Businesses can’t get through a day without having the need to negotiate. Yes, there is an argument for technology and the plethora of emails and text messages simplifying the process – but even now, when things head south, the power of effective negotiation remains unsubdued.
While I experienced hundreds of meaningful negotiations firsthand, my biggest negotiating lesson came from an unlikely source – my realtor. In hindsight, it was obvious that somebody that negotiates for a living has to be extremely good at it.
What My Realtor Taught Me About Negotiation?
Five years ago, my wife and I were on the lookout for a small townhouse in the heated real-estate market of Oakland.
Weeks of site trips and dozens of houses later, we finally found one house that we could actually see ourselves living in. But there was one problem – the house was listed at a price that exceeded my budget.
The owner, a stern man in his late 50’s, didn’t come across as somebody who would budge. Additionally, the area was highly sought after so it was obvious he had different offers. I sulked on the thought of losing such a wonderful house.
But we ended up buying the very same townhouse. How? By having a realtor who understood the power dynamics of negotiation.
The trick is the law of unequal value. In essence, two parties often value different things – differently. What you consider important will not hold the same importance for the opposing negotiator.
In my case, my realtor was sharp enough to notice that the owner valued upfront payment more than a
While I was on the verge of hastily walking away from the deal, my realtor leveraged what was important for the owner against what was important for us – and I bought the house $25,000 cheaper than the next offer.
Later on, I applied the same trick across my professional course to leverage negotiations for my benefit. By focusing on collaboration and shared goals rather than toying with hardball tactics, the odds of progressing with a negotiation are increased multifold.
How To Create A Win-Win Situation In A Negotiation
Perhaps the first thing to keep in mind about negotiations is the fact that both parties share a common objective, despite valuing different components, the objective remains the same.
The owner valued upfront payment more whereas my value was based on how quickly I could move into the house. The fact that he wanted to sell and I wanted to buy – a common objective – allowed my realtor to shine.
Reminding yourself of a shared common objective can swiftly eliminate any major blocks facing a negotiation and make room for a win-win situation.
Here are some tips on how to leverage confronting interests and create a win-win situation in a negotiation.
Conventional wisdom leads us to keep our cards close to our chests, approaching negotiations by being very guarded. While not disclosing information which might put you at a disadvantage is certainly a wise approach, it may have a negative impact on your negotiation outcomes.
Information leads to trust, and people tend to reciprocate mutually beneficial acts and respond in kind as we treat them. Studies reveal that revealing some information can increase the chances of a positive outcome in a negotiation.
Again, had we not shared information with the owner – we might have never had the chance to salvage ourselves that home.
There Is More To Negotiation Than Money
Several studies portray that people’s preferences are no longer headed by money. The rise in awareness has led people to choose things that align with their core values, personality, and a host of different factors.
A person that places greater value on working from home will not subdue their flexibility for higher pay. When entering into negotiations with such different individuals, their values should be paid adequate importance.
In real estate, some realtors value swiftly closing on a deal more than closing on a lucrative deal after chasing it for months. Their negotiation tactics will need to be adjusted accordingly with what is of greater value for them.
Ascertain Your Boundaries
While you’re going into a negotiation fairly convinced that the common objective will lead to a successful deal – and it does, most of the times – there will be certain negotiations where it will be hard to decide whether going with it is the right idea.
To avoid indecisiveness, which in turn can hamper your prospect, it is important to ascertain what we call your ‘negotiation boundaries.’
The boundaries are defined by the ‘target objective,’ and the ‘walkaway point’. The objective is the point you’re hoping to close the deal at, and signifies the greatest rational benefit to you.
The walkaway point, on the other hand, signifies the point at which you realize the negotiation will fail to meet a common objective due to whatever reason.
Heading into a negotiation without knowing your boundaries puts you at a huge disadvantage. Without proper research backing up your claims, there is a chance you might throw something crazy out there. When your decisions are based on firm data, it lends confidence and power to what you say.
In a bilateral negotiation process, a win-win situation doesn’t translate to both parties benefitting tremendously from the deal, but rather a conclusion which leaves the involved parties content with how the process was carried.
Additionally, adhering to the law of unequal value can lead negotiators to address points that the parties hold dear and place value on.
If the opposing party values a component you figure may be conceded for the sake of the negotiation, your chances of obtaining something you value from the deal rises automatically – it’s a give and take process.