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Applying Real Estate Negotiation To Salary Negotiation
If a study of inefficient hiring policies is conducted, the differences of salary for employees doing the same thing would be top of the list.
You don’t need to be in the workforce for decades to understand this.
In fact, you would very possibly learn about this within the very first week into your first job.
The inefficiency is this – different people are paid a different salary for essentially doing the same job. If you are actually someone who thinks straight, you would want to be the one who is better paid.
In a lot of ways the negotiating stages of salary requests are the same as how it goes with negotiating real estate. Just that the variables are different.
We see this happen all the time at the work place.
Someone have been loyal to the company for the last 5 years and HR refuses to give her a substantial raise. But then she quit and was rehired while pocketing a good 20% increment on her previous salary. Does that make sense to you?
In real estate, sometimes sellers refuse to entertain an offer which her perceives as lowballing when you feel that it’s a fair one. Then a month or two later, you’d find the seller willing to close at a price lower than what you initially offered.
See similarities here?
What about the time where you were told that your salary was “maxed out” for your position. Then a new staff comes in with a better pay package than you. This is like a home seller refusing to sell at a low value, but then sells it at a low value to a “friend”.
It’s just a distasteful feeling isn’t it?
Well, one of the biggest reasons you could be suffering from a low salary was the mistake you made at the interview which landed you your job. If a company has a policy of 5% increments annually, you are never going to catch up with another employee if your salary is $2000 compared to her $3000.
Never will it happen.
This leads us to those somewhat awkward moments during an interview where you haggle over your remuneration package. It is because it’s such a taboo topic that many interviewees, especially those fresh from college, avoid haggling over.
THAT is a very bad rookie mistake.
In real estate negotiations, or any high-level bargaining, any experienced negotiator will tell you that it is a prime directive to set the tone as early as the first meeting… just like at the first interview for a job vacancy…
The interview is the best time to negotiate over your salary because you have nothing to lose.
Interviewers are not able to pinpoint how much value you can actually bring to the organization. And if you get turned away, you just move on to the next interview.
It is at least 10 times easier to get a pay hike before you join a company than after you join.
If you cannot bring yourself to demand a high salary at interviews, consider that a new colleague at your office is very likely paid better than you just because he asked for it at an interview.
Here are 5 real estate negotiating tactics you can apply at an interview for a (pre) pay raise.
1) Don’t discuss your salary until you have been offered the job
Any pragmatic manager will hire someone who is the right candidate instead of someone who MIGHT be the right candidate. And once they have identified that suitable person, they will be willing to pay to hire her.
This means that money will not be a deciding factor at the stage of filtering out unsuitable candidates from the good ones. But if you had gone on record to demand a high pay scale from the get-go, you could scare them off like startled pigeons.
Once you have been identified as the person they want to hire, you are in a better position to talk about your pay package.
In the world of property, home owners who are emotionally invested in their houses sometimes want a new owner who will have care of the house and it’s legacy. Because of this, we can sometimes find home and land owners unwilling to sell, even at a premium price, because the new owner’s plans for it is undesirable.
If you can exude the aura of the profile a seller is looking for in a new owner, you could potentially find negotiations a breeze.
2) Don’t name your price until they make an offer
In any negotiation, the party that goes first will end up ceding ground.
Wouldn’t it eat into you if you name a price and got accepted immediately? You would spend the rest of the year thinking about how you could have got more for what you are worth.
This happens very often to rookie real estate investor acquisitions.
In an interview, by allowing the interviewer to go first, you also get a feel of the trading band they are working within for the salary of your job position.
You could very well be willing to accept something like $2500. But if you allow them to go first, they could enter negotiations at $3000!
You can then adjust your expectations higher and fight for $3500. That’s some handy extra cash we are talking about here.
In real estate this happens most often when unexpected offers to purchase arrive. While you might have a value in mind of a specific property, an enthusiastic buyer could open prices at levels beyond your expectations.
If you go first in an interview, you can expect them to attempt to push your numbers downwards. It’s just the way it is in the corporate world.
The silver lining is that if you have reached the stage where they have decided to make you an offer, they will be more willing to make a first offer.
Whereas, if you are just on the first interview and they are still at the stage of screening potential employees, they will think you are crazy to ask them to name a price.
3) Don’t accept the offer immediately
Mystery and suspense can drive a person crazy when it comes to real estate negotitions. This little psychological tactic can be applied effectively into salary negotiations.
Let’s say you have enticed them to make that first salary offer. Even if it is a number that you absolutely love, remember that you could potentially push it further.
By keeping silent and allowing that silence to make a point, your potential employers might feel nervous about you saying no.
In an attempt to close you, they could adjust their offer and go to the ceiling of what they can offer you. Silence is a very underestimated power play in negotiation strategies.
You could also let their offer dwindle by asking for some time to think it over.
Just say that you need to discuss it with your family. They wouldn’t want to make themselves look like jerks by not allowing you to do so.
The longer you keep the suspense, the more likely they will make a better offer for fear of losing you.
But be careful of overplaying this. You could be dumped if you get this wrong.
Lenders in mortgage negotiations especially, see almost every deal as expendable. If you become too much of a show-off for their liking, they might just walk away.
4) Counter offer
Don’t believe anything anybody says about a salary being rigid and inflexible. Everything is negotiable. You would know this is you have been in the workforce long enough.
The notion of everything is negotiable is especially notable in real estate.
If your silence and delay strategies do not lure your potential new employers into making a better offer, then it’s time you ask for it. They would probably expect nothing less.
In fact, hirers might even be surprised when there is no counter offer.
The important thing with counter offers is that you have to justify why you are worth so much.
They might have a loud chuckle if you demand 30% more of what they are offering. But if you can show them why you are so valuable, your counter will be taken seriously.
Also take into account that you have already displayed yourself as a valuable employee for them to want to hire you.
Some great ways to do this is to use research and market data to support your argument.
Use employment statistics, average salary of people with your expertise in the industry, your salary range in your last job, etc.
5) Accept the salary, then ask for more benefits
Many people stop negotiating once they reached an agreement on salary.
But being the greedy capitalist you are, surely you are not going to stop here. Because once a price has been agreed, hirers are most vulnerable to ceding ground on benefits.
It’s just like getting a property seller to agree on a price. Once he is hooked on the attractive offer on the table, he might become vulnerable to concede a lot of terms and conditions just to drag the deal over the line.
The last thing they want is to lose you when a salary has already been agreed. It would feel like they have lost a bird in hand should they lose you now.
See the psychology being played here?
Veteran employees know how to maximize their benefits. Newbies are often too “friendly” to utilize even 25% of their eligible benefits.
One of the advantages of a full-time staff compared to a part-timer is that the former has access to benefits.
You can often find that these organizational policies can save you thousands of dollars per year if you can decipher what you can claim.
Go through what is available to you and politely ask for more. You wouldn’t know what you could get until you ask.
So go out there on your next interview and use these timeless negotiation tactics to get what you truly deserve for your time and effort.