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CNN Live Saturday
"Dollar Sign": Negotiate Your Way To A Better Life
Aired September 13, 2003 - 16:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDERICKA WHITFIELD, CNN ANCHOR: Welcome to "Dollar Signs," where we hope you make the most of your money. Today, we want to show you how to get the best deals whether you're trying to buy a house, or maybe try and get a higher salary. And maybe even try to negotiate a better vacation, or something like that. Well, it can all be done by negotiating. Our Ali Velshi takes a look at the art of the deal.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: If you were willing to pay cash, I might be able to drop that down to, say, 716 each.
BERNIE MACK, ACTOR: No.
UNIDENTIFIED MALE: Yes, sir.
MACK: You would do that?
ALI VELSHI, CNN FINANCIAL CORRESPONDENT (voice-over): You may not be as good as the character Bernie Mac plays in the movie "Ocean's Eleven," but are you a good negotiator?
UNIDENTIFIED MALE: I'm an attorney. So I do it professionally. Just give them an offer and hope they accept it.
UNIDENTIFIED FEMALE: Better than my husband. I comparative shop. And I let them do what's fair. Expect that they need to make a little money and I need a good deal. So whoever's willing to work with me the best is who we go to.
VELSHI: Negotiatedding is an art. It's also something you can learn.
LINDA BABCOCK, AUTHOR, "WOMEN DON'T ASK": I think that's the positive news about what I've been working on, and that is, that people can change. They don't have to be stuck not negotiating for what they want. They can learn to negotiate and do so effectively.
VELSHI: And with people so worried about their jobs, what happens if negotiations with your employer hit a snag.
BABCOCK: There may be other issues you want to negotiate about. If it's for, say, a new job, maybe vacation time, or hours of work, whether they can have flex time. There's lots of things that are negotiable. So not to focus primarily on salary.
VELSHI: What about your home. In the still hot housing market, shopping around for a mortgage can save you up to 3/4 of a percent.
MELISSA COHN, MANHATTAN MORTGAGE: When you start shopping for a rate, don't accept the first offer that you're provided to by a bank. Take that offer and go out and shop it around, and tell the other bankers or brokers that you're talking to that you've been offered a race of X, can they do better.
VELSHI: "Consumer Reports" automotive editor Michael Quincy says check your emotions at the door, especially when buying a car.
MICHAEL QUINCY, "CONSUMER REPORTS": The worst thing that could happen is you fall in love with a car and you'll say, I'll buy it. I'll buy it. It doesn't matter how much it costs. I want that car. The best thing you can do is find out how much the dealer paid for the car. Find out the invoice price. Find out the incentives, the hold- backs that you can take off the price of the car.
VELSHI: Finally, confidence is key. If you don't have it naturally, take it.
BABCOCK: If it's an interview that involves a negotiation, do your research on what is appropriate to ask for, and practice. Practice the negotiation with someone that you know, so that you can be a lot calmer going into that process.
(END VIDEOTAPE)
VELSHI: Now, Fredricka, we talked about mortgages, we've talked about cars, we've talked about your job. But millions of Americans carry balances on credit cards or installment loans or lines of credit. And sometimes a lower rate is available to you just for the asking.
Most credit lenders, most lenders have something called customer retention incentives. If you call up and say, someone else has made me a better offer for a lower interest rate on my credit, and I'm thinking of moving my account over to them, it could trigger them to offer you something lower. Again, they won't offer it to you if you don't ask for it. But it could save you a lot of money -- Fredericka.
WHIFEILD: Yes, it's amazing how many of these lenders are willing to negotiate if you just bring it to their attention that there's a better rate out there. They want to keep you as a customer.
VELSHI: That's right.
WHITFIELD: Ali Velshi, we'll see you again in a moment.
Well, do you know who are the best bargainers? The worst maybe? According to the book, "Women Don't Ask," women generally do not negotiate as well as men. But it doesn't have to be that way. The book's coauthors are joining us now, Linda Babcock is in Pittsburgh. And Sarah Laschaver is in Boston. Good to see both of you.
Why is It, sarah, let me begin with you, why is it that women don't seem to be good negotiators. Is it just that they are just taught along the way not to be a little bit -- ask people to be a bit more flexible with what it is that they want?
SARAH LASCHAVER, AUTHOR: I guess I would answer that in two parts. First, I would say that women are actually terrific negotiators. The last 20 years of negotiations scholarship have shown that women's general approach to negotiating, which is to try to collaborate, work together, find a win-win solution tends to produce better agreements on both sides. It tends to enlarge the pie, the expression that economists do.
What women tend not to do well is negotiate aggressively enough for themselves and to know to negotiate frequently enough for themselves. In other words, they don't often ask for things that they could get.
WHITFIELD: And Linda, there are things that they need to perhaps consider, everyone, not just women, but men and women need to consider. What are they willing to lose? What are they hoping to gain perhaps?
