In this scenario, I played the role of the seller. The seller listed his car for sale because he needed to raise $12,000 to place a down payment on a condominium. The Kelly Blue Book (KBB) value for the car was anywhere from $10,000 to $16,000, depending on the condition of the car. Unbeknownst to the seller, the buyer knew about the seller’s need to raise $12,000 for the down payment and could leverage this information to get a lower price for the car.
Before starting negotiations, I wrote out my plan with the following key points: 1) start my offer at $15,000, 2) Go no lower than $13,000, 3) Highlight the excellent condition of the car, and 4) Be willing to offer a concession of paying the title transfer fees ($300 value). If the buyer’s final offer were lower than $13,000, I would walk away from negotiations.
I started negotiations by stating the KBB value of the car was from $14,000 to $16,000, based on the excellent condition of the car. My plan was to use those figures to as the baseline to negotiate. If I started at $15,000, the buyer may talk me down to $14,000. This would be more than enough to cover the down payment on the condo and meet the established RP. In my eyes, this would be a win-win strategy. I would sell the car at a price to cover the down payment and some new furniture. The buyer would obtain a car that would have potentially sold for $16,000 from a dealership and avoided any additional fees.
The strategy didn’t exactly work as planned, because I forgot that the buyer could have access to the same KBB data. The condition of a vehicle is highly subjective to a private seller and a buyer without a professional third-party assessment. In my opinion, the car was valued at $15,000; however, the ...
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...ued to negotiate to gain a concession to increase my profit. We agreed that if the project were completed on time, I would earn a 1% bonus or $299,500. This 1% bonus ended up more than doubling my profits to 20%! ($250,000 profit + $299,500 bonus).
The consequence of not taking the other firms’ bid into consideration placed my opening bid severely lower than the competition. This limited my ability to negotiate a higher rate. If I hadn’t received the concession at the end of the negotiation, I would have lost out on the potential for higher profits because I started my bid low.
In the end, I am surprised how effective having a structured negotiation cadence and bracket improved my confidence and ability to react to counter offers. I may have undersold myself with the opening bid, but I still ended negotiations at a price higher than my established target.
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