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It’s Not All About Price When Buying a Home

Jeff Cochran

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A little while back, a member of SNI purchased a new condo. The market in this particular area had continued to be hot through the recession and as a result it was very likely there were going to be multiple offers on the property. While most potential bidders tried to take advantage of time with the seller to express why they were such great candidates for the condo, this member used the time very differently.

He told the story like this: When I went in to speak with the seller, I didn’t do much speaking about myself. I sat with the owner and her fiancée and just asked and listened – why are you selling the apartment? Where are you moving to and why? What is important to you in this transaction? What else? What else? What is most important and why? It turned out they had bought an expensive house with the intention of making a few modifications but they got carried away and had started a full renovation. As a result, the house was going to take substantially longer to return to livable condition and the couple was unsure as to what they should and would do in the meantime.

When it came time to submitting offers, I extended the close date by several months and added a note about being flexible in order to let them settle in to their new home. I was not in a hurry to move, I just wanted the right place at the right price. Knowing they had been slightly over their heads with the renovation and wanted to ensure the sale would go through, I included a substantially larger than average deposit with the total bid that was about 5% lower than what I expected to be the highest bid. I also included a note about my two apartments that offered short term leases at reasonable prices – friends of mine had used them in the past and raved about the value. It turned out my bid was about 4% lower but I still came away with the best property I had seen in over 6 months of searching.

Like in many other situations, the price was important, but it’s wasn’t everything. Ask the right questions, figure out what is important to the other side, and find a way to give it to them. In order to get what you want (the condo at a good price) you have to give them what they want (a reasonable price, a sense of security, a later close date, and help figuring out their living situation).

Precedents

Jeff Cochran

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Preparation is vital in any negotiation. We say it all the time, but we wouldn’t say it if it wasn’t true. If you don’t prepare, you’re missing out on the opportunity to be in control of the negotiation. If you have prepared for all the possible scenarios, you will have the confidence to negotiate the best deal possible.

One great way to prepare is through precedents. They can be common steps or shrewd maneuvers, logical decisions or risky bets, strategies or strokes of luck, prompt or last-minute adjustments, great achievements or simple mistakes from the arc of your career, from other people, or even from the grand stage of history itself. Analyzing the past with an objective microscope can help shape your preparation for your present endeavor. History has a tendency to repeat itself, so you might as well take advantage of what has taken place before.

One example of using precedents could be if a competitor is undercutting your prices for a service or product. Because dropping your price is not an alternative, you look for transactions in which you or others have successfully warded of pricing challenges. You uncover instances in which your competitor failed to meet promised distribution times, a factor important to your customers. You make guaranteed delivery dates a key part of your deals instead of reducing prices. Your customers are convinced and you fight off the pricing threat.

Don’t Forget Scripting

Jeff Cochran

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When actors like Leonardo DiCaprio and Robert De Niro are filming a scene for a movie, they become entrenched in the script.  They go over it forwards, backwards, and sideways to get into the character and deliver their lines with power and emotion.  Hollywood, however, isn’t the only place that scripts come in handy. When preparing for a negotiation, scripting can be an extremely valuable tool.

Scripting is taking the time to write down the anticipated dialogue for a meeting. It prepares you for what you will say and what you anticipate the other side will say. You may not be able to predict the exact course of events, but you can rehearse the scenarios you anticipate. By thinking through and writing down scripts for the way you think events will unfold, you will have a solid foundation for dealing with the twists and turns of actual events.

Scripting allows you to gain confidence in the message you are trying to deliver. It’s valuable for crafting not only the message you are trying to convey, but also how you will do it. If you want an “ask” of $1 million per year, make sure you say exactly
that. Don’t say things like “something in the range of $1 million” or “between $750,000 and $1,000,000”—this already puts you below your projected ask. When you write and practice your script, you’re not only rehearsing your message, but you’re considering things like word choice, tone, use of persuasive precedents, probing, and even silence. These types of considerations will make a difference in communicating effectively and closing the deal.

 

Let The Other Side Go First

Jeff Cochran

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One of the keys to successfully negotiating any deal is letting the other side go first. It gives you a parameter to work from and provides insight as to what the other side is thinking. Letting them go first gives you the upper hand so you can negotiate better. But how exactly do you get the other side to go first? You can’t just say, “Go first.  I said so.”There needs to be a strategy. Consider the following next time you are stuck in this situation.