BABCOCK: That's right. I think when you walk into a negotiation, what's critical is that you be prepared. And by preparation, what I mean is, that you have the worst deal you're willing to accept as well as a target going into negotiation.
Those two pieces are critical for setting an appropriate strategy. So it's for a salary negotiation, think about what's the lowest salary I'm willing to take to take this job, as well as set a higher target, what am I really shooting for. And that helps you with your strategy.
WHITFIELD: For example, if, perhaps, a potential prospective employer is offering you $35,000, what you really want is $42,000. You need to find a way to split the difference? Perhaps ask for $40,000? Or what would be your best recommendation?
BOBCOCK: Yes. If you want $42,000, and you're being offered $35,000, you have to come in above $42,000 with a counteroffer and say, something like well, what about $45,000? Now, if the employer says no, what you shouldn't do is concede right there to their offer of $35,000. But say something like, well, how close can you come to 45,000? Could you perhaps do $43,000? Make a small concession and put the ball back in their court.
WHITFIELD: Well, Sarah, doesn't part of the problem sometimes feel like they're asking for the ridiculous by trying to negotiate? And that alone kind of, you know is disarming for them, and they kind of feel like they don't have a whole lot of power to ask for?
LASCHEVER: I think women worry a great deal that they think what they're asking for is absurd or ridiculous and in most cases they're mistaken. Often we've heard, in people that we've talked to, you know, somebody's father, somebody's husband said asked for X and ask for Y. And they say, oh, my god, I can't possibly do that, and they'll just laugh at me.
And the fact is, they probably won't laugh at you. They may say we can't do that, but there is a direct correlation, studies have shown, between your target and what you get. In other words, the higher -- the more you ask for, the more you get. And the higher target you take into a negotiation, the more you're going to come away with. And typically men go into negotiations with higher targets, so they get more.
LASCHEVER: This is really where gathering information is helpful. So that a woman knows what she's asking for is appropriate. In the salary domain, there's lots of ways that women can gather information about salary. Lots of sources on the Internet, such as salary.com, or jobsdoor.org, about what salary is appropriate.
Women can also use their networks. People that they know in jobs like them. To ask around and see what other people are getting. And ask men as well as women to find out what your colleagues are really making.
WHITFIEDL: Linda, bottom line is, you're saying in your book, along with Sarah, that perhaps not negotiating can be very expensive. How is that?
BOBCOCK: Well, it's extremely expensive to not negotiate. We looked at students graduating with masters degrees, found that only 7 percent of the females negotiated, whereas 57 percent of the males negotiated. I did some calculations to see what those women left on the table by not negotiating. And it turns out that figure is $1 million.
They lost $1 million in earnings over the course of their career by not negotiating just that one time. So that's a really big return on investment for a one-time conversation, $1 million.
WHITFIELD: Linda and Sarah, stick around. We're going to take a short break. But right now, some of your e-mails coming up next on dollar signs. You can still send in your questions. If you've got more. Or call us.
(COMEMRCIAL BREAK)
WHITFIELD: Welcome back to "Dollar Signs." We're talking about bargaining skills. How to negotiate the best deal. Well, negotiating coauthors Linda Babcock and Sarah Laschaver are with us. And our financial correspondent Ali Velshi is with us in New York. Good to see you all again.
All right, Angela in D.C. is on the telephone with us. And she has a question. Angela, what's your question?
CALLER: My question is, is there a way to negotiate a best deal on a consolidation loan for your student loans?
WHITFIELD: Ali, I'll let you take that.
VELSHI: Fredericka, I was going to make the point a little earlier, that pretty much everything is negotiable. You can go to shops on Madison Avenue and negotiate for handbags and boots. One of the things that isn't negotiable is the rate that is offered on a consolidation of federal loans. Things like your Stafford loans and your Plus loans, the rate is set. I might be wrong, but it's July 1, it's set, and we've seen the lowest rates this past July.
You can consolidate your federal student loans once. There's one exception to that, and that is if you go back to school and take another loan, you can then consolidate again. But you consolidate at the rate that is set in the summer and that is not a negotiable rate.
Now what you can do is, if you have loans or debts or if you took out credit card debt and you're paying for school on those things, you can go to a lender and try and get an installment loan or a line of credit at a lower rate. But if it's a federal Sally Mae backed loan, no, that's actually not negotiable. You could phone them and negotiate payment terms and extensions, things like that. But you can not actually negotiate the rate on that.
WHITFIELD: OK, I've got an e-mail question coming in from Barry of Key West, Florida. How do I find a best deal on don't ask, don't tell mortgage -- Linda.
LASCHEVER: I'm sorry, could you repeat the question?
WHITFIELD: Yes, the question coming from Barry, how do I find the best deal on a don't ask, don't tell mortgage?
LASCHEVER: On a mortgage?
