Timely Rerun: The Importance of Research and the Art of Negotiation

Original article.

Overheard from a payphone conversation: "It is much easier to save a dollar on 50 things than 50 dollars on one thing". As I continued to walk, I asked myself, “Oh yeah?”

The first part is right: it is easy to save a dollar on fifty things--downright effortless. The second part is not so right, however.

Saving fifty dollars on one thing is quite easy when research and negotiation are involved. How many of us don’t hesitate to dicker at yard sales, auto dealerships, and even at home purchases?

How can you save this much on one item? By doing a little research to determine the item’s true worth in it’s current condition (in the case of homes, an inspector, an appraiser, and prior tax records are valuable tools). The internet has proven itself an invaluable tool for the research of cars and other items.

Knowing what the item’s true current worth is provides you with a baseline for negotiations (haggling, dickering, whatever you want to call it). You and the seller can maneuver up or down from there to arrive at your final price point, often saving much more than fifty bucks for higher-valued items.

If you’re still not sure about haggling, dickering, and negotiation, do some research on it to become more familiar. Learn how to gather facts about the item(s) to assess its value in the current condition. Start small—say yard sales, estate sales, and bargain stores. As you get more comfortable gauging value and making offers, start moving into bigger arenas—car lots and pawnshops. When you feel proficient, go ahead and try making an offer on a house.

After learning how to do the proper background research and comparisons, and sharpening the art of dickering, you’ll find out just how easy it is to save fifty dollars or a great deal more on just one item.

My own examples: on one car, I saved $8,000, and another, I saved $6,000 off the sticker prices just by going to NADA blue book and looking up the values of the cars in current condition, with current mileage, and current options. I then used this info to start forming a "no higher than" price I'd pay, then took 20% off that--this was to allow for haggling room with the dealer.

I'm on the verge of doing it for a house as well--after checking on available financing, I'm going to Realtor.com and Zillow for rough value estimates, averaging them, factoring in repair costs if needed, and taking an additional 20% off for negotiating room. The list price means nothing to me, and it should mean nothing to you--it only serves to weed out less-than-serious buyers, and also serves to trap buyers who didn't bother to do any homework, and who rely on emotion to make purchase decisions for them. This happens regularly in stores, particularly grocery stores--if you see something you use regularly but don't like the current price, ask the manager about a discount for buying a case or two. You might be pleasantly surprised.

Discounts are everywhere--you just have to know how and have guts enough to pursue them. The worst that could happen is the word "NO." So you may not be getting THAT car, THAT house, or THOSE groceries in THAT particular store, but there's cars, houses, and groceries in tons of other places, and other sellers who may be more receptive to your pitch.

Whoever said living wasn't a business id dead wrong!