There was one thing I was really bad at, negotiation. Point blank I had no idea how to do or what games to play, until I read sometime back Erick Sink’s blog entry about his adventure with negotiating a car deal. Unfortently I hadn’t read this when I bought my new house in the summer. My wife and I walked into that house with the builder and were straight Google Eyed (a little more her then me). It was over, we had no chance to get some real money off of the house. That guy played me like a fiddle. Lesson learned. On December 31st, my wife was in a car accident and totaled our 2001 Honda Accord. Insurance give us more then we owed so off I went looking at cars. Here is are the 5 rules of negotiation I used get a good deal.
Rule 1: Do your homework, Know your price:
I researched what type of cars I wanted, price range, what was available
Rule 2: Define a fallback plan:
I had a rental car for 45 days, plenty of time to find something. If worse came to worse, my wife and I would have to share a car for a bit.
Rule 3: Don’t get emotionally attached.
The worst words I spoke when buying our home was “I Love this house”. I kept a very open mind to all the cars I looked at and made sure I didn’t “fall in love”. When I test drove each car I made sure to say out loud. “I’m not sure I can envision myself in this car”, I did this to reaffirm to the salesman and to myself.
Rule 4: Don’t show all your cards until the right moment:
The day I went to the dealers I had 3 Honda Elements I wanted to look at, at each dealer I only mentioned the one car as a comparative, so that I had the 3rd car to eventually use at the very end of negotiations. This worked out great for me.
Rule 5: The ability to WALK AWAY:
This is the most important rule, if a salesperson thinks you are willing to walk away (meaning no sale for them AND more importantly the time they lost) then they know you have the upper hand and will be a lot more likely to make a deal more towards your numbers then theirs.
My story goes like this. On Saturday midday I go into Honda East knowing they have a 2004 Honda Element EX 4WD with 34k miles on it listed at $19,700. Salesperson approaches, and I ask what they have in stock for a used Element (Rules 1, 4). She shows me this.
It’s very nice and exactly what I am looking for but not for the price. I take it for a test drive and mention the “I’m not sure I can envision myself in this car” line (Rule 3). She gives me more features and I show some enthusiasm for the car. Lets talk price. She gives me the run down of all the options it has on it and I make it known to her about another deal at John Nolan Ford for a 2003 Honda with very similar options but priced well below hers, $16,900 (Rule 1). I shoot an offer of 16k. She comes back with 17,900. 16,900 is my counter. She hits me back at 17k and says that is as low as she can go. That’s $2500, not too bad. But too much then I want to pay. Tell her thanks but I need to go look at the other deal. I walk away (Rule 5).
At John Nolan Ford, I follow the same rules during the test drive and I mention the offer at Honda East. My initial offer is $13,500. He comes back at $14,900. I respond with $14,000 and that I saw a 2003 Honda stickered the same but with only 15k miles in Columbus and I willing to walk to go see this car. He caves, at $14,000. That’s $2,900 off. Deal.
I’m not all of the sudden a great negotiator but by following these 5 rules, I can now at least play the game.