Negotiation in One Lesson

For me, studying negotiation is like peeling an onion. You work and work at it, and you end up thinking, “Is that all there is?”

Why negotiation is mostly art

Much of the “teaching” of negotiation is psychobabble and hyperbole. That’s no accident. In my opinion, negotiation is about 75% art and only 25% skill. You can’t learn it the way you learn to discount a note. There’s no HP-12C to tell you how to talk to a note seller.

The techniques that have been worked out are useful if you already have the ability to make people like and trust you. Seminars and books won’t help if you don’t have the raw talent. That’s like giving you a few art lessons, a brush and a palette and expecting a lifelike portrait. The more talent you have, the better you’ll do.

The heart of negotiation

The heart of negotiation has nothing to do with techniques. It’s being sensitive to other people’s needs, and making others feel at ease with you, like you, trust you and even want to help you.

I’m not telling you to be insincere. Just the opposite: people who fake it are so obviously insincere that they drive people away. Successful negotiators are genuine, naturally open people. They’re aware, even vulnerable. They truly listen and establish common ground, a mutual bond, early in the conversation.

Here are some very valuable tools. How to use them, nobody can teach you. But commit them to memory, and if you have what it takes, you’ll find this short lesson one of the most important you’ve read.

A three-note deal done right

A reader, Dale Ketcham, sent what may be the best brief seminar on negotiation ever written:

“I had a lady come in with all the information I requested on three small notes she had for sale. I looked them over and asked what she had in mind, and she said she thought she should have 50%. I told her I thought it could be arranged. So we went right then to the lawyer and completed the deal. One yield was 65%, one 36%, one 58%. I like weeks like this.”

The keys hidden in that deal

That’s it. There are at least eight keys to successful negotiation in that story:

1. He didn’t quote a price over the phone. Why let yourself be shopped? You’re not a bidder at an auction.
2. He told her exactly which documents he needed and made sure she had them before going further.
3. He had her come to him. A motivated seller will, and face-to-face negotiation is far better.
4. He followed the negotiating axiom “the first one to mention a number loses.” He didn’t make an offer; he asked what she had in mind. She had a 50% discount in mind. If you had spoken first, do you think you would have said 50%?
5. He “thought it could be arranged.” He didn’t show emotion (although I’m sure he wasn’t too sad!).
6. He used a professional to protect himself and make sure everything was legal. It’s cheap insurance.
7. He closed the deal immediately. If you have a hot deal, wrap it up then and there. As Jack Miller says, “Never steal in slow motion!”

Most negotiation has nothing to do with price

There’s one more crucial item. Did you catch it? There was no discussion of price. Dale accepted her first offer. We so often think of negotiation only in terms of price, but that’s an amateur’s idea of negotiation. Ninety percent of negotiation has nothing to do with numbers.

So why didn’t Dale push for an even bigger discount? That’s the final rule of negotiation: bulls make money, bears make money, and hogs get slaughtered.