One of the very sad truths of life is that very few people understand what other people do for a living. This is incredibly clear when it comes to negotiating prices for services. The buyers are often amazed at how something “so simple” can cost so much. Sellers, on the other hand, are amazed that anyone thinks what they’re creating or providing is easy. As a contractor or builder, you’ve definitely come across unreasonable home owners or buyers who want to haggle over every door knob and screw. But, you’ve possibly also come across a buyer or two who paid way more than they needed to because they simply didn’t know how to negotiate with contractors. As a home builder or contractor, it’s important that you are prepared to negotiate with home owners. If you aren’t prepared you may find yourself either frustrated or taken advantage of.
Build Trust
One of the most important things you can do in any negotiation is build trust with your negotiating partner. You’ll notice I said “partner,” not “adversary.” If you approach the negotiation as a partnership, the other side is more likely to do so as well. One way to both build trust and educate the home owner is to provide them with information about how to negotiate with you. Find articles, like this one, with negotiation tips of which you approve and share them with your buyer. Most home owners are fairly clueless about the actual costs and work involved in renovations or building. The more information you can share, the less frustrating your negotiations will be.
Other ways of building trust include providing local references to vouch for your work, and partnering with other professionals. For example, if you partner with an interior designer to provide referrals for each other you’ll be helping your client. You’ll also have an ally when it comes to talking to that client.
Listen
Homes aren’t just a place to sleep, they’re an important part of a home owner’s identity. When a home owner is haggling with you over the kind of wood you use or the price of a fixture, try to step back and really listen to what he or she is saying. It may be that the issue isn’t really about the price, it’s about the way the home owners sees themselves. You might be able to solve the issue without lowering your prices or changing your timeline. Of course, listening might also reveal a place where you can make additional money, or create a timeline that you like better. Does your homeowner need to be done with repairs before an important event? Would they be willing to pay more to accomplish that?
Know When to Say No
If you’ve been dealing with clients for long enough, you can probably already tell when a relationship just isn’t going to go well. Maybe you get a feeling in the pit of your stomach every time a certain client calls? You can usually tell within the first two or three meetings whether a client is going to be a pain or not. If you feel like you can afford to reject clients when you have a bad feeling about them, then you should. It’s much better to focus your energy on building your business with clients who understand you and your work, than it is to risk your reputation by working with someone difficult. Sometimes you have to walk away.
There are many resources for people who wish to become better negotiators. Articles like this one, are great for people who don’t think of themselves as negotiators. Spend some time researching negotiation tactics and practice your skills. It’s worth it.
