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September 19, 2006
Hone Your Negotiation Skills for Budget Savings
How to Negotiate
Good negotiating skills can save you thousands of dollars over the years. Many of the biggest expenses in your budget are negotiable—your car, your furniture, and your house are all examples. But you must understand how to go about it. Here are some tips.
1. Do your homework. You'll get your best results if you arm yourself with information. Magazines like Consumer Reports and similar publications are very useful. There are also books devoted to specific products, such as the Lemon-Aid Guides for cars. Visit sites such as ConsumerReports.org.
2. Research the seller's profit range for the product or service you're negotiating for. This will give you an idea of a reasonable discount to shoot for. The dealer's cost price of a new car can be found online at www.carcostcanada. corn, but be prepared to pay a small fee for this information. If you're buying a house, have your agent find out the original purchase price and any previous offers made. Most big-ticket items carry a negotiating range of 8 to 15 percent but regular retail items have a much lower range, around 3 to 5 percent. And always find out what price the competitor is willing to sell for.
3. Be realistic. A negotiation is not an argument. Nothing gets a seller's back up more than a buyer who becomes overly aggressive. To keep yourself calm and the pressure under control, make your offer high enough to be taken seriously but low enough so there's room to move. A good rule of thumb is for your first offer to be about 10 percent less than the price you're aiming for.
4. Build a relationship. Most of a negotiation's success is dependent on the relationship between the negotiators. Salespeople understand this, and the tactic works just as well for buyers. This approach works best with people you see regularly, such as your personal banker or your mechanic. Ask about their families, their hobbies, or their vacation plans. And remember the answers for the next visit.
5. Just say no. In every circumstance, the seller needs your money. Without you, there's no deal. This is the ultimate power in negotiating. If you find that you've lost control or gotten in over your head, use your feet to just walk away.
6. Practice makes perfect. The best way to be a good negotiator is to use the skills whenever you buy something, as long as the situation is appropriate. After a while, it becomes second nature.
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