  • Defer to the other side’s expertise: Say something like, “You’ve done more deals of this type than we have. What
    are going terms in similar deals? What’s fair?”
  • Turn discussions into offers: Once you start talking, the other side is likely to give enough information to suggest an offer even if they don’t make one formally. Probe their thoughts, fleshing out more and more details. Then paraphrase what they’ve said as an offer.
  • Force a counteroffer bid: If it appears there’s nowhere to go in the negotiations, ask the other side where they want to go. “You say the list price is too steep. What price could you afford?”
  • Make a tangential first offer: Offer something important the other side wants in exchange for something more important to you. “We know your company wants to ship fast while the produce is fresh. We can take delivery immediately, if the per pound is right.”
  • Set a range without making a first offer: Use exploratory conversation to learn what the other side expects. “Say, I’ve heard houses in this neighborhood sell for as little as $200,000.” There’s no risk. It’s just what you’ve “heard”. See what kind of response you get. It should give you a price range of their first offer.

Still don’t think it’s important to let the other side go first? Read this story told by Dean Jernigan, Chairman of Storage USA. It
is highlighted in the book “The Power of NICE” by Ron Shapiro, Mark Jankowski, and Jim Dale.

A piece of property was for sale on the Mississippi River. Its original purchase price was $3 million. The property had sat, unused and undeveloped, for years. One day, a potential buyer from a Los Angeles entertainment company asked for a meeting.  The property owner’s lawyer was sent to negotiate the deal with explicit instructions. “Let them make the first offer but take nothing less than $4 million.” The prospective buyer started the meeting with a simple statement. “We are not going to negotiate. Our offer is $20 million and if you are not willing to accept it, we are prepared to walk.” It turned out, the entertainment company was betting on a future legalized gambling boom to increase land values and, therefore, thought $20
million was a “fair” price. Of course, so did the property owner’s lawyer who only had one regret. He hadn’t handled the case on a contingency basis.

Sitting Down With Sharon Sudduth

Jeff Cochran

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We recently spoke with one of the longest tenured employees at Shapiro Negotiations Institute, Sharon Sudduth.  She shared with us some of the changes SNI has undergone over the years as well as a new initiative she has been involved with.

How long have you been at SNI and how is the company different now than when you first arrived?

I have been at SNI since 1999 so 13 years.  I don’t think our goals or mission is different, but we’re a lot more organized.
We have a greater focus which allows us to give more attention to the clients.  Some of this is because we have a lot more processes in place than when I first came on board.  Technology has also become huge.  We use emails, servers, and clouds on a regular basis.  It’s really streamlined our day-to-day operations.

You take on a lot of different responsibilities around the office.  Can you explain what roles you have?

I manage the administrative duties, the finances, H&R, and IT.  I wear a lot of hats but it’s a small office so that’s to be expected.

What is the best part of your job and what’s the most frustrating?

The best part is that I have my fingers in everything.  Since I’m involved in so many parts of the company, I know what’s going on at all times.  At the same time, the most frustrating part is that I know what’s going on at all times.  Sometimes I see people doing things differently than I would do them, but I have to let them do it their way because I have so many other tasks to take care of.

SNI’s been able to get new business from a number of their service providers.  How has this happened and how have you been involved?

This was something we started last year.  We decided that we want to engage our service providers in mutually beneficial partnerships.  I had a bank approach me to ask for our business.  I explained the concept we were trying to implement and as a result we were able to engage in a partnership.  That led us to do about 20 programs with them last year and a few more this year. This year we are budgeting to get new copiers.  We want to get them from a company that we can partner with.  We have been in talks with one company and so far it has gone well.

Listening With Our E.A.R.

Jeff Cochran

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When a person is under pressure or in a difficult situation, their emotions can start to get the best of them.  Even the best solution to their problem may be missed because they are so caught up in the situation.  The best way to deal with this situation is to downshift emotions as much as possible so that positive progress is possible.  To do this you need to use your E.A.R.  It will help defuse some of the emotions so a solution to the problem can be found.

