Negotiation practices vary dramatically across the world. If you are negotiating a deal with clients who were born outside the U.S., here are some basic tips that can help you close the deal.
I recently was at a neighborhood get-together where our hosts were from New Zealand and the other guests were from Australia and England. The discussion turned to real estate and what had happened when they purchased their homes. It was fascinating to hear how they approached the negotiation process and how it differs from what we expect here in the U.S.
1. Know the value of what is being offered
One of my neighbors was negotiating for a home that had a high-end custom pool table. The American owners wanted $7,000 to leave it with the house — a very good deal, especially in light of what they paid for it. What they didn’t realize was that our new neighbor had left their pool table in their previous home. The reason was that they discovered that they could purchase a new pool table for the cost of shipping their old one.
The negotiation: The sellers started at $7,000 and when the buyer said "No," they reduced the price to $6,000. The buyers continued to say "No," as the price dropped from $6,000, to $5,000, to $4,000, to $3,000, to $2,000, and to $1,000. The sellers finally relented and the buyers picked up the pool table at no cost. It was cheaper for the sellers to leave the table than it was for them to move it.
2. Be willing to haggle
It’s extremely important to understand the other party’s negotiating style. Haggling over price is the norm in many cultures. For example, the sellers of our hosts’ house wanted $4,000 for their sofa, a cowhide chair, and several custom tables designed for the living room.
The negotiation: The buyers initially offered $3,000. The sellers remained firm at $4,000. The buyers came back at $3,500. The sellers still refused to negotiate the price. The buyers walked away from the deal "on principle," even though they really wanted the furniture.
The sellers could have dropped the price a few hundred dollars or thrown in some other items to sweeten the deal. By refusing to negotiate, they failed to sell the items.
3. Wait them out
Americans are notorious in other countries for being impatient. Americans will make concessions just to wrap up the negotiations. For example, the opening position for some buyers and sellers is "No." They understand that if they are patient, they will often get what they want. In fact, this scenario is playing out currently with a property on our street.
The negotiation: The American sellers are a recently married couple who plan to build a custom home on another property they own. They received an offer from foreign prospective buyers a tad below where the comparable sales suggest the property will sell.
When the sellers said "No," the buyers came back with a "standing offer" where they will purchase the property should the seller change their mind. (Please note that for an offer to be valid in most states it must have a cutoff date.)
The sellers are patiently waiting, but their foreign buyers may wait them out. In fact, the owners said that if they don’t receive a higher offer in the next few months, they would probably accept the standing offer.
4. Know their rules
A number of years ago I was selling lots at the Summit above Beverly Hills. We had a group of foreign buyers who spent quite of bit of time with their calculators as they were discussing the various lots in the subdivision. Because they were speaking in another language, I couldn’t tell what exactly was happening.
The negotiation: When the offer came in, it was for six lots. The price was odd, as were some of the terms. I began looking for patterns, and I began to suspect that the prospective buyers were using some form of numerology. (In Chinese numerology, No. 6 is considered to be an auspicious number for business.)
I knew that properties with a four in the address were considered to be unlucky in some cultures. In contrast, the number eight was viewed as being lucky. None of the prices or the addresses added up to eight. Since they placed the offer on six lots, I tried checking the details against the number six.
When I added the up the prices for the six lots, the numbers all totaled six. If you added the lot numbers, they totaled to six. When you added up the offer date and the closing date, the numbers totaled to six (when you added all the numbers together — including the multiple digits in the totals — to form a single digit).
I told the developers what I suspected was happening. They were pretty dubious but agreed to counter back using the same strategy. The buyers signed the deal and closed several months later.
When you deal with clients from other cultures, do your best to determine the negotiating style in the country where they were born. By understanding their cultural approach to negotiation, you will have a much greater chance of winning the negotiation and closing the deal.