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 techniques.
It's a force that can be used to strengthen your negotiation techniques. It's a force that can be used to ferret out statements that are not truthful, during a negotiation. That force is 'inside information'. It differs from 'insider' information, but used correctly, it can be just as advantageous.
'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 exercising negotiation techniques. It is 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 negotiation techniques 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 friends negotiation techniques included asking 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' to bolster her negotiation techniques:
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, the negotiation techniques I recommended included giving 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 negotiation techniques 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 techniques. It's not information gathered from an illegal manner or source.
If you're negotiating against a shifty opponent, use 'inside information' as a way to 'keep him honest'. Don't disclose all of your negotiation techniques at one time.