Life experiences, lessons learned, classes taken, books and articles read, and then summarized for your viewing pleasure in the following article on commercial real estate negotiation tips.
- Don’t let contract negotiations go back and forth more than twice: the further back and forth, the harder it is to reach an agreement. Round 1 and both are focused on selling. Round 2 and the focus changes to money. By the time you get past Round 2, the parties can start to get picky, start to resent each other, and lose focus. Then the problems can become personal.
- Focus on completing the sale. Don’t be sidetracked by emotions, unimportant details, unforeseen challenges, or difficult situations that arise.
- Strive to put all contract offers and subsequent relevant details in writing. This avoids the misunderstandings, misrepresentations and omissions that normally accompany verbal communications and lead to the interruption of the process.
- When you give a concession, ask for something in return. You may not always get it, but the fact that you have compromised on an issue should give you the position to ask for and often receive something in return. Just by asking and not receiving, you prevent the other party from continuing to ask for concessions from you and your Client.
- It’s best not to accept the first offer too quickly or too easily. Wait at least a few hours. When you talk about it with the other agent, don’t talk about the ease of getting the property under contract. The other party will immediately think that he made a bad deal, and from then on, the closing process may become more difficult than it should be.
- If you hit a dead end, change your approach and solve less complicated problems. Then go back to the hard ones. The process will be smoother and once you’ve worked on the easier ones, the momentum will help get things done.
- If you’re not sure how to respond to a request, or if you know the answer but want to soften the blow, use the “limited authority” approach. “I’m not sure, let me check with my partner” or “Let me see such and such information” so you can provide a more meaningful answer.
- To support your position, please rely on the above. Suggest that this is how problems like these are usually approached or that you have done such and such before with great success.
- Ask the other party for something that isn’t critical to making the deal, so maybe you can trade this item for something more important to you.
- Negotiations are a process. No matter how fast you want things to move, the process will move based on your Client’s comfort level. Stay focused, but keep in mind that the process will most likely not move as quickly as you would like.
- Stay away from high-pressure tactics, including ultimatums, demands, or anything that sounds final and/or threatening. Most of the time it doesn’t help and can lead directly to emotional responses which then create animosity.
- Work towards a win/win. In order to have a successful negotiation, both parties must win on some points. Give and take. Strive to achieve most of your goals with the understanding that the other party is trying to do the same.
- Present all the facts to your Client. It is your fiduciary duty as a real estate agent to inform the client of all the facts related to the negotiations, good and bad. Do not insist on a higher dollar offer if other terms of the offer put Customer at undue risk.
- Remember who you are negotiating with. Sooner or later you will be at the table with the same Agent again. Don’t burn any bridges by transacting in a less than professional manner.