The art of negotiation is a skill that can be used every day throughout life. Everything that involves other people requires give-and-take. Negotiations take place with contemporaries at work, with friends over social events, with children, with parents and in every aspect of life that requires a decision.
Negotiation is reaching an agreement by conferring and discussing. Good negotiation takes a positive attitude and a little bit of acting. Good negotiators make novice negotiators uncomfortable -- sometimes deliberately -- hoping to intimidate and bend their will or cause them to bail out before reaching their goal. When negotiating, we become more determined to get the most important items and give up those that are not critical in compromise. Conflict is not the root of negotiation, decision-making is. But it does require coming to terms with another person's needs or limitations and a whole host of other variables. For example, you want to go to dinner with a friend, but she is reluctant. She says,"You always want Italian food and I'm sick of it. I'd rather eat at home." Upon hearing this, it is apparent that the problem is not going out for dinner, but the type of food to choose. Thus, you have identified what is critical and what is not -- dinner is critical, Italian is not. She chooses her preferred cuisine and you go to dinner. Both of you win.
Being a good negotiator can save hundreds and even thousands of dollars on a used-car purchase. Hear what the seller's limitations are such as her lowest price, willingness or unwillingness to do repairs, desire to sell immediately, or need for cash. This provides an idea of where there is room for compromise.
Following are the steps to good negotiation.
Research the cars you are interested in.
Decide it is time to buy.
Shop for cars.
Take serious contenders to a mechanic for inspection and estimation of repairs.
Negotiate a price.
Close the deal with paperwork and signatures.
Make payment and take possession.
Research
The most important negotiation tool is information. The more you know about the type of car or specific model, the more comfortable the discussions. It will be obvious when you've found a good deal. It will also be possible to identify inaccuracies in the seller's commentary and logically argue the value of the specific vehicle you are contemplating. You'll also know what the right car is worth to you. Do you want to keep looking or is the current deal one you can live with? Spend a month studying the particular make and model you want to buy and become an expert. The research also helps to decide which product you want and to know when a good deal crosses your path.
For instance, a friend was looking for a particular model and the ones she found were in different states of disarray, all for around $4,000. When she found one garaged in perfect condition for $2,500, she knew she'd hit pay dirt. After some small talk and discussion she said, "I'll take this vehicle off your hands." She did not attempt to negotiate, knowing she had already found a very good price. While uncommon, these things do happen.
The best used car is a well-maintained, one-owner vehicle. The best negotiation is no negotiation at all. This can only happen if you've done your homework, know a good value when it presents itself and willingness not to negotiate.
One option that may require an abbreviated negotiation is to purchase a used car with the support of the automaker behind it. Volvo Certified Pre-Owned Car Program, for instance, offers reconditioned two- to four-year-old Volvos, with under 60,000 miles, which undergo painstakingly thorough inspections and reconditioning. The vehicle then comes with a 24 month/24,000 mile Volvo Certified Limited Warranty with zero deductible; affordable financing options; two seventy-five dollar vouchers for service at a Volvo retailer; 24-hour On-Call Roadside Assistance; and the Tire Protection Plan. A good, comprehensive package such as the one from Volvo may have little left to negotiated.
When buying a car it is necessary to develop strategies to help with the process. Be reserved and tactful about your desire to buy the car. Even when really excited, keep it under wraps. Never say anything like, "I just really need to have this car. It's exactly what I want." This gives the seller more information about your level of interest than is prudent and provides the seller with ammunition to assume control of the negotiations. This information leads to comments like: "if you like it so much, why do you want me to come down in price? I'm sure others will come along who'll pay full price or more."
Decide It Is Time To Buy
Don't bother to negotiate unless you are a serious buyer -- ready to buy. Be ready to take a good deal when it comes along. If you aren't ready to part with your money, don't go shopping. You'll frustrate yourself and the sellers. They may be potential sellers later in the process. More importantly, negotiating requires a serious attitude. People who aren't ready to part with their money are seen as weak. That's a death knell in negotiations.
Shop For Cars
It is imperative to get out and look at vehicles. However obvious this may seem, often people are unwilling to step out and see what's available. Agoraphobia has no place in the car shopping and negotiation process. Without shopping, there is no way of knowing the selection, condition or competition for the models under consideration. And, without that information, there is no basis on which to compare cars and know a good deal when it presents itself.
Take Serious Contenders To A Mechanic For Inspection And Estimation Of Repairs
It is impossible to cogently talk price until the extent of needed repairs, if any, and the associated costs are determined. The vehicle has to be worth owning and that might take some work. Refusing to discuss price until the vehicle has been seen by a mechanic is also a tactic that buys time. The desire to have the vehicle reviewed expresses interest. It also says "I'm not a push over. I don't buy until I'm sure of what I'm getting." Additionally, if the seller is reluctant, this can indicate that they are hiding something.
