Its late at night, and I’m watching “Pawn Stars” on The History Channel. As I watch, I’m absolutely amazed at how terrible most people are at negotiating. Now, the variable here is that in most cases, people who are headed to the pawn shop are probably hard-up for cash. I get that. But still, the pawn stars are lowballing every client, and with almost zero haggling they are accepting the bids! In fact, its almost embarrassing to watch. One guy had a motorcycle that he wanted to sell for $16,000. The pawn star offers $8,000 and the seller took the deal right away. Another guy has 3 buttons (similar to coins) from Washington’s Inauguration worth a collective $10,000, he takes an offer of $3015. And that’s only because he asked for more than the initial $3,000 offer, so the buyer threw in another $15… Nice guy.
Now, I’m not a professional hostage negotiator but I’ve learned enough, studied enough and have seen enough that I can tell you deals like this happen all the time. And its sad to watch – doesn’t matter if its $100 or $1,000,000 – it happens at all levels. Without spilling any secrets that I’ve learned along the way, I can tell you that the one of the most important things that any party can bring to the table is INFORMATION. In fact, its only second in importance next to being willing to walk away from a deal. None of these buyers have either of these strategies in the bag.
Watching this show, its clear that if the guy with the coins had been willing to walk, that the offer would have changed. The pawn star’s face even showed that he KNEW he was scoring a deal – the guy was practically salivating. Now as a viewer, we knew the pawn star was looking for a 50% profit margin – something the seller had no knowledge of. The pawn star heard the appraiser he brought in to meet with the seller (clue #1 that you have something of value) say the total value was somewhere over $10,000, so its only pretty much common sense to assume that $5,000 was an attainable deal point. But, the seller neither did research or sought information about his items. After all, if he knew going in they were worth $10k, he’d never accept a paltry 3k. He would’ve walked in and said: “I know they are worth at least $10,000, I am willing to sell for $7500.” At least in this case he’s giving a reasonable offer, and coming in with knowledge makes it difficult for the pawn star to counter with an overly crappy offer. But, without doing any due diligence, when the seller heard the appraised value he acted overly excited which clearly gave the buyer the indication that he was a lightweight. Is $5k a good deal? Probably not either, but its 66% better than $3k. Chances are if the guy held off and did some research and sought another avenue to sell it, he’d walk away with $6 to $7k at least. But hey, this is Vegas…
Let’s do a 8 second Tivo rewind a few times and go back to the guy with the motorcycle. He came in with knowledge of the product, a bike that could go 250MPH. But he told them he was in a rush to make a deal. He was moving and the bike had to go – and he wasn’t going to hide that from the buyers. He asked for $16k, took $8k and the deal was done. Again, information – if the seller had some hint of reluctance to sell, maybe the deal would’ve gotten better. ”Well, I love this bike and I guess with the right offer I may let it go. But I really don’t want to let it go. Did I tell you this is the fastest bike in Las Vegas?” $10k would have been 25% more for the seller and for the pawn star its still a 33% profit margin. He told us, the folks at home, that he thinks he can get $15K for it.
But the best of the night was a guy who came in with an antique “calculator”. It was from easily the early 1900′s and it came with the actual instruction manual – in great shape – with his grandmothers name on it. You had to crank the thing to do a calculation – and it worked! The pawn star was impressed with it, thought it was really cool that the manual was there… The seller asked for $250, the buyer offered $75, and the deal was done. And there was no editing, it was that fast. I don’t know about you, but something in working condition with the manual and with my grandmothers name on it… I’d probably keep it no matter what. Call me a hoarder, but seriously… If you really want to sell it, counter offer at $125, settle at $100 and make 33% more.
The fact is, what people forget is that negotiating is the quickest and easiest way to make bottom line dollars. I laugh at coupon cutters and others trying to save a buck, when the same people oftentimes walk into a car dealership and take the deal after being told “NO” once. In the case of our poor sellers above, if they had just a bit of strategy they could have done at least 25% better in the case of the bike, 33% with the calculator and 66% better with the coins. But, then again, if they got a good deal they never would’ve made the show to begin with!
On another note, if I was running a business like Pawn Stars, I may for a minute be afraid that my business secrets were being laid out on TV. But people are stupid, and as I said, it’s Las Vegas. They’ll be fine. And, in fact, some morons may go there just to get ripped off and see these guys in person. ”Isn’t the father on the show just so funny? Lets give him grandma’s engagement ring and say that we sold it at their store!”
Check out these two books for some great tips on negotiating:
- Negotiate This: By Caring, But Not Too Much (Herb Cohen)
- Secrets of Power Negotiating (Roger Dawson)
