Most of us are often involved in selling or buying something. Whether it’s a car, a house, a service, a piece of furniture, or something smaller that we are buying or selling we often wonder how hard we should negotiate in order to improve our outcomes.
Sometimes being a “hard” negotiator works to our benefit and sometimes to our detriment. You have to know when to hold them, and know when to fold them. If you are a seller taking a hard line to support your value, you may be disappointed if the buyer’s desire for whatever it is you are selling is less than you imagined. If, on the other hand, his need or desire is as great or greater than you imagined it to be, then you will be pleased with your result. If you’re a buyer, you need to understand how strong your seller’s motivation to sell really is.
Of course, many other factors can come into play such as whether there is competing demand. If a seller has many buyers competing for his item then he can take a tougher stance. If a buyer has many sellers offering him a similar item then he can take a tougher stance.
Recently I needed a “backflow device” replaced in my front yard. Several plumbing companies offered to replace it for over $1,000.00. I told each of them no, and tried to negotiate with them with no success. Finally, I said no to the $1,020 price with another company who then proceeded to negotiate with me. Their need was great enough that I was able to take them down to a $535 price. I don’t know why they were willing to do this, but my perseverance in taking a hard stance was finally rewarded.
Meanwhile, my wife and I were also involved in selling our old home as we had moved to a different one. We had a near full price offer from a couple that was anxious to buy a home. I actually met them and found them to be very interested in the home. I became overconfident. I was also convinced that my offering price was well below market. Soon thereafter they completed their inspection and asked for a small discount for the few things that the inspector had discovered that needed to be repaired. I basically refused their requested discount. To my surprise, that was enough to end the deal. It was at that point that the buyer revealed that they felt there were many other choices they could evaluate and that they intended to look at some additional choices. Their love affair with my home seemed to end abruptly.
Looking back on that negotiation, I realized that the benefit to be derived in negotiating on such a small additional discount was much less than the benefit that might have been derived had I sold the house. To negotiate or not to negotiate… that had been the question. I should have taken a few more minutes to determine whether the potential benefit to be derived from the negotiation was worth the risk to the bigger benefit to be derived from a completed sale. Sometimes further negotiation is not worth the risk. Sometimes, even if you leave a few pennies on the table, it’s smart to just take the deal.
Although I believe, as a general rule, in negotiating, this experience has taught me that there are definitely times when it is smarter to accept the deal than to risk losing the deal by trying to negotiate for just a little more. It also taught me to take my time in negotiating. By making a split second decision before getting my realtor’s opinion or my wife’s opinion or before taking time for greater analysis of the risk versus the benefit, I made a bad decision. As my brother often says, “Better a little caution than a great regret.” I should have taken a little more time to discuss and deliberate when so much was at stake. We might have decided to let them have a small win so that we could have a big sale. Instead, I made a snap decision that seemed to cost me the sale.
A day passed. During that time I contacted my realtor and asked him to convey to the buyer’s realtor that we would be willing to pay the extra costs they wanted us to absorb. To our delight, the deal was immediately alive again. The house is now as good as sold. Once we got focused on the big picture we were able to make the additional sacrifice required to make things happen. The benefit we will receive far out weighs the small loss we’ll take now. We are now scrambling to get moved in time. The sale will close next week.
Sometimes in negotiation it is to your benefit to give a little. There is a time to stop negotiating and accept the deal if it serves your basic purpose.