Once the mechanic has checked out the car, make sure you get a written estimate with explanations of the needed work. This document is critical to use during negotiations as evidence of the costs of needed repairs. Sometimes, the seller doesn't know repairs are needed or their cost.
How do you take a candidate vehicle to a mechanic without buying it? Act like a serious buyer. Put down a deposit and write on the check, "completely refundable deposit contingent on mechanic's approval." This is also the time to whip out the Bill of Sale Agreement A good agreement will save misunderstandings and enable you to get back your deposit (less $50 or so for the seller's time and the cost of advertising the car for another week). This way the car can be checked out without a 100% commitment. Nearly every used car needs some kind of work. Knowing the extent and estimated costs of the repairs will help establish its value. So, the final price negotiation should take place only after repair recommendations.
Negotiate A Price
Good negotiators think the process through before beginning to talk with an opponent. This means knowing the actual value of the car, deductions for the needed repairs, and a good idea of a price you are willing to pay. If a lot of repairs are needed, most sellers will not agree to a price reduction for the full amount -- it is a used car after all. But a motivated seller can usually be persuaded to split the most necessary repair costs.
Used-car negotiations must be done face-to-face (except for a few exceptions described below). These negotiations can take time, but with a solid idea of a reasonable price and a firm commitment to consummating the deal, you won't waste much time. Figure on spending an hour negotiating the price and closing the deal and another hour on paperwork and exchanging the car for payment.
Know both the wholesale and retail value of the vehicle. This information is easy to acquire online from Kelley Blue Book at http://www.kbb.com. Each of these sites will provide a little bit different price, so they will offer a range within which to work.
Negotiating almost always involves some psychological and physical discomfort for both sides. Expect it. This is part of getting one another to make concessions. Accept the discomfort and be ahead of the game. If you can't, pay the full price for the vehicle and be happy with the purchase. There is no harm in doing this except that you will pay too much for the vehicle. On the other hand personal comfort does have a value and therefore a price.
If you are a single woman, take a friend with you when buying and negotiating with a private party. It's unwise to test drive cars with strangers by yourself. Consider personal safety first.
Never negotiate halfheartedly. If this is the correct time to buy the car, make the commitment -- go for it. Establish goals and personal expectations for the negotiations. This means having a reasonable goal and sticking with it. Be determined to get the best outcome, without being bull-headed. If the negotiations go the wrong way or get out of hand, just walk away.
Whether you are in a dealership or buying from a private party, it is a good idea to know how long the car has been for sale. If the same car is advertised week after week or you've talked to a seller who wouldn't budge on price a month ago, the seller will be more motivated and your negotiating position will be stronger.
Make sure the person you are negotiating with has the authority to make decisions. With a private party, this will be obvious. In a dealership the salesperson may go back and forth taking your offers to a manager. Dealerships employ all kinds of theatrics. Most are designed to wear you down and tire you out. Tell the salesperson you don't have time to wait for the manager's answer, you are VERY interested in buying a car right away and the manager should join in the discussion.
During negotiations, keep notes. Write everything down, every number, every promise, everything. Keep the notes in chronological order so you can go back and review what they have said. Make them wait while taking notes, if necessary.
Always speak politely and respectfully, never raise your voice. Know the pric you are willing to pay based on your research -- it should be close to wholesale. Ask the seller the price they would like. Then tell them that you would like to pay as close to X dollars as possible. Make your offer in a polite, business-like tone of voice. They will probably tell you that it is too low. Ask them what they consider a reasonable price. If they say the one they offered was reasonable, explain that the Kelley Blue Book is retail, you aren't in a retail situation and the car needs some work to bring it up to retail standards. What is being done here is that both sides in the negotiations are making their positions clear. But the idea is to get the other side to make the first concession. The seller should be dropping their price more quickly than you are upping yours.
Never be afraid to repeat yourself, ask the same questions or make the same statement three or four times. Persistence and repetition pay off. Keep establishing your position and explain logically your request for a discount.
Be willing to make small concessions on the price. Once the seller has come down, repeat that you would like to pay as close to X as possible. You like the car but it needs work and you have to be able to afford to do it. Show the seller the repair estimates and say "perhaps you didn't realize all this work needs to be done to bring the car to retail standards. I'm willing to do the work, but I have to pay a price that will enable me to afford to do so."
