Negotiating with inside information
When it comes to negotiating you always have a choice to enter into it or walk away. The most important point to assess when considering a negotiation is who has the advantage when it comes to “power”. We need to assess power before we move forward and once we do we need to find out inside information that might help us in shifting that power to our side.
One of the best examples is going back to May of 1991 when we bought our house in Garland, Texas. Being an Orange personality style which makes buying and selling more of a competition I had to find out information that can help us leverage our position. The house was exactly what we were looking forward and in our favorite neighborhood. The house was listed at $219,900 which gave me the perfect opportunity to start the negotiation with the most elementary of tactics “the price is too high”. But before I can counter with a lower amount I needed to gain information to shift power to our side. The only way to shift power is to ask questions. The questions that will impact gaining inside information in a negotiation are around time, economic considerations and sense of urgency. Let’s take a look at these as it related to buying our house and the questions we asked.
We asked how long the house had been on the market and the response was nine months. Obviously the house was not moving at the going price. To further the questioning we asked what the original price was nine months earlier and to our surprise in was $259,900 a drop of $40,000 and the house was still sitting. The economy was in a recession at the time and there was more supply than demand. It was as we all know a “buyer’s market” which was a great position to be in. Based on this information the power was shifting to our side which would justify a lower bid. The icing on the cake was finding out the sense of urgency. We all know when mortgage rates drop or three people bid on a house there is an increase in the sense of urgency. When there is a shift to greater demand and lower supply the seller has the advantage.
Coming up with the right questions to uncover the sense of urgency requires a little thought to uncover information that can give you that final competitive edge to make you offer. We finally asked why the house was not occupied and there was no furniture. We found out that the owners were living in a townhouse in McKinney. If the house had been sitting for nine months you would think they would want to sell since they were living somewhere else. We also found out that they were retired and the final piece of information was that they owned the house outright. Knowing that they had equity tied up in a house that was in a down market for nine months we finally offered $180,000 and we were told we couldn’t go that low. We came to an agreement at $187,000 and the house was ours.
Gaining inside information is critical when shifting power to your side and if you can’t you need to re-think whether or not to enter the negotiation. Important considerations as we mentioned are timing, the economy and the sense of urgency. Every industry and business has other points to consider. The most important thing to do is your homework. The more information you have on the customer the more leverage you have. Taking into account personality styles can also impact the negotiation. Oranges will always negotiate since life is a game. Golds focus on going item for item and being left brained will have the financial details figured out. Greens will find out more information that most with their thirst for research and asking the tough questions. Blues will build a relationship that will be very convincing to move forward gaining a win-win.
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