How to negotiate your way to lower homeowner costs
Does the word “negotiation” make you sweat, or make you giddy with excitement? For most people, negotiating feels like a confrontation. What if they say no? Will I feel foolish? How long will it take? Is it worth it? These are the sorts of questions that come to mind when homeowners think about negotiating. But, in this article, I’ll show you how to negotiate your way to lower homeowner costs quickly and painlessly, and help you save a lot of money.
1. Prioritize what costs you want to negotiate
You are going for biggest savings for your time, right? You should prioritize negotiating your largest costs first. If you’ve been using our savings planner, you’ll have a tried and true, easy method to identify your largest costs. If not, download it for free now.
Now, some of your largest costs are non-negotiable. Property tax, for example (though take a look at how you may be able to reduce it). Another non-negotiable cost is your energy costs. You can find energy saving ways to reduce it, but generally, most people can’t shop around for their energy.
So, let’s look at your largest costs that are negotiable. For many people, homeowners insurance is one of their biggest costs. That is certainly a negotiable item, and take a look at our step-by-step guide to negotiating your homeowners insurance down. Other negotiable items are credit card interest rates (call your credit card company and ask them to reduce your interest rate! I once got my credit card company to reduce my interest rate from 15.99% to 7.99%), cell phone (I reduced my cell phone bill by 40% simply by shopping around and switching carriers, to an even better plan) and cable bills, and also services, like landscaping, plumbing, pet care, and all the regular services that you use that really add up.
2. Ask for a discount
Your first plan of attack is simply to call your product or service provider and ask, “do you have any better deals I can take advantage of”, and see what they come up with. You may find that your plumber, for example, has a deal where if you pay for your annual boiler maintenance upfront, they will waive the initial fees and give you a discount on any repairs. You can mention how much money you already spend with them and how long you have been a customer.
For your cell phone carrier or cable provider, you may find that they are running a promotion that you could easily switch to. For your credit cards, they may offer to drop your interest rate by 1 or 2 percent, or even more, saving you instant money if you carry a balance.
Simply asking for a discount is a great way to dip your toe into negotiations, in a way that doesn’t take a lot of time or effort and can really pay off. Imagine if you asked every company who provides you with a product or a service for a discount. How much money could you save just by picking up the phone and having a quick conversation?
Well, you’ll never know until you try. 😉 Try it!
3. Do some research and play some hardball
Ok, so you’ve identified all of your largest costs, and you’ve called the provider and asked nicely for a discount. But, what happens if they don’t budge? Let’s employ a technique called BATNA. It stands for Best Alternative To a Negotiated Offer. It’s a standard negotiation technique where each party identifies what the alternative is if your negotiation fails. Sound complicated? Let’s make it simple!
Let’s take homeowners insurance. Let’s say you pay $5,000 a year for a standard policy. You know that there are more than a dozen other carriers who can provide you with a similar product.
First, you call your insurance company and ask for a discount. Next, you find out what your next best alternative is. This is where you do some research. Call a few companies (here is a script you can use for insurance, which you could easily adapt to other types of product negotiations). Make sure you are comparing apples to apples, and find a lower price for the exact same thing you are getting now. That’s your BATNA! Your best alternative to negotiating with your current company.
Now, call your company and tell them that you are thinking of switching to this other, identical product that is less money and ask them to beat it (or at least match it).
Their alternative to dropping their price is to lose you as a customer. That means they’ve lost $5,000 a year in revenue. That’s their BATNA. Not so great, is it?
This last technique, where you actually shop around and present the company that provides your product or service with a better offer, results in the biggest discounts to you.
Sure, it’s more time consuming than asking for a discount. But often it’s a win-win situation: you get a discount and the company gets to keep you as a customer!
4. Avoid fear by getting a script
Many people don’t ask for things because they are afraid of hearing “no”. And, I totally get it. The first time I had to do sales for a company, it was terrifying. What if they say no? I don’t know why as humans we so fear rejection. After all, it’s just a word from someone you often don’t even know and may never talk to again, especially if you are talking to a someone at a large company.
But yet, its very human to be afraid of the word no. So, here’s a trick: script out what you are going to say ahead of time and simply read it. Or adapt one of our scripts to the particular product you are negotiating a discount for.