Car Dealers EXPECT You to Accept Their First Offer — DON’T! Kevin Hunter The Homework Guy

Why the first offer should almost never be accepted. There's a moment in almost every car negotiation that tells me a lot about the buyer. The salesperson comes back from the sales manager's office, puts a piece of paper on the desk, turns it around and says, good news, here's what we can do. And the buyer looks at the number and thinks, hey, that's not actually too bad. So they say, okay. And just like that, the negotiation is over. But here's the question I want you to ask yourself. Why would you assume their first offer is their best offer? Because that is never the case. Even if you ask, can you give me your best price? And that's important because a lot of people have a very wrong idea about what negotiation actually is. They think making a counter offer means you're being rude or difficult. That doesn't. They think asking for more means you're being a cheapskate. No, it doesn't. And some people are so worried about offending the salesperson that they'll accept a number just because it sounds reasonable. But this isn't personal. You aren't here for a date, people. This is a business transaction. The dealership is trying to sell that vehicle at the most profitable number that they can get out of you. And you should be there trying to buy it at the most reasonable number you can get it to. There's nothing wrong with either side doing that. And today we're going to show you why the first offer should almost never be accepted, what their first offer is actually telling you, how to respond to it, how to counter without negotiating against yourself, because some of you do that, and maybe most importantly, how to know when you've actually pushed the deal about as far as it's going to go. Because I don't want you negotiating just for the sake of saying that you negotiated. At some point, a good negotiator knows when to stop. That's right. Now, first, understand what an offer actually is. An offer isn't just a number, it's information. Let's say a dealership has a vehicle advertised for a sale price of $39,995. You sit down, the salesperson goes to the manager and comes back at $39,495. What did you just learn? The advertised price wasn't their final number. They just moved down 500 bucks. So now we know there was at least some space between what they were asking and what they were willing to accept. Does that mean there's another $500, another 1,000, another 2,000? We don't know yet. And that's exactly the point. The negotiation is how we find out. I don't look at that first offer and say, wow, they took 500 bucks off, great. I look at it and think, okay, now I know you can move. And that's a piece of information I didn't have 30 seconds ago. The dealership has now shown me one number they're willing to do. My job is to find out whether there's another number they're willing to do. And there's only one way to find out. I have to test it. Yeah, and there often is another number they're willing to do. So don't confuse a discount with a good deal. This gets many car buyers all the time. You're looking at a vehicle with an MSRP, let's say of 52,000. The salesperson says, Kevin, great news. We're taking $3,000 off this vehicle. And the customer's eyes light up. 3,000 off, wow. Wait a minute there, my friend. Is 3,000 off actually good? Maybe, maybe not. The size of the discount by itself tells you almost nothing. Because the real question is, what's the market doing right now? What are other dealers asking for the same vehicle? How much inventory is out there? How long has this one been sitting? Are manufacturer incentives included in that $3,000? They could be. Does every customer qualify for all of the incentives? Are there add-ons, dealer fees? What is the actual out-the-door number? Exactly. If every other dealer in your area is selling that same vehicle for 5,000 off the MSRP, then somebody offering you 3,000 off isn't giving you a great deal. They're actually $2,000 higher than the market. And this is why we keep coming back to the same thing on this channel. Doing your homework before you negotiate. Because if you don't know what a good deal looks like, how in the world would you know whether their first offer is good or not? You wouldn't. You're just reacting to the number they put in front of you. And remember, their first offer is also testing you. Here's something else people miss. You're learning about the dealership and they're learning about you too. They put that number in front of you and then they watch you. Do you immediately say yes? Do you smile? Do you get excited? Do you say, that's better than I thought? Do you start asking what the payment will be? Every one of those reactions tells them something. This is why I tell people you don't have to act impressed, even if you are. You also don't have to act disgusted. I'm not into all of that fake theater. Just be disciplined. Look at the paper, read the numbers, check the math, and keep your emotions out of it. If you don't know what to say, just keep your mouth shut and look at the numbers in total silence. If they put a real good number in front of me, I'm not going, wow, that's amazing. I'm thinking, good, now let's see if there's anything left. Here's what I do