When we are completing a negotiation, we are elated that we reached an agreement and ready to get to work. Before considering the negotiation complete there are a few items in the endgame that need to be done. For instance we need to memorialize the agreement in writing before leaving the table, complete the contract and evaluate the negotiation. Evaluating the negotiation is often overlooked or put off until later and never completed. There is gold to be mined in taking time to evaluate the negotiation. Take a few minutes and think about how the negotiation progressed, what were the give and takes, were you able to read the other person, be creative when you ran into a snag or gain some insight that you might use again?
I recently completed negotiations for a villa in Florida. Here is a brief synopsis of the events and some things I learned or were reinforced for me from my villa-buying experience. My wife and I had looked at numerous listings and had settled on one of two developments to buy in. We looked at six units in this development, prioritized the order of preference, and did not have a must-buy mindset for any particular unit. After picking a unit to make an offer on it, we realized that there was an open-house that afternoon for that unit. We went back without our realtor and looked again. While there we also gauged the competition, i.e. were there a lot of lookers or a few and how serious they seemed to be. I also chatted up the realtor to determine how motivated the seller was. (They were motivated. The realtor mentioned that they wanted an offer.) In discussing our offer with our realtor she provided us the sell price of the last two units of that size. It was under our planned offer and the tax assessment was slightly lower. We adjusted our initial offer down by six percent and submitted it expecting a fairly strong counteroffer. When we got their counteroffer, it was to split the cost of title insurance ($400 more on our part). We accepted it without further negotiation and signed the contract to buy the property.
Here are a couple of things I got from evaluating the negotiation. First, preparation (as usual) was critical. Going back to take another look during the open house revealed some additional information about the seller. Although there was interest in the unit, we did not increase our offer because of other lookers. We felt that we were making a fair offer and would not be left out if there were negotiations with several buyers. [Plan your initial offer to give yourself a good position and don’t let your emotions (such as we could lose this unit) rule your price.]
We had taken time to vision what we wanted our outcome to be (a place in Florida, in our price range, with a water view). We accomplished all three objectives so seeing what you want as an end result opens the path toward that outcome. [Visioning the outcome does work!]
Third, while we expected a counteroffer, it was not strong and we accepted it rather than driving the price down to our original offer which we could have done. We wanted to have the seller feel good about the outcome and pushing them would have created bad feelings. In return, we picked up some furniture from them at a modest price. [Treat the other side fairly, let them save face, and maintain a good relationship.]
Evaluating your negotiation after reaching an agreement, what you did or could have done better can give you confidence and make you a better negotiator.