Be very careful about large concessions toward the end of the process. In a dealership the salesperson may make a concession, then come back with "My manager won't agree to this price," upping the ante significantly. This is a game and it is time to play the "walking game" with them. Tell them that you were "really hoping for that deal," but don't want to pay more than what was discussed. Thank them. Hand them your phone number written on a piece of paper and tell them to call if the manager reconsiders. Then leave. You may find the salesperson running after you with a significant drop in price on your way out the door. If you return and they try to raise the price again, leave! These folks are not negotiating seriously. They are playing used-car dealer games and proceeding is not worth your time.
Be direct with the seller about what you really desire. Don't ask the seller to "try and do something for me" or "what can you do for me.". You are not building a relationship, you are trying to buy a car. It is better to say, "I need to have this price, X, in order to be able to buy the car now." Conversely you can say, "I've researched this thoroughly. I've taken it to the mechanic so I know what the repairs will cost. I'd like to buy it, but the price has to be close to X."
Concession reversals are frustrating. After each side makes price concessions, the seller suddenly goes back on what was already agreed upon. Protest this by saying "You agreed to X because of..." There are two choices in this situation: stick hard and fast to your agreement and be willing to walk away after thanking them and telling them to call if they reconsider, or, if the deal is still a good one, concede to a price in the middle and close the deal.
Be very careful about items added on in the last minutes of the negotiation. Out of nowhere comes a new charge for dealer prep, an extended warranty or an undercoating. Skip the warranty. It is usually not worth buying without research and careful study, and often does not cover what is most likely to fail. If a warranty turns out to be desirable, buy one from a company that sells them directly. (Read the article "Used Car Warranties: To Buy Or Not To Buy" for more information on this subject. Undercoatings do little to preserve the value of a car and are an unnecessary expense. Remind them that the agreement has been made and resist all changes. The other party will usually give up, realizing the ploy was not successful.
If you cannot come to any kind of agreement, leave your name and phone number with the seller, politely excuse yourself and continue your shopping elsewhere. Invite them, in a positive way, to call if they decide to come closer to your offer.
Close The Deal With Paperwork And Signatures
Upon completion of the negotiations and before the contract is written up, fill in your Bill of Sale Agreement and recite your understanding of the deal to the other party. When the time comes to sign the contract, read it carefully and make sure it matches your understanding of the deal. If the numbers have been changed, don't stand for it. Ask politely for the contract to be made right. Remind them of the deal and how the agreement was achieved, while pointing to the process in your notes. Read EVERYTHING before you sign.
If the situation becomes too difficult but you still want the car and the deal, tell the seller that you are willing to leave a small deposit but must take the paperwork home to read it -- it is hard to concentrate with all the noise and commotion. Use the Bill of Sale Agreement and the same tactics employed when taking the car to the mechanic for an assessment. Put the agreement in writing, so you get your deposit back if the terms of the deal are not what was negotiated.
Make Payment And Take Possession
Don't bring cash to buy a car. Buy a money order or a cashier's check. Use traveler's checks. Anything is safer than walking around with a wad of cash in your handbag.
Frequently your bank will provide a bank check made out to the buyer for a nominal charge. If the deal doesn't go down, you can return it to your account. Get a certified check for the amount of your initial offer, produce it during the negotiations, and use the psychological advantage. If the final price turns out to be higher than anticipated, most sellers will accept a personal check for the balance.
If the person insists on cash, have them travel with you to a bank or credit union. Perform the cash transaction in front of a banker. Conversely, meet in a public place like a restaurant if your bank is out of the way. Use a credit card for the purchase, if you can pay it off quickly. Credit card rates are much higher than bank or credit union rates on used-car loans. Put as much on a credit card as you can. Your credit card purchase is usually protected under the fair credit act and it may be possible to stop payment should things go awry.
Make sure to get the Title and have the seller sign it over to you. Go immediately to the DMV and register the car. At that point, you own it.
In Conclusion
To be a better negotiator know the value of the vehicle; research in advance; have the car assessed by a mechanic before discussing price; be up-tempo and positive about working things out with your seller; create a focal point, a single reasonable price; do not nickel and dime; push for an agreement; clearly state your opinion that things can be worked out and you want to buy the car right away; get the seller to make the first concession. None of this weakens your negotiating position.
Avoid attacking anyone on a personal level. Verbal abuse or harsh words have no place in negotiations. This type of behavior creates resentment, opposition and leads to the failure of the negotiations. No agreement will be reached. If you are attacked or not treated with respect, simply leave.
Reaching an impasse is no reason to give up the ship. Look carefully at how to get the negotiations restarted. Remain positive and things usually work out for the best. Stalled negotiations can commonly get people to look harder at new alternatives.
End on a positive note. The end agreement should be a good one for both parties. Even so, each side can feel a bit dissatisfied thinking they could have gotten just a little more. Forget about it and enjoy your purchase.
