How to Concede Smart–and Avoid These 3 Mistakes
When it comes to making concessions in negotiations, here’s a good rule of thumb: If you are going to concede in the opening rounds of a negotiation, concede small.
In other words, avoid these three mistakes:
Mistake No. 1 – Equal-sized Concessions
If you have a negotiating room of $10,000, don’t give it away in increments of $2,500.
For example, imagine you are selling your house and your asking price is $270,000. You receive an offer of $250,000.
If you counter with $267,500 in the first round, $265,000 in the second, $262,500 in the third, imagine what the other person is thinking: “Hmm. Every time I push, I get $2,500. Why stop pushing?”
Mistake No. 2 – Huge, Final Concession
Let’s say you made a concession of $6,000, then one of $4,000.
You say to the other party, “That’s our absolutely lowest offer. I can’t give you a dollar more.” The problem is the other party has a hard time believing you won’t relent a dollar more when you gave up such huge concessions already.
He’s going to try for more, and when you dig your heels in, he thinks, “Why is he being so difficult? You just made a $4,000 concession and you won’t give me another $1000?”
Making this mistake has the potential for creating hostility.
Mistake No. 3 – Give It All Away Up Front
“Who would do a stupid thing like that?” you ask.
Problem is, people do it all the time. Someone calls and says, “My client doesn’t like to negotiate. So just give me your lowest price and I’ll give you a yes or no.”
Or an agent who looked at your client’s house last week calls and says, “We’ve just located two other homes my client liked equally well. Now we’re just down to the price. We thought the fairest thing to do would be to let all three of you give us your lowest price, then we’ll decide.”
Unless you recognize this ploy, you’ll panic and plead with your sellers to cut the price to the bone, even though the doors to a second round of bidding haven’t completely closed.
The Smart Way to Concede
Although negotiating this way takes time, conceding in small, irregular increments makes it more likely that you will end up with your objective price and both sides of the negotiations will feel happy about the outcome.
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