WHITFIELD: Yes.
LASCHEVER: Well, I think the one thing is to shop around. It's to search the Internet for different rates, compare and contrast and always negotiate. If you like a particular lender, then negotiate with them. Say, hey, I saw a lower rate, can you match it. And just make sure you always negotiate and always do your research before you start to negotiate.
WHITFIELD: Okay. And perhaps...
VELSHI: Fredricka?
WHITFIELD: Go ahell, Ali?
VELSHI: There will always be a premium to a don't ask, don't tell. That's known as a no income verification mortgage. So, that's based on your credit profile and the quality of the asset you're buying.
If you have less than stellar credit, or buying a property that's iffy, you're not going to get it, nevermind negotiate a rate. It's, as Linda says, it's the same as any other mortgage, you can alway negotiate, but whatever low rate you get on a 30-year fixed term you're going to pay a premium on a don't ask, don't tell mortgage regardless.
One of the things to remember, as mortgage refinancing and closings slow down, you'll find banks more to deal than they have in the past couple of years where they have been so busy, they don't need to deal.
WHITFIELD: Negotiating mortgage rates, trying to buy a house, all very intimidating. And sometimes buying a car can be very intimidating, too. This e-mail coming in from an unnamed person who asks, can you offer any substantial negotiating advice or tips to purchase a new vehicle? Sara?
LASCHEVER: Well, that's a very good question, because research has shown that car dealerships tend to offer higher rates to women. In other words, they quote higher prices to women than they do to men.
WHITFIELD: So it really has nothing to do with what their credit rating is, but simply based on sex?
LASCHEVER: Based on sex. It actually is also true of African- Americans. They quote higher sticker prices to African-Americans. So when a women or African-American walks into a car dealership, he or she should plan to offer a much lower price than he or she is being quoted. Because these are all negotiable and they should not let themselves be taken advantage of by the expectation that they will concede to a higher price than a white man would.
And again, I would want to add, I may sound like a broken record, but doing your research is key. There's lots of information on the Internet. Like carsdect.com, or "Consumer Reports" that will list really valuable information about what your dealer purchased the car for. And to alwayscheck that out first.
VELSHI: More so than anything else you can negotiate for, you can find out exactly what you need to know about a car. Two tips about negotiating for a car, go in with the invoice price, don't talk about your trade-in until you've negotiated your final price. Watch out for the extras. You may negotiate a base price that's lower than you're going to pay and then start adding the rust-proofing and this, that and the other thing, and that's actually where you get hit. Be careful about the extras when you are buying a car.
WHITFIELD: Something else that also happens when people try to negotiate their price for a car, the next follow-up question seems to be, are you going to be paying cash, are you going to try to finance. And sometimes the dealers make it a little bit difficult to try to negotiate just simply because of that question.
VELSHI: One of the things that people need to remember is that when you're going into a car dealership, or frankly any of the big ticket items that you're negotiating for, you're sitting across the table from somebody who does this for a living.
Now, one thing that's changed in the last few years with big ticket items, like car incentives, car financing rate, mortgages, you sort of sit down at the table and it's treated like, wow, look the deal we're giving you. This is such a fantastic deal you're getting, $3,000 back and 0 percent financing. You as the negotiator, you're sitting here thinking, well, I got a really great deal. I better not ask for anything because they're going to think I'm stupid. Don't swing at the first pitch. I think Linda and Sara will tell you, there's always a deal to be had.
WHITFIELD: This email coming from Fleshing, New York from Rohikh Gupta (ph) who asks, "what is the point of intersection of best deal and deal lost?" Linda you want to take that?
BABCOCK: I'm sorry, I didn't...
WHITFIELD: What is the point of intersection of best deal and deal lost?
BABCOCK: Best deal and deal lost? I'm afraid I don't really understand the question.
LASCHEVER: I think maybe I can answer that.
VELSHI: Go ahead, Sara.
LASCHEVER: I think that what this question reveals is the sense of risk that a lot of women feel around negotiating. They're afraid if they ask for too much, they'll lose the deal. Rather than reframing the interaction as, you know, the -- a process by which two people or a group of people try to find a solution that everybody can be happy with.
So I don't think there is exactly a point of intersection. I think women need to assume that they can ask for more than they're going to get, and if somebody says no, they can back down a little bit. Or they can say, well, if you can't give me that, can you give me a couple of other things, you know, flexible work schedule or more vacation time or something like that. And that if they don't think of negotiation as basically an aggressive act, but they think of it as a collaborative act, they won't feel such a great sense of risk.
WHITFIELD: Ali, you're nodding your head in agreement on that. Anything you want to add on that?
VELSHI: I think there's a point where people think that if they make an offer that's deemed ridiculous, that deal is over. Well listen here, in financial journalism, everything we talk about are deals.