when that first offer hits the table. The salesperson comes back and says, Elizabeth, here's what my manager can do. First thing, I don't start talking. I look at the document. What's the selling price? What discount are they showing? What incentives are they showing? What fees did they add? And are there dealer products? What's the tax? What's the bottom line? If I've got a trade, what are they allowing for it? If there's a payoff, is that number correct? Because sometimes a deal looks better at the top of the page and gets way worse as you work your way down. They may give you a bigger discount and then put $1,800 worth of products underneath it. Or maybe they increased your trade allowance but reduced the discount they gave you on the vehicle. So before you counter anything, understand what they actually offered you. You don't always need a big speech. And once you've read the offer, you don't have to give the salesperson a five minute explanation. Sometimes your response can simply be, we're still too far apart. Or I'm not there yet. Or you can say that number doesn't work for me and then stop talking. That last part is important. Stop talking. Because buyers get so nervous about silence that they start fixing the dealership's offer for them. The salesperson says, I don't think my manager can go any lower. And then the buyer immediately says, well, what if I came up another 500? Why would you do that? They didn't ask you for another 500. You just gave them 500. You negotiated against yourself, you big dummy. If I make an offer and the salesperson says, I don't think my manager will do that. My response can be very simple. Take it to your manager. Let the manager say no. You don't get to say no for them. And don't chase your own offer. Here's another version of the same mistake. You say, I'll do 37.5. The salesperson looks at you. They don't say anything. Five seconds goes by. Now you're getting uncomfortable. 10 seconds. And you say, well, maybe I could do 37.750. What just happened here? They didn't counter you. They didn't even say no. Exactly. I just bid against myself if I did that. Don't do that. Make your offer, then close your mouth. Silence is not an emergency. Let the other side respond. What about, this is our best price? Now let's say the salesperson says, that really is our best price. Okay, maybe it is. You don't have to argue. You don't have to say, I don't believe you. You can simply say, what now, Kevin? Thank you, but I'm going to keep shopping. And then you know what I do? I'm prepared to leave. Because if that really is their best number, there's nothing more for me to discuss. But here's what's interesting. Sometimes the number that was absolutely, positively the bottom line, suddenly isn't the bottom line anymore when the customer starts packing up. Now there's another trip to the manager. Another $300 appears, maybe 500 bucks. Maybe a fee disappears. Maybe they find another way to make the deal work. And if they don't, that's fine too. The purpose of negotiating isn't to force the dealer to move. It's to find out whether they actually will. But don't negotiate randomly. Now let's put a big warning right here. I'm not telling you that every time a dealership gives you a number, you should throw some ridiculous counter offer back at them. If the vehicle is $40,000 and you say, I'll give you 31,000, based on what? That's not negotiating. That's just throwing numbers around. Your counter should have some connection to reality. What are comparable vehicles selling for? Are there incentives? Is the model in high demand? Is it the end of a model year? There should be a reason behind the number you're using. Exactly. So compare these two customers. Customer number one, I want another $4,000 off. Salesperson asks, why? Because that's what I want. Okay. Now customer number two says, I'm looking at two comparable vehicles with similar equipment and both of them put the market closer to this number. If you can get here, I'm interested in moving forward. That's a completely different conversation. Now the salesperson has something to take back to the manager that's reliable. This applies to your trade too. Let's say you're trading a vehicle. The used car manager looks it over. The salesperson comes back and says, we can give you 18,000. And secretly, you are actually hoping they'd give you 18,000. So what does the unprepared buyer do? Perfect. No, don't do that. How do you know they wouldn't have paid 18,500 or 19,000 or even more? You don't actually know. This is why I want outside appraisals before we ever have this conversation. At a minimum, get some real buy figures. CarMax, Carvana, maybe a local dealer that actively buys used cars. Something that gives you a real number. Because now, if the dealer offers you 18,000 and you already had a 19-2 purchase offer, you don't have to guess. You can say, I already have an offer for 19-2. If you want my trade, you'll have to beat that. And make them beat it. And that's leverage. And notice again, we're not negotiating from emotion. We're negotiating from information. Now watch what happens with the second offer. This is where the negotiation starts giving you even more information. The dealer's first offer is 41,500. You counter at 39,000. They come back at 