Negotiating a mortgage, car or even insurance, preparation is the key to victory. When you know what you want and how you intend to get it, you’re much more likely to come out of the appointment smiling.
“Start out with an ideal and end up with a deal.” -- Karl Albrecht, co-founder of Aldi.
Let's go through the different phases of a deal and prep for each one. Skipping one of these will most likely hurt your chances so don't slack off on any of them.
Before the appointment…
Know what you want. Sit down and work out exactly:
What you need and what want. Secure the needs first and negotiate with the wants (aka the extra stuff you can do without)
How much you can afford
How far you’re prepared to compromise on both (afford vs. spend)
If you’re looking at a long-term deal, look beyond the immediate price and make sure you can afford the payments without stretching your budget to its breaking-point.
Find out what’s available. Do some research to find out how realistic your goals are versus what the market is offering. You probably weren’t expecting to find a mortgage rate at 1% or a luxury car for 50 pounds / dollars a month, but you should never assume that the price you are willing to pay is the floor for the market. You could still be surprised by the deals offered if you look hard enough.
Re-evaluate your goals: If you had seriously underestimated the price, you may need to re-think. Ask yourself:
Do you want a cheaper car (house, TV, holiday, etc.)?
Can you afford to pay more? Where does this item fall on the need/want spectrum?
Should you wait until prices come down / you’ve saved up?
If you’d overestimated the price, you’re free to raise your expectations, lower your budget or (ideally) both.
‘Arm’ yourself. Knowledge is power, so make sure you understand:
Which professional bodies oversee the industry
The technical / legal terms involved
What costs the seller really amassed in order to offer you this product
Find out if the product / industry has been in the news recently. This might tell you who to avoid, or if the industry’s about to go through some changes which could cost you time, money, emotional stress down the road.
Ask around to see if anyone you know has done something similar recently. If not, see what case studies / testimonials you can find. Mouse Print, Consumerist, and other sites report on shady dealings out there so once again, do your homework!
Select your supplier. Shop around. The bigger the deal you’re looking at, the more time you should invest: with a mortgage, for example, a tiny difference in the interest rate can save you thousands.
It’s often a good idea to start with a company you're currently doing business with. If you’re looking to refinance your mortgage, for example, talk to your current mortgage provider – if they don’t want to lose your business, they may offer you a good deal.
Understand how the company works. Do they offer their own product(s) or are they simply reselling something? Do they work with a range of partners, or will they check the entire market for you? How do they decide which partner gets YOUR business? That is an absolute key question. If your business goes to the highest bidder, I'd steer clear.
Arrange your appointment. This should give you some insight into how they do business. If they’re unprofessional, unhelpful, or hard to get hold of, maybe you should choose a different company. Remember, a company works it's hardest when they're trying to win you as a customer. If they are terrible at that, imagine how terrible the service will be once they get your money.
In the appointment…
Remember who’s the customer. As a (potential) paying customer, you are entitled to the person’s time and expertise. Tell them what you want and let them explain your options. Have a calculator and notepad ready, and take the time to do whatever calculations you find necessary.
Show what you know. Depending on the type of company you’re dealing with (and the amount of leeway the person has), showing that you ‘know your stuff’ could put you at a psychological advantage. So tell them what other deals you have been offered / seen advertised. Show them you understand the technical terms, and the pros and cons of the most common options.
Admit what you don’t know. If you need something explained, ask.
Don’t let them ‘blind you with science’. Any specialist can use technical terms to gloss over drawbacks – or to sell ‘benefits’ you don’t really want or need. Make them repeat themselves in layman’s terms, then take a good look at what they’ve just said.
Give and take. Don’t be too inflexible.
Compromise – if you’re being offered a good deal, don’t turn it down because there’s one tiny thing missing.
Consider new ideas – just make sure you understand the pros and cons, and find out if you can ‘mix and match’ elements of various options.
Don’t be rushed into anything. If you’re happy with the deal, get them to draw up the paperwork and tell them you’ll be back in a day or two.
At the very least, you should read the small print – and ‘sleep on it’.
If it’s complex / full of legal terms, you might consider taking it to an independent specialist.
Don’t feel pressured. You can always walk away from the deal. If you’re not impressed with their ‘final offer’, thank them for their time and say you need to look elsewhere. (If they offer you a better deal at this point, so much the better.)
After the appointment…
The end? If you’ve found a product you’re happy with, great. If not, think about the appointment you’ve just had, make some notes and use the experience to prepare for an appointment with another company. If you have enough of these haggling sessions, you just may elicit a bidding war for your business.
So what do you think? Is this something you can do when it comes time to negotiate or are you going to take the first offer thrown your way?
Written by M. Taylor of Gregory Pennington, a UK based Debt Management Specialist.
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