Empathize: Let the other person know that you recognize that he or she is under emotional stress or pressure and that you’ve been in similarly difficult situations.

Ask: Take the time to ask a couple of nonthreatening questions to gain valuable information and to let the other person vent his or her emotions

Reassure: Let the other person know that you believe, in time or with remedies, the situation will defuse and/or improve.

Follow this simple acronym and you will be ready to overcome the emotional obstacles of others.

Interview with Mark Jankowski

Jeff Cochran

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Mark Jankowski Co-Founded the Shapiro Negotiations Institute in 1995. He has been an invaluable asset to the organization over the last 17 years, but he will soon be moving on to pursue other endeavors.  A couple days ago we were able to talk to Mark about his time at SNI.

How would you describe your 17 years at SNI?

Absolutely life changing.  I recall when we started the business in my apartment in 1995.  My kitchen table was my office and the second bathroom was our storage closet!  I never would have known then that I would be fortunate enough to co-author two books, teach on five continents, and work with tens of thousands of participants.  More importantly, I have worked with incredible people at SNI.  Ron Shapiro has been a mentor, partner, and guide throughout my years here.  Todd Lenhart has for many long stretches carried the entire business on his back.  Jeff Cochran is the most incredible facilitator I have ever encountered.  I could go on and on, but suffice it to say that I know that as I depart SNI, it is in great hands and extremely well positioned for future growth.

What was the vision when you started SNI and do you think that vision has been met?

Our first business cards had the following quote:  “Helping individuals and organizations reach their full potential through The Power of Nice.”  Over the years, we have had many participants come back to us and tell us that not only did our programs help them do their job better, but it helped them live their lives better.  I recall one instance where a participant told us that he was concerned that his son did not want to go to college and that no matter what was said to the son, he simply refused to budge.  Two weeks after taking our course, he e-mailed to let us know that he used our negotiations approach with his son to convince him to go to college.  Other participants attributed leaps in their career paths to what they learned in our programs.  Our vision was never about revenue or building equity so that we could sell the business.  That is not to say that we are not proud of how much the business has grown over the last 17 years, but from the very start Ron set the vision that if you help the people with whom you touch, the business will take care of itself.  I think that the last 17 years are a tribute to that vision.

What has been one of your most memorable moments with the organization?

As with many things, my most memorable moment, and most illuminating for that matter, was at the time one of my greatest failures.  Ever since we started the business, people encouraged us to move beyond focusing on just negotiations training.  They told us that if we offered things like leadership training or team building, we could increase revenue by selling more products to our existing clients.  Ron and I always resisted, knowing that we did not have the level of expertise in those areas to deliver the type of top shelf product that we offer through negotiations training.  However one client begged us to do a team building retreat for them. I violated our ‘stick to your knitting’ mantra, and agreed to give it a go.  It was a total disaster.  We held it at Ron’s farm.  We tried to do a row boat race, and the boats sank. Our campfires almost burned down the fields, and 98 degree temperatures made the entire day almost unbearable!  Ron later told me that we created so much chaos at his farm that the migratory geese stopped visiting!  It was then and there that I decided that we would stick to delivering training focused on Sales, Negotiation, and Influencing, and to stay away from other topics in which we did not possess adequate expertise.  All in all, our strategy has served us extremely well.  And to give you a sense of “the rest of the story”…  Several years later I ran into one of the participants in that team building session and I offered an apology for the “less than adequate session.”  She looked back at me stunned and said, “That was one of the best team building events we ever had!  People have talked about the chaos and hilarity for years.  It really did give us an experience that bonded us all together.  As a matter of fact, my new company is looking to do a teambuilding session and I was wondering if you would do it!”  We respectfully declined.  The geese had returned to Ron’s farm and I did not want to risk chasing them away again.

What do you plan on doing in the future?

Several years ago I started to focus on the technology side of the training business.  I have four kids at home and my wife is in a wheelchair and going on the road to do live training simply became impossible.  I decided then to try to find a way to be able to continue to meet our initial vision, but to do so in a way that used technology such as 3D virtual worlds, iPads, Webinars and the like.  It has been a great challenge as it is very difficult to translate a live training experience into an online format.  Of course I do love a good challenge, and I decided to devote my full time and effort to developing ways for both corporations as well as schools to “harness the potential of teaching through technology in order to reach their fullest potential.” (Sound familiar?)