40,900. What did you just learn? Well, they moved 600 bucks. Now maybe I moved some. Then they move again. But I pay attention to the size of the moves. Because the movement itself could tell you something. Maybe they move 600 the first time, then 400, then 200, then 100. Their concessions are getting smaller. That can be an indication that you're getting closer to where they're going to stop. Not a guarantee, but it is information. And I want your movements to get smaller too. Don't do this. Say 39,000. They say no. Then you say 39,500. They say no. You say 40,000. They say no. You say 40,500. Do you see what you just taught them? Every time you say no, you give them another $500. Exactly. So why wouldn't they just sit there and keep saying no? Why would they ever say yes to you? They're just waiting for your next $500 concession. Your concessions need discipline. And if you move, get something for it. This is another important principle. Don't just give something away. Trade something. If you're going to increase your offer, look for movement from them. So instead of, okay, I'll come up another 500, you might say, if you can get the out-the-door number to this, I can move to this. See the difference? One is, I'll give you more money. The other is, if you do something for me, I'll do something for you. That's a negotiation. Concessions have value every time. Don't hand them out for free. Sometimes your best counteroffer is your feet. Now let's say we've gone back and forth. The dealership has moved. I've moved. We're still $1,500 apart. The manager says, that's absolutely it. Okay, thank you. I'm leaving. That doesn't mean I'm mad. It doesn't mean I slam the door. It doesn't mean I'm playing some kind of childish game. The deal just hasn't reached a number I'm willing to pay. And this is where my willingness to say, thanks, but I'll keep shopping. And then walking away becomes so important because if they know you'll buy regardless, what incentive do they have to keep negotiating? And sometimes the number that couldn't possibly move starts moving again when you stand up. And if they let you walk, that's information too. Maybe you really did push them about as far as they were willing to go, and that's okay. But what if their first offer really is excellent? And this is why the word almost is in the title. We didn't say, why you should never accept the first offer. We said, why the first offer should almost never be accepted. There are exceptions. Maybe the vehicle is already priced very aggressively. Maybe it's in high demand. Maybe it's a high demand model with almost no inventory. Maybe their first offer already beats every comparable deal that you've already found. Maybe you've already been negotiating remotely. And what you're calling the first offer at the dealership is actually the end result of a negotiation that already happened from home. Smart, by the way. And this is where I don't want people turning negotiation into some kind of a ego contest. If I've done my homework and a dealer puts an exceptional number in front of me, I'm not going to risk losing a great vehicle at a great price just so I could say, ha, I got them to move another 100 bucks. That's just being stupid. The goal is not to beat the salesperson. The goal is not to win some imaginary contest. The goal is to buy the right vehicle at the right number. So how do you know when you finally say yes? This may actually be the most important part of this show because if you don't know when to stop, you're not a good negotiator either. You say yes when you've done your homework, when the price makes sense against the market, when you understand all the fees, when you know exactly what's happening with your trade, when you understand the financing, when you've made a reasonable effort to improve the deal, and when the numbers have reached a point where you're comfortable moving forward. That's it. Because great negotiators don't just know how to keep pushing. They know when they're done pushing. And sometimes that means the dealer moved three times. Sometimes it's five times. Sometimes only once. And sometimes they don't move at all. What matters is that you know why you're saying yes. So here's the big takeaway. The first offer shouldn't scare you. And it also shouldn't excite you too much either. Study it. What did they move? What didn't they move? What fees are in there? What add-ons are there? What's happening with your trade? What's the real bottom line? And then find out what happens when you say, nope, we're not there yet. Because the first offer tells you where the negotiation started. It doesn't necessarily tell you where it ends. And if you accept it without testing it, without countering it, without knowing the market, and without even asking whether they can do better, then you may drive home thinking you got a great deal without ever knowing how much money you actually left sitting on that desk. And that's why the first offer should almost never be the last offer. Remember to like and share this video if you got something out of it. I'm Kevin Hunter, the homework guy, America's consumer watchdog for car buyers, signing off for The Amazing Elizabeth and our incredibly talented car buying coaching team. You guys rock. God bless you all.