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June 8, 2010

Negotiating Tip: Car Buying Negotiations Part 1

Of all the things Americans are expected to negotiate, car buying seems the most challenging and even intimidating.
People seem to actually dread the car buying process and for good reason. Not only are most people ill equipped to negotiate that transaction, our opponent (the car dealer) has built in advantages that tilt things in their favor.
Let's examine here in Part 1 of Car Buying Negotiations five of the mistakes that people are prone to make during the car buying process.
Mistake #1: Complacency
In many of my negotiating seminars I mention how challenging it is to negotiate with car dealers. I admit my vulnerabilities in this area. It never fails. After the seminar a participant can't wait to share with me how successful they ALWAYS are when buying a car.
Now I'll admit that some people might just be successful in that process, but it is rare. It's more likely that someone bragging on their car buying success is being 'taken' and they don't even recognize it.
If one doesn't come away from a car buying experience feeling they've been in a tough negotiation, that's the sign that they've lost big time.
Check out Mistakes #2 and #3 and see if you don't agree.
Mistake #2: Experience
It is a well known that the more you do something the better you seem to get at it. Negotiating for a car is no exception.
How many car negotiating experiences does the typical person participate in during their life time? Five, seven, ten, more? To be sure most of us only experience this event every few years.
How good could we be at something that we only did something every few years?
On the other hand, how many car negotiations does your car dealer
experience every month, every week and even every day? By sheer
weight of experience they have a tremendous advantage. Put another way, they've seen it all.
If we think that our frail attempt to match them will be automatically successful, we're just fooling ourselves.
Advantage: Car Dealer
Mistake #3: Expertise
Herb Cohen in his classic book, "You Can Negotiate Anything" lists a number of power sources. One that never gets much attention is expertise. Expertise refers to special skills, knowledge and capabilities that one possesses. He shares that the party with the most expertise has a negotiating advantage (power) in virtually all cases.
Who, in a the car buying negotiations, has the most expertise?
Who knows more about the market and car buying and selling tends?
Who knows more about car values, prices and demands? Who knows about the competition? Who knows the various ways to structure a car purchase deal that would lead to a profit making opportunity?
Who knows the used car and trade in market better? Who knows the cost and value of options, accessories, warranties, and financing?
In each of the above situations, the expertise advantage goes to the car dealer. While some car buyers claim to have similar expertise, 99.9% of them are either just bragging or fooling themselves.
Advantage: Car Dealer
Mistake #4: Home Court
It is always tougher to play 'on the road'. Going to the other party's location puts us at an automatic disadvantage.
That's almost always the case with car dealers. We go to them.
They can control the environment, the activities, the progress of events and the extra parties that might be integrated into the negotiations.
While the car dealer can go 'check with the manager', 'get an opinion from the used car department' and even 'excuse themselves to go check on something', we are left exposed and uncomfortable in the showroom or on the lot.
They've got references, forms, sales reports, data and other opinions, while we stand alone.
While they probably don't seek to make us uncomfortable, the way the game is played works out that way.
How many times have we asked the car dealer to bring that car by our house so we could check it out and discuss the deal on our home court?
Advantage: Car Dealer
Mistake #5: Posture and Position
Face it. It is tough to go to a car dealer and not indicate, to some degree or another, that we really NEED another car. Our physical presence testifies to our motives and possibly our desperation. It's like we walk in carrying a sign saying, "I really need this deal."
Oh, there are some who feign a casual 'just looking' demeanor, but if in fact we want (need) a new car, our cover is blown rather quickly.
Truth be told, the car dealer has a better feel for activity and buyer traffic than we do. They know that we're not there just kicking tires and checking out the new models. Car dealers can assume the posture of waiting for another buyer better than we can pretend that we're 'just looking'.
Regrettably, it is how the game is played. It isn't a fatal circumstance, but to ignore its reality and impact is costly. We can't change it, but we can compensate.
 Advantage: Car Dealer
So where do we go from here?
Well, recognizing the common mistakes will position us to build a strategy for proceeding. Exactly how we do that will be the topic of my next Negotiating Tip.
In the meantime, join the good negotiators who recognize the mistakes that are common in any negotiating circumstance.
Keep Negotiating.
Licensed Pennsylvania real estate broker for over 35 years, John Hamilton is an author, national speaker and educator who specializes in the art of negotiation. His most popular workshop is, “Negotiating: What’s Mine Is Mine, What’s Yours Is Negotiable” John was the 2002 President of the International Real Estate Educators Association and conducts over 125 seminars annually to business, banking, auctioneer, manufacturer representatives and real estate Boards/Associations. John's book KEEP Negotiating has become a desktop favorite for active real estate agents everywhere For past 15 years he has presented training program nationwide on sales, negotiating and motivational topics. Visit for a free report entitled the Top 12 Mistakes Negotiators Make. 

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