Ron Shapiro On MLB’s Spring Training

Jeff Cochran

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Our chairman, Ron Shapiro, recently traveled to Arizona and Florida to check in on some of his clients during Major League Baseball’s Spring Training.  While he did catch a few innings, most of his time was spent building and strengthening relationships.  It just goes to show that the game is important, but the relationships made outside the lines are just as, if not more, valuable.  Taking the emphasis on relationships that has worked so well as a sports agent into the business world has led Ron to become a change agent.

How many Spring Trainings have you been to and how does this most recent trip compare to your first?

I’ve been going since 1975, so almost 40 years.  My most recent trip was much shorter than my first trip because Shapiro Negotiations Institute takes up more of my time.  I also used to spend most of Spring Training in Florida because that’s where the majority of facilities were. Now, many teams train in Arizona so I spend about half of my time out there.  Another difference is it’s become a lot less personal now in the sense that the new stadiums and facilities put a greater distance between the players and the fans.  The older facilities allowed for a more personal feel.

What was the purpose of your trip?

I see players and club officials and spend time with them to learn what’s on their minds.  I actually see relatively few innings of baseball games.  If I watch 2-3 innings of a game that’s a lot.  The purpose of my trips isn’t about seeing games, but connecting with people.  I take the things we preach at Shapiro Negotiations Institute, like building relationships, and apply them.

Do a lot of other agents do the same thing you do at Spring Training?

It’s always been the case for agents to meet with clients during Spring Training.  It’s a relatively low pressure environment and allows for higher time availability for players.  It’s not the game-to-game grind of the regular season.  Players only play in parts of games so they are much freer, which is great because it allows for more 1 on 1 time.

Do you have any memorable stories from this or any other Spring Training?

I’m in baseball because I love the people involved in the sport.  This is the time when I get the best opportunity to engage with these individuals.  Meeting with great people and families, like the Mauers, Ripkens, and Pucketts, is a wonderful experience.

One memory that stands out was being able to step in to hit a few pitches.  I love the feeling of a wooden bat hitting a leather covered baseball.  When they were kind and threw the ball up to me…it went well.  When they showed me their stuff…it didn’t go so well.

The Last Baltimore Orioles World Series Title

Jeff Cochran

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The power of relationships can’t be overlooked.  If you want to do business more than once, relationships make all the difference.  Of course you can be a hit-and-run negotiator by making one deal with somebody that squeezes them for all their worth, but then they will never want to come back and make another deal.  If you make WIN-win negotiations and build bonds, great things can happen in the future.

With baseball’s Opening Day beginning tomorrow, we thought it would be a good idea to share a story about the hometown Orioles and their last World Series championship.  Hopefully they’ll be able to bring another championship back to Baltimore in the near future.

The following is an excerpt from the book “The Power of NICE” by Ron Shapiro, Mark Jankowski, and Jim Dale.  Ron’s story shows how special relationships and bonds between players and management in 1979 helped the Baltimore Orioles win the World Series four years later.

The Orioles fell one game short of winning the World Series in 1979.  It was a team that had all the makings of a World Series winner, if the players could be kept together.  But keeping a team of that caliber together during the dawning of free agency was a real challenge.  Hometown heroes were leaving daily for big bucks in other markets.  It so happened, in the rarest of situations, I represented 15 members of that team.  We had negotiated very hard for every one of them, but we and our clients, also tried to understand the other side, the team.

So, when it came time to renegotiate contracts, how many of the players opted to leave Baltimore for greener pastures?  How many did the Orioles decide just weren’t worth the price?  None.  Eddie Murray, Ken Singleton, Rich Dauer, Scott McGregor, Doug DeCinces, Rick Dempsey, Dennis Martinez, among others, all stayed.  They each achieved WIN-win.  They stayed with the team and in the town they wanted and got paid market or near-market value.  That was, and is, unprecedented in modern sports.  It wasn’t because one side caved into the other.  It was because bonds had been made, relationships had been built and deals had been made that lead to more deals.

In 1983, the heart of the team was there and that team won the World Series.  It was a long-term dividend of the Power of Nice.