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10 Negotiation Mistakes That Will Destroy Your Deal

In any kind of bargaining situation, from million-dollar property deals to purchases at a flea market, there are many pitfalls to avoid.

What you say and how you say it can be the difference between walking away with a steal — or empty pockets. So before you make any more deals, make sure you steer clear of these 10 negotiating mistakes.

See Also on Kiplinger: How to Negotiate a Car Lease

1. Waiting for Someone Else to Set the Price

It's one of the biggest mistakes in negotiating, and people continue to make it every single day. They believe that by waiting for the other person to speak, and say a price, they are putting themselves in a position of power. It's actually the complete opposite. By saying the price first, you are doing something called, "anchoring." For example, when looking at a new or used car, don't wait for the seller to set the price first. Come in low, and firm. You have now anchored the price you're negotiating over at a much lower place than the seller is comfortable with. He or she will raise it up, but you have set the bar.

It's a common tactic used in sale pricing. Set a high before-price, anchoring people to that. Then, drop the price by 50 percent. In reality, that lower price is actually the price the business wants for the item, but they are now making you believe you got a bargain. A full price $50 item will sell poorly compared to an identical $50 item that was originally marked as $100.

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2. Showing Fear or Weakness

Sometimes striking a deal can be a scary prospect, especially on a big purchase like a home or car. However, as nervous or fearful as you are, you cannot let that play any part in negotiating. The salesperson is trained to smell that kind of fear, and will use it to his or her advantage.

So, whatever your stomach is doing, you need to have a calm, collected, and serious demeanor. Let the person know you're not to be messed with, by dropping a few hints about all the preparation you've done for this meeting. And when it comes time to talk hard numbers, do not show any kind of weakness either. Being stubborn may not be an admirable trait, but when it comes to the deal you want to make, stick to your guns. The old saying is true… give them an inch, they'll take a mile.

3. Signing Anything Without Reading It First

We have all signed agreements like the Apple terms and conditions, which appears to be about as long as "War and Peace" without reading them. We know it's just not worth our time. But when involved in a negotiation, you must read over everything before signing. Never trust a salesperson at their word when it comes to contracts or binding agreements. You're signing something that could tie you up in knots for years, so make sure you know just what you're agreeing to.

If you need a professional to look it over, insist on that. Too often, someone will strike a verbal agreement, but sign one that is very different. Trust, in this case, is not going to cut it. Read it all, thoroughly, and ask questions at any time.

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See Also on Kiplinger: How to Negotiate With Home Buyers

4. Not Doing Your Homework

When it comes to getting a great deal, you need to be prepared to put some time into researching it. Whether it's a new car, a home, a computer tablet, or even some fruit and veggies at the local farmers market, you cannot haggle blindfolded. If you try, you'll be uncovered as someone who doesn't know what they're talking about and your deal will go nowhere. So use the technology you have available to really dig deep. If it's a new car, find out exactly what the dealer paid for it and what the typical "out the door" cost is. If you're at a farmers market, look around, and see what the prices are like at competing stalls. Does someone have a better deal on oranges? Can they match it, or beat it? Knowledge is power in any deal you are making.

5. Confusing Friendliness With Friendship

It doesn't matter if you are well-acquainted with the person you're dealing with or they're a complete stranger. When it comes time to make the deal, amicability, charm, and kindness all confuse the issue. Salespeople in particular are trained to say and do things that make them appear like they're your best friend. They're not. They just want the sale and they know quite well that they'll catch far more flies with honey than vinegar.

If you are caught in a bargaining situation and the other party is trying to say things that make you feel guilty about asking for something you want, it's time to regroup. A deal is a deal, and any kind of emotional blackmail or, "Hey, we're buds. Can you cut me some slack?" language has no place at the table.

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6. Not Sticking to Limits

It happens at auctions all the time. People see something they have to have, whether it's on eBay or at a live auction. They say beforehand that "$1,000 is the highest I'll go," and yet when caught up in the heat of the bidding, they blow right through that limit and spend more than they can afford.

Setting limits is necessary to protect yourself in the bargaining arena. Before you enter it, you are calm and know the numbers well. Once in it, emotions can run high, and common sense gives way to pride or greed. Don't fall into that trap. If you can, bring cash to a live auction and no other way to access funds. That means it's almost impossible to go over the limit you set.

7. Telling People What You're Ready to Spend

Never, ever give anyone that kind of information. Car dealerships rub their hands with glee whenever anyone says, "I'm willing to go up to $20,000." That information is something only you should know. As far as anyone else is concerned, you are willing to spend the least amount possible and not one penny more. By giving out this information, you have given away your anchor. A slick negotiator can get you to go beyond that price with a, "Well hey, it's only $1,000 more, and it's such a good deal."

Now, what you can do is create a fake limit and anchor the other party to that. You may be ready to spend $20,000, but set the max at $15,000. That's your top limit. When they get you to spend $16,000, they'll feel like they've won, and you know you were willing to spend $4,000 more.

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8. Going for the Win

When two parties come together to discuss a deal, both want to win. Obviously, that cannot happen. The seller wants to get the most possible money, the buyer wants to pay the least. By obsessing over the win, you can lose sight of the ultimate goal — to get a deal. If you let the other party think they have won, when in fact you have come away from the table with everything you wanted, then you actually win.

What's more, if you try too hard to get every single thing you're asking for you could blow the entire deal. So, know beforehand what you want out of the deal rather than being greedy and taking it all.

9. Being Nice

While it may not be true that nice guys finish last, it can definitely apply in the deal-making process. Being warm and cordial is all well and good, but never be afraid to break away from that to show you mean business. You can laugh and smile all you want, but it's also OK to be stern and say things that some may find abrasive or even rude. As long as you do everything in a civil way there is nothing wrong with ditching the nice guy routine and playing hardball.

10. Showing Eagerness

"Oh I love this house. I love it, I love it, I love it. Let's make a deal." With a phrase like that — whether it's a home, a car, or a new TV — you're putting yourself in a position of weakness. You have just told your counterpart that you love what they're selling so much you'll do anything to get it. They know this, and they'll use it to their advantage.

When faced with your dream home or car, never show those emotions to the seller. As far as they're concerned, you could go either way, and they'll really have to work hard to make a sale. And if it comes down to it, walk away. Get up from the negotiating table and leave. You should never be afraid to let a deal go no matter how much time you've invested. If it's not the deal for you, however much you love it, then you cannot go ahead.

This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website.

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This article is from Wise Bread, not the Kiplinger editorial staff.