Negotiation Skills – An Offer You Must Refuse, To Make

There are situations in a typical business negotiation where a party to a deal must make the opening offer, even though they prefer not to. There are effective negotiation skills to employ when one is forced to make the first offer, and I cover a lot of them in one of my earlier articles entitled: How to Make Effective Opening Offers. In that article I discuss the importance of thinking through the offer before making it, and thereby making the right kind of opening offers, because like most things in life, having a thought-out plan is the surest way to a positive result.

By the same token, there are opening offers you should never make. Ever. But many people make these kinds of offers every day in business and personal negotiations.

These bad opening offers can come in a variety of packages, but most can be grouped into what I call Dummy Offers. There’s two reasons for the name. One, the offers are not genuine, or serious, so they’re like a dummy, or a “fake” body. Second, and more importantly, the Dummy Offers are made by dummies, or people who don’t know any better (but should). And how do I know about Dummy Offers? Because I have been the dummy making them, plenty of times, and believe me, the results usually made me feel like a dummy.

The first Dummy Offer is the “informal offer”. It goes like this: the buyer is looking at the merchandise or property or contract and is talking and talking and casually mentions to the seller what he thinks would be an adequate price to pay for the item or service. Just an informal, off the record, comment. Right?

Wrong. While the buyer thought he was merely whetting the appetite of the seller, to sort of “warm him up” to where he was going to come in at, what he really did was to set a base standard in the mind of the seller, a rock bottom limit to what he would pay and the seller would take. Sellers seem to have this sensor fixed in them so that whatever price they hear, it is the lowest possible amount the sale could possibly settle on. In other words, the price negotiation was heading North from that point, at least in the seller’s mind.

This is done frequently by buyers and of course they never mean to lock in a bottom price. But that is exactly what happens. The “informal offer” is an “uninformed offer”, and should never be made, unless it is in the planned design of the buyer for other reasons, but that is a different subject altogether.

When you are negotiating, you have to consider everything you say to be something you would write, because sellers don’t forget. If it works to their advantage, they will remember it and they will surely shove it back in your face later on.

Another Dummy Offer, often made in preliminary negotiations, is the “range offer”. Like the informal offer, the range offer sets expectations in the mind of the seller or other party that are hard to break. I’ll share an example:

A buyer is looking for a car to buy and knows a seller intending to sell hers. They buyer contacts the seller and in the course of conversation, the seller asks him what he thinks the car is worth to him. The buyer, thinking that this is part of the normal process of arriving at a price blurts out, “Oh, in the range of 5 to 7 thousand.”

The buyer thinks he just told the seller he might be willing to pay more but hopes to get the car for closer to five thousand dollars. But it’s not what the seller heard. All she heard was: “This car is worth AT LEAST seven thousand dollars to him”.

Like the informal offer, the range offer alerts the seller to a price, and the seller’s expectations are set based on what she hears the buyers say. The “range” offer doesn’t really communicate an idea of how much the item or service will sell for; it communicates a number that is either at the very top, or at the very bottom, and it becomes the starting point for all future negotiations. This principle of Dummy Offers applies both ways. The examples above illustrate misunderstandings by sellers, but in the same way buyers can get the wrong idea when a seller shares her mind too early.

Astute buyers and sellers see that the learning and implementing effective negotiation skills involves knowing when to be silent and when to share one’s intentions with the other party. Doing it properly can bring significant beneficial results, while ignoring it might get you stuck with an offer you can’t refuse… because you already made it.

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