Improve Your Negotiations With The 5 Golden Rules.   LEARN THEM

I listed my house in 2003 at an aggressive price. I had been tracking the sales of comparable homes for eight years and had a good idea of what I could get.

But you never know. So in setting my goal and determining my list price, I also asked two experts for advice: my neighbor, a retired commercial appraiser who had been living there for more than 30 years, and my real estate agent, who knew the market intimately.

A month or so later, after getting several offers and going back and forth with some possible buyers, I sold my house.

This offer-concession stage — in real estate and other negotiations — presents challenges even to expert negotiators. And even within this stage, the issue of when and how far to move each time often is critical.

So how should you make these highly tactical decisions?

1. Set an aggressive and specific overall goal. Your touchstone should be the goal you set at the beginning of the negotiation. What does success look like to you at the end of the negotiation?

In short, your end goal should drive your strategic behavior in determining when and how much to move.

2. Research the industry timing and size patterns. Find out the offer-concession patterns and expectations that exist in similar situations.

The more specific the context in which the pattern appears, the more it will help you determine what to expect and how to act and react.

You can then determine what offers to make, when to make them, how much to concede, if at all, and whether and how much of a response to expect.

For example, certain patterns in residential real estate negotiations drive most parties’ offer-concession expectations: Sellers traditionally start by making the first offer and listing the house; potential purchasers make the next move; sellers usually counter (assuming there aren’t competing bids); and this may go back and forth one or two more times.

Other patterns and expectations exist in other negotiation contexts. In U.S. retail sales, we expect the list price to be the store’s first and last offer, but in an open air market in Mexico, we expect the seller has built room to move into the “list price.”

Also take into account the following general offer-concession patterns in American culture:

• The timing pattern: The longer you wait, the less eager you appear, and vice versa. You generally don’t want to make your first counter too quickly, because immediately responding to an initial offer likely will be perceived as expressing too much interest. On the other hand, you don’t want to wait too long. This would send the “I don’t care enough” signal.

The time that lapses between offers and concessions also often tends to get smaller and smaller as negotiations proceed. Near the end the time between offers and concessions may be just seconds, as they come fast and furious.

So you should manage the time between your moves to send the appropriate signals. And analyze the time between your counterparts’ moves so you correctly interpret their signals.

• The size pattern: Early concessions include relatively larger moves. The size of concessions also tends to be larger near the start of negotiations than near the end. Thus, concessions tend to get smaller as the difference between the parties narrows. Factor this tapering element into your decision of how far to move each time.

And, of course, pay attention to your counterparts’ moves and the extent that they fall into these patterns, too.

One final comment on these patterns: Beware of going significantly against the patterns with your moves. It can be done, but it can be exceedingly difficult to undermine parties’ long-held expectations.

After all, when was the last time your grocery store discounted an item’s price just because you asked?

3. Game plan your moves in advance. Sit down with a colleague or an expert in that negotiation context and game plan your moves in advance, taking into consideration your goal and the timing and size patterns.

Decide when you want to make your moves, how far you anticipate moving each time, and where you want to end up. Of course, be flexible when you actually make your moves.

Published January 13, 2006 The Business Journal

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