Neutralise an extreme first offer and bring the discussion back to objective criteria.
When someone opens with an extreme number, don't counter it and don't offer to split the difference. Say calmly that the number doesn't match the evidence, return to the evidence, and then put your own number on the table with its reason.
Daniel rents a two-bedroom condo unit in Clementi for S$3,000 a month (an invented example, as are all the figures that follow). Two months before the lease ends, the landlord's agent messages him to say the owner wants S$3,600 to renew. Daniel has checked listings, and similar nearby units go for about S$3,150.
His first instinct is to counter at S$3,300, because it is halfway between S$3,000 and S$3,600 and so feels fair. The numbers show otherwise. S$3,300 is S$150 a month above the market rate of S$3,150, which comes to S$1,800 a year more than a typical tenant in Daniel's position would pay. Meeting in the middle of an extreme anchor and your own number still favours the side that set the extreme anchor.
An extreme anchor is an unreasonable opening number from the other side. Lesson 4.1, How the first number pulls everything toward it, showed how a starting number shapes the discussion. An extreme number doesn't need to be accepted to work. It only needs to be treated as one end of the range, and a midpoint does exactly that.
Countering an extreme anchor directly is a trap. A counter-offer accepts the other side's number as a legitimate starting point. After it, the conversation happens between your number and theirs, so if theirs was unreasonable, the middle is unreasonable too.
Your first move is to take their number out of the frame. You do this by calmly stating that it doesn't match the evidence, then turning to the evidence. Keep the tone plain: no outrage and no lecture, only an observation.
Daniel replies to the agent. He thanks them, says S$3,600 is well above the listings for similar nearby units, which are around S$3,150, and asks how the owner arrived at the figure.
A good naming reply like this does three things. It tells the other side the number has not landed. It puts objective criteria, such as comparable market listings, back in the centre, as covered in Lesson 1.3, Separate the people from the problem. And it asks a question that may reveal an interest. The owner's mortgage payment may have gone up, for example, or the owner may have seen one listing at S$3,600 and assumed it was the market. Listen to the answer for reasons like these.
Daniel does not call the figure ridiculous or accuse the owner of greed. Your aim is to move the number, and an argument about the person makes that harder.
Once you have named the extreme number, you re-anchor: you put your own number on the table with its reason and treat it as the place to negotiate from.
After hearing the agent's answer, Daniel proposes renewing at S$3,050 for two years. His reasons are that he has paid on time throughout, and that the owner would avoid empty months and agent costs for finding a new tenant. S$3,050 is below the market figure of S$3,150 on purpose. As Lesson 4.3, Open with an ambitious number and a reason, explains, opening below your target leaves you room to concede towards it.
Daniel is now prepared to negotiate up from S$3,050, instead of down from S$3,600. Negotiating up from your own anchor is better than negotiating down from theirs. If he ends at S$3,150, that figure is the market rate, and has no connection to the midpoint of an inflated ask.
The same approach works when the extreme number is a lowball. Say a freelancer quotes a S$6,000 retainer and the client says it should be S$2,500. The freelancer should not counter at S$4,250, the midpoint. Instead, they say the figure is far below what similar work costs, explain the basis of their own figure, and offer options, such as fewer deliverables at a lower price.
The agent writes back that the owner is firm on S$3,600. Daniel has three calm options, and so do you:
Ask what is behind the firmness, using the questions from Lesson 1.2. Say you need time to consider it, and come back in a few days. Fall back on your BATNA if they truly will not move and the gap to market is large. Daniel's BATNA is renting another unit at S$3,150.
Taking a break is more useful than it sounds. A day or two away from a number loosens its hold on everyone, including the person who said it. People who opened high often return with a more realistic figure after checking listings themselves, or once a consequence such as an empty unit becomes real.
Moving home is annoying, but for Daniel it may cost less than S$1,800 a year in extra rent. Whatever happens, don't negotiate yourself towards the midpoint just to end the discomfort of a stalled conversation.
The activity asks you to prepare your own short response to an extreme opening, so that the words are ready if you ever hear one.
Write how you would answer an extreme opening from the other side in your negotiation. Use three sentences at most.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).