PLAY DUMB! No matter how the other guy explains what he wants out of the deal, just don't catch on. A real exercise in ego suppression – and one of the most valuable of all skills – is to be able to drop 60 points off your I.Q. and just say ‘I don't get it.' ‘How could that be?' ‘Why are you charging me all that money when you said you only wanted $100,000.?' ‘Explain it to me again.'
One of my most glaring faults is that I start helping the other guy explain by sort of catching on to some of his points. This only makes it easier for him. Ask if he's a banker. If not, why is he acting like he is? How can that house be worth so much when he didn't pay anywhere near that amount? Keep it up. Do it 10 times, 20 times, and watch what happens. You'll be surprised. The interest rates and payments will start to drop. It will be your highest paid skill over the years – it really pays to be ignorant, or at least to appear to be; especially on his turf.
We've already discussed the value of and power of silence during the questioning period. It works to great advantage when you're doing the actual negotiation too, for a number of reasons:
First, it makes it seem that you're taking the whole thing seriously.
Second, you appear to be carefully considering the other guys' proposals.
Third, when you say you don't understand, they believe you because you've spent so much time thinking about what they've said before responding.
Fourth, it makes them nervous because they also are thinking that perhaps they've gone too far, or maybe they are wrong and you're right – it saps their confidence.
Fifth, it gives you time to think about your next gambit without appearing to be doing that.
Silence can be your guest expert, your counselor, your second member of the negotiating team. And it helps you to avoid HOOF IN MOUTH DISEASE. I'd like to have a nickel for every time I opened my mouth when I should have kept it shut. I've cut off valuable information just when the other guy was going to give it. I've given away my true goals just because the other guy asked me a direct question which I answered. I have pointed out faulty reasoning that would have made me lots of money, I've talked my way out of a superior strategy into an inferior one. The list is endless. Here's an example.
I was trying to buy a small motel. The owner had 13 units near the local race track that was seasonal – being filled up during racing season and being empty the rest of the time. This suited me perfectly, because I planned to operate it only during the full period. The owner lived there all the time, so kept it open. This killed his net operating income because of continuing utility bills, maid service, management, etc.
I planned carefully to approach him near the end of the off-season when his cash reserves would be low. I figured he'd be soured on the motel and ready to move on. I even found that by making a $1.00 deposit into his bank account, the computer would automatically give me his adjusted balance. I knew when the till was getting empty.
So, I made arrangements to buy the place and started to negotiate. it was all going smoothly. He was going to sell me the property with 10% down and the balance payable at 5% over 20 years. Then I whipped out my trusty calculator (which I'd just bought and which I hadn't mastered yet) and plugged the whole deal in. The calculator came up ERROR. I tried again with the same result. What was happening was that the payment we'd agreed on was LESS THAN 5%.
Flustered and confused, I TALKED HIM INTO HIGHER PAYMENTS INSTEAD OF A LOWER INTEREST RATE. Then the calculator worked perfectly – it showed me that the deal was no good. I broke off negotiations because I never could get him to agree to the original terms.
Who can say what this little exercise cost me? But I've since learned not to take calculators to a negotiation — by not having one with me, I can break off and go get one before proceeding further (this combines several tactics which include dealing with legitimacy, 3rd party, limited power to decide, playing it dumb, slowing down the deal, retreat and retrench). If the profit isn't as plain as day to me, I know that I've got to do a lot more preparation. That makes it just that much more important to cease and desist from face to face negotiation until I'm ready.