Negotiate Successfully Using ‘Inside Information’
When you negotiate and you have ‘inside information’, do you know when or how to use it? There is an undervalued force that speaks, but makes no sound, a force that can’t be seen, but one that can have a great impact on any negotiation. It’s a force that can be used to strengthen your negotiation position. It’s a force that can be used to ferret out statements that are not truthful, during a negotiation. That force is ‘inside information’.
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‘Inside information’ is a term I’ve coined as information you gather before and during a negotiation that can be used at strategic points in the negotiation. It’s information gathered legally from sources that are uncovered as the result of the research you do before negotiating.
Recently, a real estate investor friend of mine sought my advice on a negotiation situation she encountered. She was in the process of making an offer on a property that had listed for $2.2 million. The existing owner stated he had made a million dollars worth of upgrades to the property and thus the ‘real value’ was worth a sum closer to $3 million. When the property’s appraisal, the price at which comparable properties sold for in the area, came back, the property was valued at $1.9 million.
The owner of the property did not know my friend had received the information displayed in the appraisal and thus, he was still trying to tout the property’s value as $2.2 million. My friend asked the owner if he could lower the price of the property and the owner indicated he couldn’t at that time.
My friend had several pieces of ‘inside information’.
1. She knew the property had been on the market for more than a year.
2. She knew the owner was getting very anxious to sell.
3. She knew the appraisal of the property was valued below the asking price.
4. She knew the current housing market was more than likely going to a see a continuing decline in property values.
I suggested she let a week or so pass and then contact the owner again. In the follow up conversation, I suggested she give the owner statistical information showing where property values were in his area a year ago, where they are today, and where they might be a year from now. I also suggested she let him know that she knew what the appraisal was for the property. She followed my suggestion and a few weeks later, she bought the property for $1.75 million.
As I stated at the onset of this lesson, ‘inside information’ is different than insider information. I make that distinction to highlight the fact that you should not feel badly about using ‘inside information’; it’s information that you gather as the result of doing your due diligence before and during the negotiation process. It’s not information gathered from an illegal manner or source.
How then do you determine when to use ‘inside information’? You should always consider the following factors as an indicator as to the timing of using such information …
1. Make a determination as to the believability of the information you have before using it. In some cases, with some negotiators, you can do more harm than good by introducing information that’s not believable, even if it’s verifiable.
2. Assess the value the information will have on the overall outcome of the negotiation. Some negotiators will become rigid and immobile when presented with information that’s drastically counter to their position.
3. Use ‘inside information’ as a positioning tool, if you wish to let your negotiation partner know that you are aware of more than he may think you know (Be careful not to display the information in a manner that could be perceived as threatening. Depending on the timing of its use, you can either enhance or break rapport).
When you negotiate, be less distracted and more determined to reach the goals you’ve set for the negotiation. If the overall goal of the negotiation is worth the effort you undertake to reach a successful outcome, use the ‘inside information’ you have at your disposal. Don’t be bashful about using this tool as an aid. If you’re concerned about how you will be viewed, don’t display, nor use all the information you have. Do what you can, with what you have to justify the outcome of the negotiation in your mind. If you use ‘inside information’ correctly, you’ll make yourself and your negotiation partner feel good about the outcome of the negotiation … and everything will be right with the world.
The Negotiation Lessons are …
• When negotiating, if you’re negotiating against a shifty negotiator, use ‘inside information’ as a way to ‘keep him honest’. Don’t disclose everything you know at one time.
• Determine what type of information will best motivate your negotiation partner. With some negotiators, hard, verifiable statistical information will move them closer to your position, while others may be motivated to move to your position, because ‘everyone else is doing’ what your information indicates.
• Always be aware of the impact ‘inside information’ might have on the negotiation and make sure your information is valid. If it’s not, you’ll lose credibility and positioning in the negotiation. If you can’t somewhat predict what the outcome might be as the result of using the information, be cautious how you interject it into the negotiation.