There are 5 stages to negotiating
1.Investigation
Before you even start you should already have the following answers ready and also remove any emotion to them and be honest with yourself or be it your client.
- What are your goals for the negotiation
- What do you want to achieve
- What would you concede
- What will you absolutely not concede too
2. Determine your BATNA* (Best Alternative to a negotiated agreement)
You should also have the answer for your BATNA ready before you enter negotiations as this will help you decide what else you can put on the table if the opposition put down a non favorable deal. Its more a backup to a plan when things look like their going south or in the bin/pan. You should study what the position BATNA is as this can tell you if you may need to conceded or if the position have a poor BATNA (Desperate for a deal) ask for more money if you are a seller or negotiate a lower price if you are with a buyer.
3. Presentation
During this stage you present your case to be in favor of your deal. Leading with facts with the information you gathered before.
4. Bargaining
This is the stage where each party lay out what they want and what they may or may not concede too. Giving up one thing to gain another is considered being cooperative. During your planning you should have had a list to decide what you can and cannot concede to. Don’t give away all you want to conceded and try and keep as much as you can. Making concessions is moving the negotiations forward.
Concessions are normally made up of (What you willing to give away or take from a deal)
- Money
- Time
- Responsibility
- Resources
- Autonomy
If for some reason the opposition says no, ask questions as to why they said no and don’t just leave the answer closed. Asking questions can lead to finding other options around the objection and lead to a win.
5. Closure
Closure means either the deal has gone through or both parties walked away with no deal on the table. In either case, you should review your strategy and learn from the experience so the next time you enter the negotiation you will know what to expect and how to re negotiate .
Most times it’s clear why a deal could not be negotiated at the table, but if you are confused why the client or opposition walked away from the deal you thought was reasonable, it is a good idea to do a follow up call. Sometimes a small trivial thing can be overlooked or conceded and a new deal can be brokered. Sometimes a follow up call can see the other party more willing to part with information as they will be thinking you are not in selling mode.
Negotiating Approach and Mistakes
Distributive approach
This is seen as a pie approach where each party tries to get as many slices of the pie. It’s not always a good way to approach negotiations as when each member takes a slice, it means the other party gets less pie.
Integrative Approach
This is similar to the pie approach but instead of having just a standard pie, you normally try and inflate the pie, that means each member gets more pie than they expected. Commonly referred to as the Win Win approach. In this method you enter negotiations in corporation mode, you listen to what the other party wants and develop trust and come to a mutual understanding, both parties then try and find paths to achieve their goals. Statistically, only 20% in negotiations come to a mutual close as one still concedes.
Think in terms of 2 kids fighting for an orange, one wants the orange for making juice the other wants it for the peal. Instead of giving them one each you reach a agreement .
Research shows many people view negotiations as conflict and try to avoid it or in most cases just concede. Research also shows women are more prone to negotiation avoidance than men, but if trained well can negotiate and increase their revenue. Statically 7% of women negotiated their salaries after getting their first job opposed to 56% of men. Hence women generally are on lower salaries, but have higher numbers in employment for obvious reasons. For this reason it’s not always in your best interest to take the first deal thrown at you.
When negotiating don’t let your own agenda and ego get in the way. Think more in lines as to what the other party wants you to agree too. This will give you a better position to negotiate things you may not want. A good deal is only good and fair when both parties feel they walked away with a win.
Setting unrealistic expectations will see a deal fail, finding the middle ground and been realistic of your goals and what you aim to achieve will get you a win.
Showing emotions like anger, hate , disgusted, furious, despise will see you walk away with a poor deal, but that said people with POWER may use this to press their weaker opponents to concede. In general its best to avoid placing emotions in negotiations as it may lead to conflict. This includes body language and facial expressions. When your words and facial expressions don’t match, you are less likely to be trusted.
Past Experiences can also hamper a deal, if you failed before you need to overcome it else it will effect your next deal. You should focus on the learning curve and use it to empower yourself. Especially if your opponent is the someone who beat you before. Do not let the past repeat itself.
Using hard ball tactics may also not be in your best interest, meaning if you have the upper hand and you destroy your opposition, the chances are you may run into them again on another occasion where they have the upper hand and they will destroy you. Furthermore your reputation will suffer. This is the win win and if your opponent feels you are unfair, dishonest they may concede a lot less. Treat people the way they want to be treated so you can build trust, relationships and show your ethics in this manner.
Culture differences also comes with how people deal with conflict. Some have higher tolerance and some have lower. Americans and Germans have high tolerance to conflict and tend to start strait off with what’s on offer whereas in Japan they prefer to build trust and in China starting off with other topics is required to build friendliness.
Also in Japan offers made are more interpreted over time as trust whereas in America information is laid out to build trust. Western societies see negotiations as business where most other will want to see trust and relationships first.You also need to be careful of not putting people in a uncomfortable position to say no, in some cultures you need to word correctly to not show disrespect. Example instead of saying will you take this you should ask how he can take it in a question? You should get to know your buyer and seller if their from another country or culture so you can understand how to deal with them before you enter negotiations.
You should always understand every party has some negotiations leverage and your focus must be on this. People also tend to like and trust if you listen more to them, it also gives you the opportunity to negotiate.
In general the first person to concede is the looser in negotiations. If you want to avoid this move the topic and get them to make the first offer. If you reach an impasse (STOP) your best option is to agree to disagree and move on to the points you both agree on, that way everyone is in the agreement mode and then return to the disagreements so you may win more of them. Set the reality of the negotiations to your own reality and be patient. Setting a deadline can also win you more concessions.
Alternative dispute Resolution (ADR)
This is when negotiations come to a standstill and you require a third party neutral to the negotiations to come and medicate/arbitration the situation and resolve a conflict without escalating it further (Example tenants who won’t move out or pay).
Mediation means only for both parties to find a solution that cannot force anyone to do anything, it’s confidential and the mediator represents both sides and is needed when
- Both parties are unable to find solutions
- Personal differences are standing in the way
- Parties have stopped talking
- Finding a quick resolution is important
Arbitration means both parties submit their case to an independent neutral arbitrator and he makes a decision for both parties. The decision is final and binding and called an award both parties have to follow.
It’s also normal for some people to do both where they go to an Arbitrator and get a sealed envelope with the decision, followed by mediation. If the mediation fails, the envelope is opened and both parties have to follow the decision.
The Offer
Once you made an offer, wait and be silent so the other party can let it sink in and wait for their response. Smile, be content and let your body relax (make it appear it’s a good offer where everyone is going to be happy) is like poker but avoid a poker face as it will arise suspicious or a face what says your tying it on.
When someone uses tactics
You should always be on the look out for tactics been used in negotiations, not only do they stop the tracks of a win win negotiation they are considered rude and you should identify them and make the other party aware you know so they negotiations and continue. the main ones are
- Good cop / Bad cop
- The Nibble
- Bogey
https://www.linkedin.com/pulse/have-you-ever-fallen-victim-dirty-negotiation-tricks-simon-hazeldine
http://faculty.washington.edu/vandra/html/body_negdirty.html
http://www.randyhoexter.com/15-dirty-negotiation-tricks-and-how-to-avoid-them/
Swot Analysis
You can use this tool to discover how and where to identify your weaknesses and strengths. You can apply this also to a property your client is looking to buy and making a sale.
Courses
https://www.open2study.com/courses/negotiation-and-conflict-resolution
https://alison.com/courses/introduction-to-conflict-management-and-negotiation
UK Real Estate Agent Broker 