So, there's no sense that the deal is not recoverable. If you don't get what you ask for, it doesn't mean the deal is gone and you have to walk away from the table. It's a business of coming to a consensus on what is appropriate, where does the car dealer make the money, where does the bank make their money. I think part of the question is, don't worry about losing the deal. Be ready to walk away, but you can come back with a different offer.
WHITFIELD: All right. More calls and e-mails right after this.
(COMMERCIAL BREAK)
WHITFIELD: Welcome back to "Dollar Signs." We're taking your questions about the best ways to bargain. Our Ali Velshi is in New York. Linda Babcock is in Pittsburg. And Sara Laschaver is in Boston.
All right, you guys, I've got a caller on the phone for us from Missouri. And this from Charly. Charly, what's your question?
CALLER: I'm going to get a large injury settlement. Can a person negotiate it on their own? Or do they need to go with a lawyer?
WHITFIELD: Linda?
BABCOCK: Well, I think it's probably best to get an expert to help you because they'll know the range of typical settlements that a person such as you would get. And so they're going to just be more likely to be able to set a really good target for you in terms of what you want your settlement to be.
So, even though they're going to take a fee from it, they're going to be a lot more expert in terms of knowing what to ask for and the whole negotiation process. So it's probably well worth it to get a lawyer in this case. Especially if you're talking about a lot of money.
WHITFIELD: All right. Sara?
LASCHEVER: I would totally agree. I think there are certain situations in which you should get a lawyer. You should get an agent. I interviewed a woman who's an english professor out in -- on the west coast, and she had written a couple of books that were very successful, but she negotiated the deals for herself and not gotten a lot of money for them. And I said to her, Eleanor, what are you doing? You're in a business where people have agents to represent them.
And so she hired an agent, and this agent got her ten times as much for her third book as she had negotiated for herself for her second book. So I think there are a number of situations in which it is appropriate to hire someone who is particularly skilled and experienced in your -- in the area you're working in.
WHITFIELD: Ali, this next e-mail really does underscore an important point that you were making earlier. This from Douglas in Carmel, Indiana. He said, "parents need to teach their kids that it is okay to negotiate for purchases. My father taught me that it doesn't hurt to ask for a lower price. You have nothing to lose, only something to gain." So, perhaps you could give best advice on how do you teach parents how to teach their kids that it is okay to negotiate?
VELSHI: Fredricka, I wonder if my mother is watching this today, because she's still teaching me that it's still okay to ask. She thinks I'm the biggest sucker alive.
But you are absolutly right. We're socialized to think -- and I know Linda, and Sara are talking about how, in some ways, women are socialized not to ask. A lot of us are socialized just not to ask for the best deal. Parents have to teach them that, A, there is a way to do this that is polite. A lot of people don't teach there kids not to do that because it seems impolite. There's a way to do that that's polite. There's a way to do it that shows the other party that you're actually in the game. You actually know what you're talking about. You are an informed consumer. It's absolutely wise to teach your kids how to ask because they're going to encounter this all through the life.
WHITFIELD: All right. Rosy from Mississippi is on the phone with a question. Rosy?
CALLER: I want to know if you have purchased a vehicle at a higher price at 11.8 percent, is there a way to negotiate a new loan to get a better deal at that car loan note?
WHITFIELD: Linda?
BABCOCK: Well, certainly, to refinance a car, for example, just like you would for a house, you can renegotiate for a lower rate. So, again, shopping around to try to find the best rate, and negotiate. Always ask for a lower rate. You may not always get it. But it doesn't hurt to ask.
WHITFIELD: Ali?
VELSHI: There are -- as Linda said, there are companies that will actually refinance your car loan. If it's 11.8 percent, you can bring that down.
Remember, though, when you talk about a mortgage or a loan for a car, the payments over the first few years are heavily interest laden, and very little capital. What you might find that you refinance after two or three years on a five-year car loan, all you've done is pay interest, so you're refinancing your capital again and you're paying interest again.
So be careful at what point in your car loan you're at. If you're a year in or less, it's worth it. If you are two or three years into a car loan, you have to actually get on the financial calculators and do the math on that.
WHITFIELD: All right. Bottom line, everything is negotiable. Ali Velshi in New York, Linda Babcock in Pittsburgh, and Sara Leschever in Boston. Thanks to you all for joining us. Appreciate it.
BABCOCK: Our pleasure.
WHITFIELD: Thanks for joining us today. Stay with CNN tonight for stories you won't want to miss. Rock producer, turned murder suspect, Phil Specter and the world's most wanted man, Osama bin Laden are profiled next on the "PEOPLE IN THE NEWS."
And at 6:00 Eastern, fresh insights into the latest tapes of bin Laden with our guest on CNN LIVE SATURDAY. And at 7:00 Eastern, 4:00 Pacific, the "CAPITAL GANG" takes on President Bush's request for more money for Iraq. Carol Lin has the headlines for you right after a quick break.
