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5.0 EXAMPLE OF A NEGOTIATION; NEGOTIATING, BARGAINING AND HAGGLING
How
do you apply the techniques to buying a house to a small item? The principles are the
same. Here is an example:
Let's
say you find a two year old VCR in very good condition with a ton of bells and whistles at
a yard sale. The scribbled price tag says $125.
You
know that you can buy a brand new bare-bones VCR for $100 and that VCRs need repair after
a few years.
You
explain to the seller that you have seen new VCRs selling for less and you have seen used
VCRs selling for as low as $40. Notice you didn't say you are offering $40, it's just what
you have seen. You are also letting the seller know that you are somewhat
knowledgeable.
The
seller says that it has been cleaned and checked recently and that he only used it on
Sundays to watch a rental video. However, he will let you have it for $100 if you are
really interested.
You
ask if you can turn it on and put in a video. You push a few knobs and fiddle with the
remote. You put your finger on a scratch in the finish. After a while the seller says,
"Well, I guess I could sell it for $90."
You
then make your first offer. He has come down $35 so you come up $10. "I'll give you $50
for it because it seems to be in good condition." You have now justified why you are
willing to pay more than the $40 you originally mentioned.
The
seller looks stunned. He was quite sure that he could get $90-$100 for it if he asked $125,
but he is looking at a serious buyer who will take it off his hands. "$75 is the absolute
lowest I will go," says the seller.
You
take some more time. Try out all the various features. Ask to see the instruction manual.
The seller shifts from one foot to the other. "Well, it does have a lot of features. I
will give you $60," you say.
Now
the seller has a choice. The bid and asking price are so close, the two can probably split
the difference, or he can wait for another person to buy it, which might never happen.
Also, the seller has now invested some time in this sale and wants it to
succeed.
You
say,"Look our prices are so close why not split the difference. $67.50?" The seller does
not look happy. "Make it $70 and you've got a deal," he finally says. "Okay," you
say.
How
did the buyer get such a good deal? He knew and could justify the going price for used
VCRs so he started low to begin with. He gave a rational reason for every rise in his
offer. He let the seller drop his price twice as much as he raised his price. He agreed to
the sellers price at the very end, letting him save face.
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