Why Salary Negotiation Is Like Buying Real Estate

We all have our guilty pleasures, and one that continually draws me in from my DVR is “House Hunters International” on HGTV. Each episode, viewers watch as the subject of the show gives up their life at home and travels thousands of miles to an international destination in order to buy or rent a new home or apartment. Those of us playing at home are sucked in through a game show angle, trying to predict which of the three choices will be the winner.

This show makes me very angry for several reasons.

• They never seem to choose the “right” house.
• When the agent says it’s “a little over your budget.” (In a recent episode that number was $100,000 … I’d hate to see what “a lot” over budget was).
• Someone dismissing a $350,000 vacation villa overlooking a tropical lagoon because the color of the spare bedroom is ugly, when a $35 can of paint would solve the problem.
• And to be fair, maybe the reason it all feels awkward are claims that the production of the show is fake. Wait, not all reality shows are real?

However, the show can also teach us something about salary negotiation.

No matter what the setup -- Austrian apartment or Costa Rican casa, poor student, newlywed couples moving for work, or families with kids -- the decision always comes down to three elements:

1. Location and hard facts
2. Amenities and gut feel
3. Budget

When you’re applying for a job, the hiring manager is also looking at three elements:

1. Hard skills
2. Soft skills
3. Budget

Let’s look at how these tie together. First, imagine you’re shopping for your dream vacation home with a $250,000 budget.

House A: Very good location, ocean view, 2 small bedrooms, dated interior, $240,000.
House B: 20 minute drive to beach or activities, 3 bedrooms, tons of light, updated appliances, $255,000.
House C: Beachfront location, walk to shops and restaurants, 3 large bedrooms, open floor plan, brand new appliances, $289,000.

You’re already weighing the pros and cons, right?

• Is the location, view, and price of House A worth it if you’re going to be living in a cramped space that feels outdated?
• Is the larger, more comfortable House B worth it if you constantly have to be driving to get the beach or restaurants?
• House C has it all… perfect location, great convenience, and a modern living space – at a cost.

One thing becomes clear… the only way to really get what you want – the full package of House C - is to be willing to go 15% above your allotted budget.

Now let’s tie this into your dream job. For example, a project manager at a tech company that makes wearable gadgets for runners and has a $55,000 budget.

The hard skills are the facts around your qualifications for the job. This would be items like having a college degree, several years of relevant work experience, and the specific ability to do the job. So let’s say in your current job you are the project lead on a comparable consumer product, managed a six-figure budget, and successfully led a team of 5 designers, engineers, and production personnel.

The soft skills have to do with your personality and fit, both for this position and the company as a whole. Let’s say in your current job, it involved a mix of startup-mentality in bringing a product to market for the first time, as well as taking on an extroverted business development role to evangelize the product and motivate team members. It also helps that you are a diehard runner yourself, having completed 14 marathons and serving as a coach for newbies training for their first race.

In short, you’re a perfect fit for the job, and you know it. Alas, you’re already earning in the $55,000 range, and were looking to increase your salary at least into the low $60s.

Much like the dream home, your strategy is to show that you fit elements #1 and #2 so well, that for the company to get exactly what they want (the full package that will help grow their business), they’ll need to increase their budget.

Sure, the company can save some money and hire Employee A for $53,000, who has the right degree and some experience, but is from a different industry and isn’t passionate about running.

Or they can stick tightly to their budget and pay $55,000 for Employee B, a runner that worked in bizdev, but has much less experience in a project manager role.

However, you step up and demonstrate that you can deliver the exact experience they’ve dreamed of, backed by industry data of what you are worth on the marketplace.

If you were the hiring manager, wouldn’t it make sense to stretch the budget 15% to $62,500 to get the exact employee you wanted? I thought so.

So when you find yourself at your next interview, by equally emphasizing your specific, fact-based qualifications, as well as your personality and fit, you put yourself in the position to demand a higher salary. Who knows, with the increased funds you earn by negotiating, you might even be able to afford that dream house on the beach.