How to negotiate like a Wall Street banker

wall street negotiate

Think what you want about Wall Street bankers -- they're greedy, overpaid, egotistical -- but negotiation is their area of expertise.

They have perfected the art of cutting a deal to their advantage, whether it's to buy a company, trade a stock or snag a bigger bonus.

You don't need millions (or billions) in your bank account to use some Wall Street negotiating tricks in your everyday life. CNNMoney spoke with numerous bankers. Here are the top 5 tips:

1) Is that the best you can do? When you negotiate for a living, it permeates everything you do, even when planning a kid's birthday party at a local ice skating rink. One banker always ends any type of transaction by asking something to the effect of "is that your best offer?" He says you would be surprised how often someone then comes back with an additional discount, including at the local skating rink.

"If you don't ask, it will never happen," says Hart Lambur, a former Goldman Sachs trader who founded the investing community Openfolio.

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Lambur says the same philosophy works for your bonus or salary increase. He recommends being clear about your desires and intentions months before your review day. Waiting until that day is too late.

2) Give a reason: It's simple psychology that people respond better when they hear rationale for why they should give you something.

Consider this: researchers have done studies in cities where they go out into and solicit money. They ask for $1 from passersby. They get a bit, but not much. They get a lot more when they ask for $1 because they are sick or hungry. What's interesting is that they get almost as much when they ask for $1 because it's sunny or Tuesday or some other random reason.

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"People like reasons," says Stuart Diamond, a professor at the University of Pennsylvania and author of the bestseller "Getting More: How you can negotiate to succeed in work and life." "A good reason is better than a bad reason, but a bad reason is better than no reason."

One private equity vice president agrees. He has seen colleagues see success in negotiating bigger bonuses partly by reminding senior executives that they have a family, a mortgage and other responsibilities and thus need more money.

3) Be ready to walk away: The ability to walk away is a powerful negotiating tactic. It's not always possible, but when it is, use it. On Wall Street, traders are taught never to lead with the best offer. Their job is to figure out at what price you will cave. It's pretty similar to buying or selling a house. You know the other person is interested, but how far can you push the price?

One trader describes how his landlord raised his rent close to 20% after the first year. He tried to fight it, but was unsuccessful. It happened again this year but with a much different outcome.

"We went in with a different plan -- if he raises too much, we're going to walk away," he said. "Three days later (the landlord) called back and said would you take a $50 increase?"

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In a job setting, the ideal is often to get a counteroffer from another firm if you don't think you're being paid enough or given the right opportunities. It's amazing how fast companies will meet or even exceed a competitor's offer if they want to keep you.

4) Stalk your opponent: Ok, you don't quite want to stalk someone, but the more information you know about the other person or party you're dealing with, the better.

"It has to start with THEM," says Professor Diamond. "You don't say 'I want a raise.' You say, 'How do I meet your needs so much that I get a raise?'"

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Too often people only think about money in transactions, but there are many other ways to create value -- perhaps you could refer more business to someone or even offer to give people a tour of a factory or another unique experience that might mean a lot more to them than money. It sweetens the deal.

Professor Diamond, for example, has trained thousands of Google employees in negotiating. When he first started working with Google, the company offered to give his then 8-year-old son a tour. "It was his favorite thing all summer," Diamond says. "It's those kinds of intangibles that really matter."

5) Leave the screaming to Hollywood: Bankers in films talk tough and shout down the phone or across their big desk. They are all about reducing the person on the other side of a deal to ant-like status. That might be good Hollywood drama, but Wall Streeters say that being polite beats throwing punches any day.

"I want to get the best deal for my side, but I want to other person to know it's not personal," explains one underwriter.

The reality is most business relationships are long-term, including with your bosses doing your review. You don't want to blow it, even if you're disappointed.

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