Many U.S. citizens would prefer to pay full price rather than negotiate. Sometimes it is because they feel uncomfortable negotiating and other times it is because they have become emotionally attached to the thing they want to purchase and don’t want to try to negotiate for fear of losing it.
Psychologists recognize the power of emotional attachment and suggest that if you do want to negotiate for an item, do not hold it or touch it because it shows you are already emotionally attached to the item and “own” it in your mind, which lowers your negotiating power.
While many of us aren’t privy to private negotiations, a barrage of television shows allow us to watch others negotiate—successfully and unsuccessfully. If you have ever watched TLC’s Say Yes to the Dress, you may be surprised, as I often am, to see a woman go into the bridal shop with a firm budget of say, $4,000. Perhaps a friend suggests she tries on a beautiful dress, and she does. She falls in love with the dress and sees herself walking down the aisle in it. It is HER dress.
In her mind, she has already made the emotional connection and does not want to let the dress go. The problem? The dress is well outside the $4000 budget; in fact the dress is $7000.
Likewise, you may watch a show on HGTV like Property Virgins or House Hunters and see a couple look at several properties. Many of the properties don’t have the features they would like. Perhaps one home is too close to the train tracks, another has tile floor instead of wood, still another has an odd layout. Finally, they see a house they love. The location is perfect, the amenities are what they are looking for, the layout is good. They begin to talk about the parties they will have on the back porch and which room will be which child’s.
They have now become emotionally invested in the house, and, unfortunately, as such, they lose much of their negotiating power.
To negotiate successfully, you must be willing to walk away from negotiations, but if you already “own” something in your mind, whether it is a wedding dress or a home or a vehicle, you are not likely to walk away. Without that ability, you have lost much of your negotiating power.
This appears time in time again, especially in the home shows. Maybe the couple has a budget of $250,000 max and the house they want is at the top end of their budget or slightly over. They may try to negotiate, but if the owner is not willing to compromise, the buyers may snatch up the property with little negotiation.
A friend of mine moved from Illinois to Arkansas. In Illinois, her home was nearly 100 years old and was a small 3 bedroom farmhouse. She had the good fortune to sell her home right at the peak of the real estate bubble and sold for nearly $400,000. She and her husband were able to pocket nearly $150,000.
When they began their home search in Arkansas, they were shocked by the amount of home they could buy with the money they had. They settled on a five year old 5 bedroom home for around $300,000. They could have tried to negotiate with the owner, but they decided not to because they really loved the home and how much more they were able to buy.
They were already emotionally attached to the home and didn’t want to lose it.
Was this the only house that would have suited their needs? Not likely. But because they had become emotionally attached, their search was over. Perhaps they could have gotten a better deal, but they didn’t want to try.
While it is easier said than done, the best thing you can do for your bottom line is to control your emotions when making a large purchase and be willing to walk away.