How to Get Better at Negotiating

When times are tough there is one skill that can help keep more money in your pocket – negotiating.  Right now it is important for everyone to take a look at all of their bills and try to find places where they can save.  Often, this will require picking up the phone and talking to someone about money.  If it is the first time you’ve had to do this and you feel embarrassed know you aren’t alone.  Try to think about awkward conversations as having a monetary value.  When I took a new job in January part of me wanted to accept the offer right away and move on.  However, I knew that one awkward conversation could be worth thousands of dollars so I negotiated.

When I was a kid I learned how to negotiate by buying used cars with my father.  We would show up with cash and often would walk away with a car for far less than the seller wanted.  No matter how well or horribly the negotiations were going at some point it was my job to look unimpressed and say I wanted leave.  The role came naturally to me as a tween.  He was a pro at getting a great deal where everyone walked away happy.  There were several valuable lessons I learned during these trips that can help everyone get better at negotiating.  Here are a few tips to make negotiating easier to help save or make you money.

No Such Thing as TMI

When you are negotiating there is no such thing as too much information.  The better informed you are about the situation the more comfortable it will be for you to negotiate.  Information will help keep the feelings of anxiety, shame and even pity at bay.  It is natural to feel awkward when you are negotiating.  However, if you know what a fair price is it will be harder for you to accept a bad offer or walk away if you know your offer is competitive.  When it comes to salaries be sure to check out sites like Payscale, Salary, or Fairy God Boss to see what other people are making in similar roles.  There is no excuse to skip this step since all of your research can be done at the comfort of your own laptop.

With cars we always knew the Kelly Blue Book value before we left the house.  When I bought my home there were several things we did beyond looking at comps for recent sales in the area.  We drove by the home at night and other busy times to get a different perspective than a Sunday afternoon showing.  Social media is overflowing with local groups where you can find out everything about the town, schools, and community in the area.  We even tried the local pizza on a few occasions.  When you have good information you make better decisions.  This goes for negotiating salaries, home buying and just about everything else.

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Cash is King

Parting with cash is difficult.  Unlike the dopamine rush we get from swiping a credit card or 1-click purchases – handing over our money feels painful.  People spend less money and more time assessing the value of something when they need to use cash.  When we would negotiate used cars we typically had as much cash as we could possibly part with on hand.  The goal was not to part with all of it.  Certain purchases, like a home are nearly impossible to do on an all-cash basis.  However, the more cash you have to put up the stronger your offer will be.  The need for financing creates obstacles between the buyer and seller.  Even though the seller gets the same amount in the end the person who comes with the most cash will usually get the deal.

On the flip side, if you need to finance a purchase think about it as if it were cash leaving your pocket.  When I was preapproved for a mortgage I saw an amount that was higher than my initial budget.  While I could have expanded my search to bigger houses and locations I kept my search limited to what was affordable for me.  Emotions can override logic when it comes to money – especially when we use credit or someone else’s money.  Don’t believe me?  Watch any episode of Say Yes to the Dress to see women fall “in love” with a dress above their price range that they never should have seen in the first place.

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Teamwork Makes the Dreamwork

Money is an uncomfortable subject for everyone.  People who have money feel bad about it and people who don’t feel bad too.  When you have someone else to help drown out the voices in your head it can help you negotiate better.  Pick the right partners when you are doing business.  The real estate agent we worked with showed us plenty of houses and steered us away from some places we thought were perfect but he knew were not.  Our mortgage broker replied to our texts within minutes and provided everything we needed to feel comfortable in a stressful situation.

As a Certified Financial Planner, I spend my days looking after people’s money and help them make expensive decisions about their home, job, family and lifestyle.  Choose your team wisely.  If you feel pressure or feel awkward talking to your person there are plenty of others out there waiting to treat you better.  A partner, coworker, friend or even a bored teenager can help you work through some of the emotions that lead people into bad deals.

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Prepare Yourself (for Yourself)

Most people are harder on themselves than anyone else would be.  If you hate negotiating try to write down some of your thoughts beforehand on paper.  You can’t control what someone else does but you have complete control over how you think and feel.  Plan for what you will do if you feel your voice get shaky or if you have second thoughts before you sign.

Know ahead of time what would be the best case scenario, what would be a decent offer and what would make you walk away.  Write these numbers down on paper ahead of time.  That way when you get to the table you will know how you really feel about the situation because you went through it with a clear mind and no pressure in advance.  The more prepared you are for the feelings of fear, self doubt, embarrassment and shame the better you will do in any negotiation.

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Everyone Can Win

The most important thing I learned when I was young about negotiating was that no one likes to be bullied.  When we were buying cars and the person was a jerk we left pretty quickly.  The thought of someone we don’t like getting what they want is unappealing – even if it means we would get what we want too.  You can be nice and even have a sense of humor and still get what you want in a negotiation.  My dad was always really friendly when doing business with people.  Negotiating is easier when everyone is nice and drops their egos.

Negotiating isn’t arm wrestling – there can be multiple winners.  When you look at the big picture in any negotiation each person wants something the other person can provide.  Instead of being two sides of the same coin try to be a team!  If you think about how “we” can make a deal happen you will be surprised at how much more comfortable it can be.  Also, remember that everything is negotiable so if you don’t get exactly what you want think of other things that would help get you to a yes decision.  Things like timing, closing costs, appliances or for job seekers benefits, vacation time and start dates all have value.  The more willing you are to think of ways to make it work the easier the process will be for everyone!

Do you have any negotiating tips that have helped you make or save more money? Please share them in the comments!

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