How to Save Money Buying a Car and House and Everything Else

The Guidelines to Saving Money When Making a Purchase

1. Establish reasonable goals resulting from solid preparation.

2. Listen in order to understand the other party’s position and interests.

3. Always be polite and avoid showing your emotion.

4. Never make the first offer or bid against yourself.

5. Work through impasses.

6. Hold people to their representations

Establish reasonable goals through research

I sometimes think that this is the most important aspect of preparing for any negotiation. Before you can begin negotiating you must know what it is you want. Often people have no clear understanding as to what they would like to accomplish by the negotiation. They may well have some vague idea about what they would like, but have not established in their heads where they want to end up. Nor do they have any plan on how to get there even if they do have some goal. Such vague notions and lack of preparation will almost surely mean that you will not reach your goal.

There was a folk song that was popular in the 1960s that became the unofficial anthem of the civil rights movement, "Keep Your Eye on the Prize." It sounds simple enough. Nonetheless, this is exactly what you need to think about each time you negotiate: What is the prize you hope to receive through the negotiations? What is it that you really want? The late Stephen Covey in his popular self-help book, "The Seven Habits of Highly Effective People," identified the most important of his habits for a successful negotiation: "begin with the end in mind."

 

That is what I am asking you to do each time you begin a negotiation: "begin with the end in mind." Every time you are engaged in a negotiation, and as we will discuss, you are probably engaged in some form of negotiation many times every day, keep this principle in mind. If you do, you will be more successful in those negotiations. Why does this formula work? Because, if you keep your goal in mind, you are more likely to negotiate in a way that will facilitate the accomplishment of that goal. It does not matter whether you are asking for a raise from your boss or discussing where to go to dinner tonight with your spouse. These are negotiations and having a firm goal in mind will enable you to achieve that goal. Sometimes people are afraid to express that goal to the other party. That can be a major source of frustration. Who hasn’t stood outside with their co-workers deciding where to go to lunch and no one speaks up until finally someone does and then you end up going someplace you hate. Believe it or not, that is a negotiation and you just lost it.

 

How do you decide upon your goal? Let me suggest that one way of doing so is to do your research and plan out what you want to say and do. Let me give you a few examples. Let’s say you are interested in buying a new car and you want to make sure that you get the best price. When you go into the car dealer’s showroom, you will see the sticker price on the side window of the car you are interested in. As you know, that is really just the beginning price; it is not the price you should pay. You will soon be entering into negotiations with the salesperson and perhaps the manager. You want to be prepared; you want to know what the best price you can expect to get for the car you want.

 

One way to find out is to research the price paid by the dealer so that you know how much the automobile has been marked up in price. Two excellent sources of that information are Edmunds.com and Consumer Reports magazine. Edmunds will show you what other people are paying for the same car you want to buy. Consumer Reports, in addition to its yearly car issue and periodic reviews, has an online product that for about $14 will give you a printable guide for the exact car with options you are interested in buying. It will show you not only the cost of the vehicle to the dealer (what he paid for it from the manufacturer) but also the costs of any accessories and packages available for that model.

 

Armed with that information, you can confidently go into the dealer, present your research and ask for the best price based upon the cost to the dealer. Now, the dealer will complain that he will not make a profit if he sells you the car at his cost. Certainly, he is entitled to some profit. Your research also should have taught you that frequently the dealer will receive certain incentives from the manufacturer that are not shown anywhere. That may be the only source of profit he needs.  So don’t be shy about asking for the car at the dealer’s own cost. Who knows, you might actually get the car at that price. In any event, as a result of your research, you have established your goal: get the best price from the dealer. And you have used that research to get that price.

 

This same strategy can be employed when buying a house or a new television as well as many other products. For example, when buying a house, before making an offer, you should research the real estate records  for your county (some of these are available online, so start there) to determine the price paid by the seller as well as research the price recently paid by buyers of comparable homes. Now, your agent may say that she has done so, but I suggest you do your own research. It is your money and no one has a greater interest than you in making sure you do not overpay for your dream home.

 

When buying appliances such as televisions, a good practice is to go to one of the big box stores such as Best Buy or Target, find the product you are interested in, noting its price. If you then go online and check on Amazon, eBay or similar sites, you can determine the price others are paying for that same product. Of course, you can purchase the item from Amazon if the price is lower; or, as an alternative, take your research to the big box store and ask that they either meet or beat that price. You will probably be surprised how often they will make the sale at the lower price. You have established your goal through research and will probably reach that goal.