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During a negotiation, it can be all too easy to make a mistake. When this happens, we often look back at our actions and wonder how we could have been so stilly as to do something like that. It turns out that a lot of the mistakes that we make are the same mistakes that we keep making over and over again. If we can take the time to understand what they look like and why they occur, then we might have the ability to avoid repeating making them once again.
Mistakes That We Make When Negotiating
No matter if you’re planning on selling you house, trying to get rid of excess merchandise, or even just searching for new clients, there’s a good chance you’ll end up making your next sales negotiation more challenging than it needs to be by falling into common cognitive traps. The good news is that you can improve your sales negotiation skills by learning about four of the most common traps that often hold back sellers and how you can go about avoiding them.
The Problem Of Overvaluing Your Possessions
So here’s a question for you: why is it that some homes are plucked off the real estate listings within days or weeks, while others end up sitting there for months or even years? Yes, yes – location and curb appeal have something to do with it, but it turns out that there’s another factor, one that sellers can avoid: the tendency to overvalue one’s property. In some cases sellers ignore the sales negotiation techniques that are suggested by their real estate agents’ carefully determined valuations and end up asking for much more than they should. To avoid overvaluing what you are selling, you need to seek out unbiased appraisals from third-party experts such as real estate agents, jewelry appraisers, or even financial experts. To motivate yourself, just imagine how you will feel in several months or a year if your item fails to sell. If you can focus on the future, you may be able to look at your possession more rationally.
Allowing Yourself To Focus Too Much on Price
What’s your most important goal when negotiating? If you’re like most of us, you want to get the best price possible. It’s normal for negotiators to place a high premium on meeting their target price in a negotiation. However, a self-interested focus on price haggling can prevent us from viewing a sales negotiations as being collaborative. When you are stuck in a competitive mindset, you’ll be unlikely to probe the other side’s needs or add more issues to the discussion, such as delivery timing, payment schedules, and other sources of synergy that could enhance the agreement and your bottom line. When you find yourself obsessing about the price, take time to brainstorm ideas for adding more value to the deal, both on your own and with the other side.
Allowing Your Ethics To Become Compromised
Let’s face it, no matter if you are selling a house, your services, or one of your company’s products, the odds are that you’ll probably know more about the item up for sale than potential buyers do. Because of this information asymmetry, you have to be careful not to take advantage of buyers during your negotiations. Research has shown that even negotiators who think of themselves as being highly ethical are at risk of compromising their moral principles. In a sales negotiation, you are going to have to examine whether your negotiating behavior is in line with your ethical standards. If the other side is skeptical of your claims, you might want to propose adding a contingency agreement to the contract.
Allowing Yourself To Make Unappealing Offers
Even if you’ve spent a good deal of time researching the other side’s needs and putting together proposals that meet their interests, you could slip up by failing to present your offers in the best light possible. You need to consider that negotiators often fail to frame information to their advantage. In a typical purchasing negotiation, the buyer has a target price they are aiming to meet, and they’ll view any compromise away from their target as a loss. Sellers often unwittingly reinforce such negative frames if they present proposals in terms of losses away from the buyer’s ideal target price. To prevent this from happening, you should try to frame your offers as gains over the status quo.
What All Of This Means For You
When we are involved in a negotiation, the last thing that we want to do is to make a mistake. However, it turns out that there are a set of mistakes that negotiators make over and over again. In order to prevent ourselves from making these kinds of mistakes we have to first become aware of what the mistakes are and then we can start to take steps to prevent making them.
We value things that we are selling very highly; however, during a negotiation it can be all too easy for us to overvalue them. We need to get outsiders to help us come up with a reasonable price. During a negotiation we can focus too much on the price that we are being offered. We need to find ways to work with the other side to get the deal that we need. If we know more about what is being negotiated than the other side does, our ethics can become compromised. We need to make sure that the offers that we make will be appealing to the other side.
Awareness of these common sales negotiation pitfalls is the first step in helping us to overcome them. It does takes diligence; however, we can all lessen the negative impact of common cognitive biases on our mind. By making these changes, we’ll have a better chance of getting the deal that we want.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: What’s the best way to detect if we are making one of these mistakes in our negotiations?
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What We’ll Be Talking About Next Time
I’m pretty sure that most of us think of ourselves very highly. We believe that we are skilled negotiators and that we can probably handle any situation that shows up during a negotiation. However, an outside observer might not agree with us. The reality might be that there are certain circumstances that we are not the ones who should be negotiating. In fact, these are the circumstances when we should perhaps take a step back. How can we detect when we are in one of these situations?