|Mark O. Haroldsen’s BLOG|
Today I’d like to add a footnote to last week’s blog on the theme of negotiation. Many years ago I took a group of investors to Tangiers in Northern Africa, both for fun and for a seminar I was to put on for them. And what a seminar it was! The best part, however, was a lesson that was learned from a rug merchant in Tangier’s.
While on this trip we all took a tour. The talkative guides took us through the narrow, winding back streets, through the open markets with their pungent odors and all kinds of interesting and colorful people. Then, after half an hour’s stop at the Kasbah, we finally ended up at a rug merchant’s large second-floor shop.
Even though I was paying for this tour, no one had bothered to tell me where we’d end up. It was there in the next hour or so that the big lesson was learned by all of us, a lesson in the art of negotiating. We were all hot and tired but sitting comfortably on mounds of beautiful Oriental rugs. Our gracious host began telling the group about the uniqueness of his rugs then his troupe of articulate salespeople went on to sell their captive audience on the quality of the rugs.
Interestingly enough, they also explained the custom of haggling over price. They would be offended if we were to accept their first price without some sporty bargaining. Priming the crowed into a jovial joking mood, the merchant asked someone to make an offer on a rug he said was for sale at $4500 dollars. One of the guys in my group offered $500 dollars. After a lot of back and forth the rug was sold for $1200 dollars. The buyer had been assured that its value was over $2000 dollars. I found out later that the buyer had it appraised in the USA for a mere $600 dollars. Oops! There was lesson learned there for certain, a lesson that happens to be about one of the oldest tricks in the old negotiating handbook. That is, you start with a very high price to give the illusion of a bargain when the price is dramatically cut.
I’ve used this method many times on both the buyer’s side and when selling a property and you probably have too. You can read more about the rug merchant and related negotiation techniques in my book How to Wake Up the Financial Genius Inside You.
Previously on Mark O. Haroldsen's Blog