If you followed Practical Frugal Living during the blog’s early days, you know my take on the popular History Channel program American Pickers. It’s an entertaining show, mostly because of the likeable co-stars, Mike Wolfe and Frank Fritz; however, it is no place to master the true tenets of practical frugal living. While the notion of buying rusted junk and turning it over for a profitable re-sale is appealing, the thought of traveling across the country in a full size van to scoop up junk that might or might not sell again at some unknown future point for $50 – $100 profit is no way to financial independence.
As I’ve mentioned before, from a practical frugal living standpoint, the real value of the show is in illustrating what we should not do. In addition to the mind-boggling amount of carefree travel and fuel consumption that the show seems to glamorize, it also models some horrible negotiation skills every week. (The same is true, by the way, for the History Channel’s other popular program, Pawn Stars.) Time and again, we watch as people, on both sides of a given transaction, make terrible moves in negotiating prices.
Surprisingly, the all-time worst example came from Mike Wolfe himself during his first visit to “Hobo Jack,” a skinny, old, bearded man who lives out in the woods of southern Illinois amidst acres of tarp-covered, rotting junk. During the show, Mike came upon a pre-1920 motorcycle chassis that was broken, rusted, pitted, and filthy. Mike, taken by its age and rarity, made his interest in the rusted scrap metal crystal clear to the old fellow and invited a “crazy number” for which Hobo Jack would let it go. Jack responded that he would “probably take $3,000,” to which Mike agreed. Surprisingly, Hobo Jack then responded, “No, I can’t do that.”
Instead, he directed Mike to a two cylinder motor, devoid of markings, that Jack believed to be from a cycle car. Mike, thinking it “could possibly be a motorcycle engine,” got excited again. Still not knowing what the engine actually was from, Mike promised to make it easy for Jack by offering up $2,000. When Jack balked, Mike said, “I’ll do $2,500 cash and then I’m at a dead end.” Hobo Jack fingered his beard and said let me think about it. With still no counteroffer even made, Mike offered $3,000 for the motor, and also decided to throw $5,000 at the earlier seen bike, for a total of $8,000. The old man then invited Mike to “sweeten it a little more,” to which Mike responded with yet another increase to $8,500. He assured Hobo Jack that this would finally be his top offer by saying “I’m done, turn me over, I’m crispy.”
At this point, Frank Fritz said you could really feel the tension between the two, and actually compared them to two rams. Hobo Jack, finally, said he would “think about $9,000.” Mike, of course, agreed, saying, “Let’s do it, I’m standing tall on this thing.” (Seriously, he really did make this comment.)
So where do we even begin? Let’s set aside the wisdom of bidding thousands of dollars when you are not even sure of what exactly an old old junk item is and focus only on price negotiating gaffes.
First, Mike should have held the man to his initial “crazy offer” of $3,000. Under basic principles of contract law, there was an offer and an acceptance, which made for a binding contract of sale. I suppose Hobo Jack’s qualifier that the first offered number would “probably” do it was sufficient to provide him with an out, but I personally cannot imagine letting a person renege on an offer so easily.
Putting this aside, a fairly basic rule of negotiation is to never bid against oneself. Mike, however, a man who supposedly negotiates all the time, did this no fewer than four times before the seller so much as gave a number that he would “think about.” The problem with this approach was perfectly played out on the show: it completely bolsters the other party, giving him all of the negotiating leverage. Why on earth Mike would not have told the guy early on to give him a basic counteroffer – and one that he would be held to – is beyond me.
I see this boneheaded approach to negotiations all of the time on Pawn Stars as well. The scenario usually comes from a person who asks the shop to pay a certain item for an item. The store owner simply says, “That’s not going to happen,” and the seller routinely drops the price several times before the first offer is actually made. Again, this is no way to approach a negotiation. No matter how desperate to sell something you may be, please, always require the other side to come forward with clear numbers in response to each move you make. Otherwise, you have completely exposed your underside, and you might as well give the item away.
It is also imperative to maintain credibility when negotiating. Do what you say and say what you mean. Mike violated this rule by falsely stating that he was “at a dead in” and “crispy done” before going up each time again. When you do this, you send the message to the seller that the sky is the limit and that there is no reason to believe that any number is truly too high.
The other poor negotiating technique that we frequently see from the stars of American Pickers is a tendency to let the seller know just how eager they are to buy. A sales negotiation is a game of poker, and it is essential to maintain a calm poker face throughout. Mike, however, often begins the process by gushing over how great a discovered item is. It’s far better to act coolly indifferent about the find and casually request a price. Proceed then with the negotiation process.
Price negotiation is a vital skill for practical frugal living. But it has to be done correctly in order to have positive effect.