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Who should make the first offer in a negotiation?

What should be your negotiation strategy when putting an offer on the table?
This is a popular question that I get asked quite often. Opinions differ; I strongly believe that no matter whether you are buying or selling, you should put the offer on the table first. By putting the offer on the table first you are setting an expectation or an anchor point. It is important that your offer is ambitious. If you are the buyer your offer needs to be below you maximum acceptance point; if you are the seller then your offer needs to be below your minimum acceptance point. You open ambitiously so you have room to move in the negotiation, this shows the other party that there is willingness to come to a deal. At the same time it evokes reciprocity, a basic law of social psychology; when we get something we feel obliged to give something in return.

Let's say you are looking to buy a house. The maximum you want to spend is $950,000; your maximum acceptance point is $950,000. You can't go above that, you don't have more money.
So your offer should be well below the $950,000 but realistic. Don't offer half as that would insult the other party and they might not be willing to negotiate with you at all.

 This methodology should be applied in all negotiations, whether you are buying something or negotiate over salary or a contract.
In Summary: Open first, be ambitious but reasonable, apply reciprocity

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