(COMMERCIAL BREAK)
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Aired September 13, 2003 - 16:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDERICKA WHITFIELD, CNN ANCHOR: Welcome to "Dollar Signs," where we hope you make the most of your money. Today, we want to show you how to get the best deals whether you're trying to buy a house, or maybe try and get a higher salary. And maybe even try to negotiate a better vacation, or something like that. Well, it can all be done by negotiating. Our Ali Velshi takes a look at the art of the deal.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: If you were willing to pay cash, I might be able to drop that down to, say, 716 each.
BERNIE MACK, ACTOR: No.
UNIDENTIFIED MALE: Yes, sir.
MACK: You would do that?
ALI VELSHI, CNN FINANCIAL CORRESPONDENT (voice-over): You may not be as good as the character Bernie Mac plays in the movie "Ocean's Eleven," but are you a good negotiator?
UNIDENTIFIED MALE: I'm an attorney. So I do it professionally. Just give them an offer and hope they accept it.
UNIDENTIFIED FEMALE: Better than my husband. I comparative shop. And I let them do what's fair. Expect that they need to make a little money and I need a good deal. So whoever's willing to work with me the best is who we go to.
VELSHI: Negotiatedding is an art. It's also something you can learn.
LINDA BABCOCK, AUTHOR, "WOMEN DON'T ASK": I think that's the positive news about what I've been working on, and that is, that people can change. They don't have to be stuck not negotiating for what they want. They can learn to negotiate and do so effectively.
VELSHI: And with people so worried about their jobs, what happens if negotiations with your employer hit a snag.
BABCOCK: There may be other issues you want to negotiate about. If it's for, say, a new job, maybe vacation time, or hours of work, whether they can have flex time. There's lots of things that are negotiable. So not to focus primarily on salary.
VELSHI: What about your home. In the still hot housing market, shopping around for a mortgage can save you up to 3/4 of a percent.
MELISSA COHN, MANHATTAN MORTGAGE: When you start shopping for a rate, don't accept the first offer that you're provided to by a bank. Take that offer and go out and shop it around, and tell the other bankers or brokers that you're talking to that you've been offered a race of X, can they do better.
VELSHI: "Consumer Reports" automotive editor Michael Quincy says check your emotions at the door, especially when buying a car.
MICHAEL QUINCY, "CONSUMER REPORTS": The worst thing that could happen is you fall in love with a car and you'll say, I'll buy it. I'll buy it. It doesn't matter how much it costs. I want that car. The best thing you can do is find out how much the dealer paid for the car. Find out the invoice price. Find out the incentives, the hold- backs that you can take off the price of the car.
VELSHI: Finally, confidence is key. If you don't have it naturally, take it.
BABCOCK: If it's an interview that involves a negotiation, do your research on what is appropriate to ask for, and practice. Practice the negotiation with someone that you know, so that you can be a lot calmer going into that process.
(END VIDEOTAPE)
VELSHI: Now, Fredricka, we talked about mortgages, we've talked about cars, we've talked about your job. But millions of Americans carry balances on credit cards or installment loans or lines of credit. And sometimes a lower rate is available to you just for the asking.
Most credit lenders, most lenders have something called customer retention incentives. If you call up and say, someone else has made me a better offer for a lower interest rate on my credit, and I'm thinking of moving my account over to them, it could trigger them to offer you something lower. Again, they won't offer it to you if you don't ask for it. But it could save you a lot of money -- Fredericka.
WHIFEILD: Yes, it's amazing how many of these lenders are willing to negotiate if you just bring it to their attention that there's a better rate out there. They want to keep you as a customer.
VELSHI: That's right.
WHITFIELD: Ali Velshi, we'll see you again in a moment.
Well, do you know who are the best bargainers? The worst maybe? According to the book, "Women Don't Ask," women generally do not negotiate as well as men. But it doesn't have to be that way. The book's coauthors are joining us now, Linda Babcock is in Pittsburgh. And Sarah Laschaver is in Boston. Good to see both of you.
Why is It, sarah, let me begin with you, why is it that women don't seem to be good negotiators. Is it just that they are just taught along the way not to be a little bit -- ask people to be a bit more flexible with what it is that they want?
SARAH LASCHAVER, AUTHOR: I guess I would answer that in two parts. First, I would say that women are actually terrific negotiators. The last 20 years of negotiations scholarship have shown that women's general approach to negotiating, which is to try to collaborate, work together, find a win-win solution tends to produce better agreements on both sides. It tends to enlarge the pie, the expression that economists do.
What women tend not to do well is negotiate aggressively enough for themselves and to know to negotiate frequently enough for themselves. In other words, they don't often ask for things that they could get.
WHITFIELD: And Linda, there are things that they need to perhaps consider, everyone, not just women, but men and women need to consider. What are they willing to lose? What are they hoping to gain perhaps?
