By Bill Fishburne –
Have you ever walked up to the counter at a fast food place and tried to negotiate the price of your hamburger? Have you tried negotiating the price of your fishing license because you never catch anything anyhow?
Have you ever been in an area of the world where haggling over price was half the fun of making a deal? Have you stood on a street or in a small shop haggling (love that word) with someone over the price of bananas and cantaloupes, or fake Calvin Klein jeans?
Well, with a lesser amount of arm waving and fake hurt feelings, we basically do the same thing when we buy a new car or make an offer on real estate. The differences between our refined and formal process and the seemingly raw emotions on display in haggling is determined by culture and the values differing societies take on the process itself.
When you go into a new car showroom, sooner or later a sales representative will come around and very politely begin interacting with you. He’ll greet you, shake your hand, introduce himself and offer to be of service. He’ll talk about football, the weather, your job or your dogs. If things go well during this informal get-acquainted period, you’ll start discussing cars. If he’s well-trained he’ll begin to assess your personality type while you talk. He’ll avoid saying “I” and will get you to talk about yourself and your ideal car while he leads and controls the conversation.
After some time, if things go well, he’ll move you to one of the closing offices. At that point, everyone will know the game is on. He will use your personality type to help you decide this is the car you absolutely must have. You will be making the decisions, while the sales rep controls the process with just a few questions.
Colombo would be proud.
At some point you’ll name a price you might be willing to pay for the car. He’ll tell you how low that is and show you the value of all the options. At some point, he’ll say your offer is so low he’ll have to review it with the sales manager.
I don’t know what goes on in the sales manager’s office. Maybe the salesman prostrates himself on the floor and begs “the man” to give you the car. Maybe they have a cup of coffee. However it goes, you are not actually being represented in the discussion.
The sales representative’s role is that of an un-empowered agent of the seller. He works for the seller. He may be your friend and you might have him over for dinner, but he is paid by the dealership.
This is what makes many (or most) women fear or hate buying a new car. More than men, they are experts at seeing through flattery and insincere promises. Men have fed them that malarkey all their lives and they recognize it when they see it. (That’s one reason female salespeople do so well in the car business.)
Go back to the fellow waving his arms and pitching a fit on the street because you refused to pay his outrageous price for the fake Rolex. Unless a turnip truck has just brought you into the neighborhood, both of you know the watch is a fake. The issue, therefore, is the deal. In some cultures that can only be determined through intensive negotiation, raised voices, arm waving and the gnashing of teeth.
As an aside, I participated in such a negotiation in Mexico City many years ago. I was buying a small bust of an Aztec god made of carved and polished Obsidian. The vendor wanted $90. I had been at this little arts market before, and I knew that $90 was off the charts too high. I offered $30. He screamed and shouted. I started to walk away. He looked like he was going to cry and showed me pictures of his starving children. I looked at the photo and pointed out it had been clipped from Time magazine, page 103, and it said so right in the corner. He stopped the histrionics, laughed, and we quickly agreed on $45. He probably “won” the negotiation, but it was an enormous amount of fun and we still have Tio Feo.
The important thing to learn from this is that he who controls the process generally controls the outcome. The sculpture vendor lost control of the process. Auto dealerships are much more sophisticated, and they have the mysterious sales manager in the back office. They are not going to lose control.
In real estate, what is the process? What type of negotiation are you in? Is it an old-fashioned American Win/Win situation or are you in a Win/Lose contest? You’re very likely to be in the latter if you allow it to become confrontational. Your real estate agents (Realtors™ if they belong to the National Association of Realtors) will work hard to get you into the house or help you sell the house under the most favorable terms possible. It’s not in anyone’s best interest to have the parties square off in a macho shouting match that will almost inevitably result in two angry clients with no deal.
A few weeks ago I attended a class taught by Larry Kendall, President and CEO of The Group, Inc., of Ft. Collins, Colorado. Working with his agents, Kendall has developed what many consider to be the nation’s best sales training program. In one part of it, Kendall reviews the various strategies and then overlays the style of negotiation on the culture of the negotiators. Win/Win strategies are nearly uniquely American, Kendall says. In in most of the rest of the world the belief is that the other guy will win, and you, therefore, must lose.
Avoid losing. Talk with your agent about the other side’s needs. Recognize the players in the negotiation and their style. Then apply the tools you need to gain control. When all is said and done, remember it’s not personal. Your objective is to buy or sell the house.
Negotiation doesn’t always work
Have you ever walked up to the counter at a fastfood place and tried to negotiate the price of your hamburger? Have you tried negotiating the price of your fishing license because you never catch anything anyhow? Those negotiations won’t work. They won’t work in the upcoming housing crunch market, either. Whenever someone has complete control over the supply (burgers in a bun or trout in a stream) there will be no negotiation until supply and demand are in balance. The real estate seller may have the house you want, but there still are lots of houses.
Finally, remember that negotiators generally have limited or no authority. The real estate agent can’t initiate or accept a price proposal. The negotiator’s value lies in providing valuable information about the property and helping his or her client determine the next step in the negotiation process that will ultimately enable them to buy or sell a house.
Put a “W” on the board. In fact, put up two of them.
For more information on buying or selling real estate, contact your local Realtor or send me a note at email@example.com
Written by Bill Fishburne, the President of the Henderson County Board of Realtors.