Negotiating When You Hold Little Power

One of our teammates is in the market to buy a condominium. It wasn’t that long ago that it was darn near impossible to even give away a piece of real estate. On the street where I live, there’s a house that’s in foreclosure that has been on the market for close to three years. But, in some sections of the real estate market, like condominiums, the market has done a 180 and sellers are now receiving multiple offers at prices significantly higher than their asking price.

Let’s switch examples. You’re applying for an internal promotion in your company. The job has been posted both externally and internally in the company. Someone in HR has let you know they have received over 200 resumes and two other internal candidates besides yourself have applied for the job.

In both of these examples, the odds looked stacked against you. Let’s take a look at the options that may help bring you closer to a win-win outcome, or at least not leave you as the loser in a lose-win outcome.

Gain inside information: In the promotion example, if you really want the job, then you need to set a meeting up with the person who’s actually hiring for the position. Tell the manager that you aren’t even sure if the job is a fit but if he/she could meet with you for a brief 15 minutes, you could both decide if you should put in an application. In the real estate example, if the home is tenant occupied, you could stop by the house the evening before making an offer and ask if you could take a 5 minute tour to confirm that you want to move forward. Real estate agents hate this recommendation but, after buying multiple homes in my life, I’ve always been successful when I’ve been able to figure out the owner’s needs first-hand. Many times, the information the seller has shared with me has been the exact opposite of what my own agent had shared. While you think that your needs are identical with your agent, unless you have a long-term relationship with your agent, this may not be the case.

Determine your counterpart’s true implicit needs: Although we tend to look at most negotiations as being focused on price and money, there are many other types of needs that may be driving the behaviors of your counterpart. Is the buyer qualified to buy this home at the price they’re proposing? Is the buyer’s qualification verified? How quickly can the sale be completed? Will the new buyer make a good neighbor to the seller’s friends? Does the seller have the need to close the deal and then rent the home back until he can find another place to live? In a short sale or a deal where there is little equity, at what point will the seller have to add cash into the deal to make it work? If they want out of the home bad enough, how much are they willing to drop the price? In the employer example, does the boss already have someone in mind they want to offer the job to? Do they feel a need to hire someone from inside the company or are they committed to finding the best qualified candidate?

Do your own research: For whatever reason, people who feel they lack power and clout tend to do less research to validate what’s known and what’s shared by their counterparts. In the promotion example, talk to others in the department to find out what type of boss you’ll be working for. You can also talk directly to the boss to find out what type of work will be done and what the expectations are for the job. In the real estate example, besides generating comps to support the price you are thinking about offering, talk to owners and renters in the complex or people living in the neighborhood. Knock on a few doors and you may even find an owner willing to sell their unit without a real estate agent and split the savings with you.

Walk away: In the above real estate example, one thing that we learned in the last real estate bubble is the people who bought last in the cycle, and participated in a multiple offer/bidding situation, had the most to lose when the market turned. Although the same may not be as applicable today because we’re at the beginning of a new real estate cycle, you don’t want to be negotiating against yourself. That’s exactly what will happen if you agree when your agent tells you that the seller has multiple offers and that you better increase your offer significantly if you want the house. Only when you are willing to walk away do you regain or maintain your power. Why is walking away in your best interests? Because there’s a good chance you’ll find another house to purchase, most likely, without multiple bids. In the world of negotiation, some of your very best deals in life will be the ones you decided to pass on.

When you’re in the middle of a negotiation in which you hold little clout or power, you tend to give up deal points you wouldn’t normally in an effort to make the deal work. When the counterpart senses that you lack power, the natural tendency is for the counterpart to raise their goals and ask for more. They know that if you really want the prize, you’ll be willing to cave in and give them what they’re asking for.

So what do you do? You accomplish your goals. If your need to gain something is strong enough, and you’re willing to do whatever it takes to accomplish your goal, you will be successful. Don’t sweat the small stuff in small negotiations. When the size of the negotiation could have a significant impact on your financial well-being in the future, I recommend following the above four points. I believe that patience, most often, will help you to drive a better win-win negotiation. A great line to remember is, “I want this, but under these conditions or terms, I don’t want it that much.” And, after you’ve applied the recommendations of gaining inside information, determining your counterpart’s implicit needs, validating the facts and determining your willingness to walk away… if the deal is still so good you have to have it… GO FOR IT!