BABCOCK: That's right. I think when you walk into a negotiation, what's critical is that you be prepared. And by preparation, what I mean is, that you have the worst deal you're willing to accept as well as a target going into negotiation.
Those two pieces are critical for setting an appropriate strategy. So it's for a salary negotiation, think about what's the lowest salary I'm willing to take to take this job, as well as set a higher target, what am I really shooting for. And that helps you with your strategy.
WHITFIELD: For example, if, perhaps, a potential prospective employer is offering you $35,000, what you really want is $42,000. You need to find a way to split the difference? Perhaps ask for $40,000? Or what would be your best recommendation?
BOBCOCK: Yes. If you want $42,000, and you're being offered $35,000, you have to come in above $42,000 with a counteroffer and say, something like well, what about $45,000? Now, if the employer says no, what you shouldn't do is concede right there to their offer of $35,000. But say something like, well, how close can you come to 45,000? Could you perhaps do $43,000? Make a small concession and put the ball back in their court.
WHITFIELD: Well, Sarah, doesn't part of the problem sometimes feel like they're asking for the ridiculous by trying to negotiate? And that alone kind of, you know is disarming for them, and they kind of feel like they don't have a whole lot of power to ask for?
LASCHEVER: I think women worry a great deal that they think what they're asking for is absurd or ridiculous and in most cases they're mistaken. Often we've heard, in people that we've talked to, you know, somebody's father, somebody's husband said asked for X and ask for Y. And they say, oh, my god, I can't possibly do that, and they'll just laugh at me.
And the fact is, they probably won't laugh at you. They may say we can't do that, but there is a direct correlation, studies have shown, between your target and what you get. In other words, the higher -- the more you ask for, the more you get. And the higher target you take into a negotiation, the more you're going to come away with. And typically men go into negotiations with higher targets, so they get more.
LASCHEVER: This is really where gathering information is helpful. So that a woman knows what she's asking for is appropriate. In the salary domain, there's lots of ways that women can gather information about salary. Lots of sources on the Internet, such as salary.com, or jobsdoor.org, about what salary is appropriate.
Women can also use their networks. People that they know in jobs like them. To ask around and see what other people are getting. And ask men as well as women to find out what your colleagues are really making.
WHITFIEDL: Linda, bottom line is, you're saying in your book, along with Sarah, that perhaps not negotiating can be very expensive. How is that?
BOBCOCK: Well, it's extremely expensive to not negotiate. We looked at students graduating with masters degrees, found that only 7 percent of the females negotiated, whereas 57 percent of the males negotiated. I did some calculations to see what those women left on the table by not negotiating. And it turns out that figure is $1 million.
They lost $1 million in earnings over the course of their career by not negotiating just that one time. So that's a really big return on investment for a one-time conversation, $1 million.
WHITFIELD: Linda and Sarah, stick around. We're going to take a short break. But right now, some of your e-mails coming up next on dollar signs. You can still send in your questions. If you've got more. Or call us.
(COMEMRCIAL BREAK)
WHITFIELD: Welcome back to "Dollar Signs." We're talking about bargaining skills. How to negotiate the best deal. Well, negotiating coauthors Linda Babcock and Sarah Laschaver are with us. And our financial correspondent Ali Velshi is with us in New York. Good to see you all again.
All right, Angela in D.C. is on the telephone with us. And she has a question. Angela, what's your question?
CALLER: My question is, is there a way to negotiate a best deal on a consolidation loan for your student loans?
WHITFIELD: Ali, I'll let you take that.
VELSHI: Fredericka, I was going to make the point a little earlier, that pretty much everything is negotiable. You can go to shops on Madison Avenue and negotiate for handbags and boots. One of the things that isn't negotiable is the rate that is offered on a consolidation of federal loans. Things like your Stafford loans and your Plus loans, the rate is set. I might be wrong, but it's July 1, it's set, and we've seen the lowest rates this past July.
You can consolidate your federal student loans once. There's one exception to that, and that is if you go back to school and take another loan, you can then consolidate again. But you consolidate at the rate that is set in the summer and that is not a negotiable rate.
Now what you can do is, if you have loans or debts or if you took out credit card debt and you're paying for school on those things, you can go to a lender and try and get an installment loan or a line of credit at a lower rate. But if it's a federal Sally Mae backed loan, no, that's actually not negotiable. You could phone them and negotiate payment terms and extensions, things like that. But you can not actually negotiate the rate on that.
WHITFIELD: OK, I've got an e-mail question coming in from Barry of Key West, Florida. How do I find a best deal on don't ask, don't tell mortgage -- Linda.
LASCHEVER: I'm sorry, could you repeat the question?
WHITFIELD: Yes, the question coming from Barry, how do I find the best deal on a don't ask, don't tell mortgage?
LASCHEVER: On a mortgage?
