BEST NEGOTIATING TIP 1012: Bartering

Head hunters aren't interested in your dollars. Never venture into the jungle without something of value to offer the residents, like beads, trinkets or your mother-in-law.

To barter is to trade by exchange of services, commodities or other valuables. Bartering is an important aspect of negotiations; often it can be more important than any monetary consideration.

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In a negotiation bartering non-monetary issues of the human psyche to ply human needs as commodities within the settlement framework often provides the incentive one or both of the parties needs to agree to the monetary aspects. An example is a corporate tenant rep trying to lease a property from a private landlord.
Many, especially young, corporate negotiators approach prospective landlords offering money (rent) and security (financial stability of their company as a tenant) and taking little or no time to uncover other incentives that might be of interest to the landlord. four_hands_holding_up_cash.jpgLandlords then focus on extracting as much money as possible leveraging against the corporate negotiator's need for new sites to make bonus, to keep his boss happy and to grow the company to keep Wall Street happy.

More experienced corporate negotiators typically approach the same landlord on behalf of the same company with a full quiver of emotive commodities with which to barter. The commodities might include the quality of the proposed tenant and use, the prospect of multiple transactions with the landlord, the ability to move swiftly through the permitting and construction process, a strong national advertising campaign that will make the shopping center more known within the trade area, the potential of increasing the rent value of the adjacent spaces, and/or the strength of the tenant to landlord's current and future lenders or investors. This 'added-value' approach serves to inform the landlord about potential benefits above and beyond basic rent considerations. If any of those arguments are meaningful to the landlord, the tenant should be able to offer less rent than another tenant thereby bartering non-monetary incentives for reduced rent considerations.

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This tactic of adding ancillary through the barter process applies to almost every possible human interaction. Two sons arguing over who gets the the bigger piece of cake will likely become more compliant should their mother give one son the knife and ask him to cut the remaining cake into two pieces and give the other son the first pick after the cake is cut. They now have a need to work together to make sure the portions are equal and acceptable.

Understanding the value of your available assets and potential barter commodities is a critical part of the strategic planning before a negotiation. In many cases, something seemingly of little value to you may be very valuable to the other person. Often it is a small, personal concession that can reap a major financial windfall. Unless you are aware of the potential value of that concession you might give it away.
You need to understand the needs and wants of the other party as well as your own goals. No one said this was an easy process. It requires time, patience, interviewing skills and research. Then you might be ready to sit at the table.