The Savvy Shopper: Start Negotiations with the Right Opening Offer

"Make me an offer," says the car salesman.

And yet, as a professional negotiator, the salesman probably believes the old saying, "The person who speaks first, loses." Making the wrong offer can hamstring your good deal. So how do you know where to start? Too low and they laugh or throw you out. Too high and you leave money on the table.

Recently, with GM selling cars in California through eBay, we advised shoppers to use the "Make an Offer" choice. But apparently the offers were all over the place and didn't result in many sales. So we came up with a solution.

From our sales data, we have listed all the typical amounts that GM cars are discounted. Once you know where most other buyers wind up, you can set your opening offer accordingly. So if the typical discount for the Malibu is 9 percent, you could offer maybe a 12 percent reduction in your opening offer. The dealer will counter offer and you're done.

So the rule of thumb is that you want to be in the ball park, but on the lowest end of the range that they would consider. If you aren't anywhere near the ball park, they won't even counter offer. They may invite you to leave.

Once, I was negotiating for a used car and I made an opening offer. The car salesman responded by saying, "Out the door?" I should have responded by saying, "Yes, of course." Instead, I stupidly said, "No, before taxes."

The fact that the salesman would even consider my offer to be close to "out the door" (which would meant a much lower figure for him) showed how low he was willing to go.

So, remember to consult any pricing information you can find before making your opening offer. The right number will set the tone for a successful negotiation -- and good deal for you.

Posted by

Philip Reed September 7, 2009, 1:24 AM

Permalink

Categories:

Car Buying, The Savvy Shopper