WHITFIELD: Yes.
LASCHEVER: Well, I think the one thing is to shop around. It's to search the Internet for different rates, compare and contrast and always negotiate. If you like a particular lender, then negotiate with them. Say, hey, I saw a lower rate, can you match it. And just make sure you always negotiate and always do your research before you start to negotiate.
WHITFIELD: Okay. And perhaps...
VELSHI: Fredricka?
WHITFIELD: Go ahell, Ali?
VELSHI: There will always be a premium to a don't ask, don't tell. That's known as a no income verification mortgage. So, that's based on your credit profile and the quality of the asset you're buying.
If you have less than stellar credit, or buying a property that's iffy, you're not going to get it, nevermind negotiate a rate. It's, as Linda says, it's the same as any other mortgage, you can alway negotiate, but whatever low rate you get on a 30-year fixed term you're going to pay a premium on a don't ask, don't tell mortgage regardless.
One of the things to remember, as mortgage refinancing and closings slow down, you'll find banks more to deal than they have in the past couple of years where they have been so busy, they don't need to deal.
WHITFIELD: Negotiating mortgage rates, trying to buy a house, all very intimidating. And sometimes buying a car can be very intimidating, too. This e-mail coming in from an unnamed person who asks, can you offer any substantial negotiating advice or tips to purchase a new vehicle? Sara?
LASCHEVER: Well, that's a very good question, because research has shown that car dealerships tend to offer higher rates to women. In other words, they quote higher prices to women than they do to men.
WHITFIELD: So it really has nothing to do with what their credit rating is, but simply based on sex?
LASCHEVER: Based on sex. It actually is also true of African- Americans. They quote higher sticker prices to African-Americans. So when a women or African-American walks into a car dealership, he or she should plan to offer a much lower price than he or she is being quoted. Because these are all negotiable and they should not let themselves be taken advantage of by the expectation that they will concede to a higher price than a white man would.
And again, I would want to add, I may sound like a broken record, but doing your research is key. There's lots of information on the Internet. Like carsdect.com, or "Consumer Reports" that will list really valuable information about what your dealer purchased the car for. And to alwayscheck that out first.
VELSHI: More so than anything else you can negotiate for, you can find out exactly what you need to know about a car. Two tips about negotiating for a car, go in with the invoice price, don't talk about your trade-in until you've negotiated your final price. Watch out for the extras. You may negotiate a base price that's lower than you're going to pay and then start adding the rust-proofing and this, that and the other thing, and that's actually where you get hit. Be careful about the extras when you are buying a car.
WHITFIELD: Something else that also happens when people try to negotiate their price for a car, the next follow-up question seems to be, are you going to be paying cash, are you going to try to finance. And sometimes the dealers make it a little bit difficult to try to negotiate just simply because of that question.
VELSHI: One of the things that people need to remember is that when you're going into a car dealership, or frankly any of the big ticket items that you're negotiating for, you're sitting across the table from somebody who does this for a living.
Now, one thing that's changed in the last few years with big ticket items, like car incentives, car financing rate, mortgages, you sort of sit down at the table and it's treated like, wow, look the deal we're giving you. This is such a fantastic deal you're getting, $3,000 back and 0 percent financing. You as the negotiator, you're sitting here thinking, well, I got a really great deal. I better not ask for anything because they're going to think I'm stupid. Don't swing at the first pitch. I think Linda and Sara will tell you, there's always a deal to be had.
WHITFIELD: This email coming from Fleshing, New York from Rohikh Gupta (ph) who asks, "what is the point of intersection of best deal and deal lost?" Linda you want to take that?
BABCOCK: I'm sorry, I didn't...
WHITFIELD: What is the point of intersection of best deal and deal lost?
BABCOCK: Best deal and deal lost? I'm afraid I don't really understand the question.
LASCHEVER: I think maybe I can answer that.
VELSHI: Go ahead, Sara.
LASCHEVER: I think that what this question reveals is the sense of risk that a lot of women feel around negotiating. They're afraid if they ask for too much, they'll lose the deal. Rather than reframing the interaction as, you know, the -- a process by which two people or a group of people try to find a solution that everybody can be happy with.
So I don't think there is exactly a point of intersection. I think women need to assume that they can ask for more than they're going to get, and if somebody says no, they can back down a little bit. Or they can say, well, if you can't give me that, can you give me a couple of other things, you know, flexible work schedule or more vacation time or something like that. And that if they don't think of negotiation as basically an aggressive act, but they think of it as a collaborative act, they won't feel such a great sense of risk.
WHITFIELD: Ali, you're nodding your head in agreement on that. Anything you want to add on that?
VELSHI: I think there's a point where people think that if they make an offer that's deemed ridiculous, that deal is over. Well listen here, in financial journalism, everything we talk about are deals.
