They start off negotiations by offering peanuts, then point at how far they’ve come when they quadruple their offer.
If they’re still one-half of fair, does it matter that they moved so far.
I got taken with that tactic, though in reverse. I was negotiating to purchase a beautiful stone chess set in Mexico earlier this year.
The sticker price was $150.00.
I am a professional negotiator. I can negotiate circles around some Mexican vendor. I’ll get to the best price. I’m going to go home with a beautiful stone chess set at the vendor’s bottom line.
We do a little negotiation dance. I don’t want to be too insulting with my initial offer. At the same time, I want to leave myself some negotiating room. We go back and forth.
We end up at $85.00. I’m tickled, but I hide my smile as the Mexican vendor wraps up the pieces for me. I’m really quite impressed by his follow through. Instead of seeming disappointed about how little he was paid, it’s almost like he has a skip in his step as he carefully wraps up the pieces for travel.
I’m pleased as punch.
Then I go to another market.
I look around to see if I can find a comparable chess set. Sure enough, it wasn’t quite as unique as I thought. I find a set that’s almost identical. The sticker price is $85.00.
I now understand the skip in the other vendor’s step. A sticker price of $85.00 means that any gringo could pick the thing up for $40.00.
How could I have done so poorly? I made a classic negotiation mistake. I entered a negotiation without having a clue about the value of the item I was negotiating for.
I didn’t have a hope.
I’m not making the same mistake with a real estate negotiation I am currently involved in. I did the smart thing and hired a qualified appraiser to assess the value of the property. As an aside, here’s a “shout out” to the father/son team at Westside Valuation Services for extremely fast service. Thank you!
The negotiation of a personal injury claim is no different. And I can tell you from considerable experience that the negotiation tactic I mentioned at the beginning of this column is very typical.
The thing is, in order to get to the quadrupled offer you need to do what I should have done in Mexico, which is to go to another market. It’s not enough to get an “appraisal” of your claim.
There are front line adjusters who negotiate claims directly with injured victims. They have a certain level of negotiating room. Once a lawyer is involved the claim goes to a “litigation adjuster” who has a lot more negotiating authority.
The quadrupled offer isn’t the fair one though. To get to that level your lawyer needs to put together the medical opinion and other evidence that would be necessary to prove your losses at a trial. No, that doesn’t mean that you have to go to trial. It means you have to get ready for trial.
It’s like the Cold War. Both sides got ready for trial. The more ready you are, the less likely a trial will be necessary.
And I ended up with a beautiful chess set that might well be the most expensive chess set ever sold in Mexico.
Published June 5, 2011 in the Kelowna Capital News