are better. Take the power away from them. Give them a throw away line, wording it as if they are about to lose the deal or negotiation if they don’t step up. I have used this one often and 9/10 times it has worked!!
11. ASK FOR MORE THAN YOU EXPECT
If your negotiating on a property you own for example, always ask for more then you expect. Start high. It will manage the expectations and make them have to work backwards from that amount. They can say no and if they are a true buyer they will come back. If not they were never really in the game!
12. NEVER GIVE A CONCESSION WITHOUT A RETURN
If you have to give something away don’t do it without getting something in return. So simple but effective.
13. PUT IT IN WRITING
The written word has far more credibility than the spoken word therefore, as much as possible, make offers in writing. The written word carries real power in negotiations.
14. NEVER SPLIT THE FIRST DIFFERENCE
So a buyer has asked you to split the difference. You are $30k apart from each other and they are willing to go up 15k and want you to reduce your price by 15k. Say no to split the first difference and go for the second difference.
15. THE HELP OFFER
Everyone responds positively to kindness. If someone treats us in a considerate manner it makes us want to please them in return. So if you can find a way to show kindness, your negotiation will almost certainly go well.
16. THE COLOMBO FACTOR
This is a favourite of some of the very best negotiators. It is based on the 1970’s television series Colombo, about a scruffy detective who masks his intelligence with a bumbling style.
There are two key points here:
Colombo did not act intelligent, but was!! Don’t show the other party how smart you are or how good you are at negotiating. It will make them step up. It is just like practicing tennis with Rafael Nadal, from the experience you will become a better tennis player, not Nadal.
One of Colombo’s most famous lines which he often uses after questioning a suspect is “Oh, just one more thing.” This is exactly what you do in your negotiation. When everything is just about to be wrapped up and done, when everyone is on the verge of agreement, you come out with your “just one more thing request.” You are there to get what you want.
Follow these negotiation rules and you will be surprised at the results.
If you don’t have a third party negotiator, then call me as I do this for many clients now!!