So, there's no sense that the deal is not recoverable. If you don't get what you ask for, it doesn't mean the deal is gone and you have to walk away from the table. It's a business of coming to a consensus on what is appropriate, where does the car dealer make the money, where does the bank make their money. I think part of the question is, don't worry about losing the deal. Be ready to walk away, but you can come back with a different offer.
WHITFIELD: All right. More calls and e-mails right after this.
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WHITFIELD: Welcome back to "Dollar Signs." We're taking your questions about the best ways to bargain. Our Ali Velshi is in New York. Linda Babcock is in Pittsburg. And Sara Laschaver is in Boston.
All right, you guys, I've got a caller on the phone for us from Missouri. And this from Charly. Charly, what's your question?
CALLER: I'm going to get a large injury settlement. Can a person negotiate it on their own? Or do they need to go with a lawyer?
WHITFIELD: Linda?
BABCOCK: Well, I think it's probably best to get an expert to help you because they'll know the range of typical settlements that a person such as you would get. And so they're going to just be more likely to be able to set a really good target for you in terms of what you want your settlement to be.
So, even though they're going to take a fee from it, they're going to be a lot more expert in terms of knowing what to ask for and the whole negotiation process. So it's probably well worth it to get a lawyer in this case. Especially if you're talking about a lot of money.
WHITFIELD: All right. Sara?
LASCHEVER: I would totally agree. I think there are certain situations in which you should get a lawyer. You should get an agent. I interviewed a woman who's an english professor out in -- on the west coast, and she had written a couple of books that were very successful, but she negotiated the deals for herself and not gotten a lot of money for them. And I said to her, Eleanor, what are you doing? You're in a business where people have agents to represent them.
And so she hired an agent, and this agent got her ten times as much for her third book as she had negotiated for herself for her second book. So I think there are a number of situations in which it is appropriate to hire someone who is particularly skilled and experienced in your -- in the area you're working in.
WHITFIELD: Ali, this next e-mail really does underscore an important point that you were making earlier. This from Douglas in Carmel, Indiana. He said, "parents need to teach their kids that it is okay to negotiate for purchases. My father taught me that it doesn't hurt to ask for a lower price. You have nothing to lose, only something to gain." So, perhaps you could give best advice on how do you teach parents how to teach their kids that it is okay to negotiate?
VELSHI: Fredricka, I wonder if my mother is watching this today, because she's still teaching me that it's still okay to ask. She thinks I'm the biggest sucker alive.
But you are absolutly right. We're socialized to think -- and I know Linda, and Sara are talking about how, in some ways, women are socialized not to ask. A lot of us are socialized just not to ask for the best deal. Parents have to teach them that, A, there is a way to do this that is polite. A lot of people don't teach there kids not to do that because it seems impolite. There's a way to do that that's polite. There's a way to do it that shows the other party that you're actually in the game. You actually know what you're talking about. You are an informed consumer. It's absolutely wise to teach your kids how to ask because they're going to encounter this all through the life.
WHITFIELD: All right. Rosy from Mississippi is on the phone with a question. Rosy?
CALLER: I want to know if you have purchased a vehicle at a higher price at 11.8 percent, is there a way to negotiate a new loan to get a better deal at that car loan note?
WHITFIELD: Linda?
BABCOCK: Well, certainly, to refinance a car, for example, just like you would for a house, you can renegotiate for a lower rate. So, again, shopping around to try to find the best rate, and negotiate. Always ask for a lower rate. You may not always get it. But it doesn't hurt to ask.
WHITFIELD: Ali?
VELSHI: There are -- as Linda said, there are companies that will actually refinance your car loan. If it's 11.8 percent, you can bring that down.
Remember, though, when you talk about a mortgage or a loan for a car, the payments over the first few years are heavily interest laden, and very little capital. What you might find that you refinance after two or three years on a five-year car loan, all you've done is pay interest, so you're refinancing your capital again and you're paying interest again.
So be careful at what point in your car loan you're at. If you're a year in or less, it's worth it. If you are two or three years into a car loan, you have to actually get on the financial calculators and do the math on that.
WHITFIELD: All right. Bottom line, everything is negotiable. Ali Velshi in New York, Linda Babcock in Pittsburgh, and Sara Leschever in Boston. Thanks to you all for joining us. Appreciate it.
BABCOCK: Our pleasure.
WHITFIELD: Thanks for joining us today. Stay with CNN tonight for stories you won't want to miss. Rock producer, turned murder suspect, Phil Specter and the world's most wanted man, Osama bin Laden are profiled next on the "PEOPLE IN THE NEWS."
And at 6:00 Eastern, fresh insights into the latest tapes of bin Laden with our guest on CNN LIVE SATURDAY. And at 7:00 Eastern, 4:00 Pacific, the "CAPITAL GANG" takes on President Bush's request for more money for Iraq. Carol Lin has the headlines for you right after a quick break.
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