Negotiation is a part of life before we even realize we’re doing it. When I was younger, my parents finally gave in to a monthly allowance based on extra chores done around the house. Given, I was still responsible for my basic chores of cleaning bathrooms, vacuuming, etc. It took a lot of convincing to get money for extra chores, though. Before I was smart enough to advocate for myself, negotiations rarely went further than exchanging candy with other kids or telling my sister I would vacuum the rooms if she did the dishes that day. (Shout out to my sister for being an awesome sister.)
Now we negotiate when buying cars, accepting job offers, and in most of our cases here on BiggerPockets, buying homes. Over time, I’ve become much more assertive in negotiating house prices, violin/dance lessons (a very active passion of mine), and Craigslist finds. It has literally paid off. There are a few reasons I recommend doing this on a regular basis, which I’ve outlined below.
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4 Reasons Negotiating Regularly Will Make You Better
1. It allows for continuous feedback.
Very recently, I advocated for a 15% increase in salary to my employer, thinking at the time that they may have not allowed an increase at all, as it was outside the scheduled window for such discussions. To my surprise, they came back saying they typically didn’t offer negotiations but that they could meet me at a 10% raise and discuss more come summertime. It was wonderful!
There was another surprise to this as well. I approached my employer asking for a quick meeting so I could propose why my work was worth a 15% increase. Their response was to have the meeting anyway (after the 10% increase was agreed upon) to give me feedback, all of which turned out to be positive. They told me what they appreciated about me, that they hoped I didn’t feel undervalued, and that they’d love to discuss my compensation further when my window for negotiation opens again. This did two things for me as the employee: It made me feel acknowledged, and it make me feel valued. At this point, I asked what I could work on to ensure expectations are met for maximum salary potential, and we discussed that further as well.
Related: 13 Tips for Skillful Real Estate Negotiation
2. You’ll never make and/or save $10K if you don’t ask.
The worst someone can say is no, right? Not quite. There are many experiences where those asking for salary increases have been met with hostility from their employers, so take heed that your mileage may vary when attempting this. However, if you feel no hostility will manifest from such a discussion, let this be a mantra. Do you know how close I came to not asking at all?
Recently, I found a townhouse that would rent for $950/mo listing at $89K. It was pretty new, needed very little work, and in a great area for rentals. I decided to come in at $75K to which the owners came back to $85K. Typical negotiation. I eventually messaged the agent saying the highest I could go with a cash offer (as in, financed by HELOC) was $79K, and the owners accepted. In this case, you’re buying a rental property—you have all the power, as you have a flexible timeline. Tell yourself you’re worth it and at least ask the question.
3. It builds confidence and experience.
Trust me, the more you do this, the easier (and sometimes more fun!) it gets. Once you reach financial independence, you really don’t have much to lose. Once something is negotiated, it doesn’t mean you’re done negotiating. I once had a townhouse under contract with financing and decided to switch to cash (again, financed by HELOC). I asked if the sellers would drop the price down $2K if we paid cash and they said yes. Not a bad deal!
I once bought a condo where in the contract it stated “as is,” and during the inspection, a few issues popped up that were more expensive than I budgeted for. At that point, you guessed it, I asked the seller to address them. They didn’t need to address the issues, and I would have still bought the place otherwise, but they agreed to fix them. Why not at least try to ask?
4. It increases your buying power in more ways than one.
Aside from your ability to negotiate a current deal, remember that money saved from past deals increases your buying power and velocity of your money. You have power to make more money with negotiation tactics and roll those savings into more and more investments. That’s a huge deal! (Pun intended?)
Creativity is your friend, and people are people. Don’t be afraid to play the game once in a while. Happy investing!
What negotiations have you been a part of lately? How did those turn out for you?
Let’s talk below.