In commercial real estate sales or leasing just about everything you do involves negotiation. Sellers, buyers, landlords, and tenants, all have issues and priorities when it comes to negotiation outcomes. Many times they will not be open on what it is they really want. Here is a fundamental tool to use in the property negotiation process.
You have to prepare before you go into the negotiation battle. So what can you do to prepare? Before you start every negotiation you should have a personal process of what I call ‘negotiation vaccination’. This is a deliberate choice and effort of looking at what could go wrong before you start the negotiation. You have to ‘vaccinate’ yourself against what can go against you. You have your answers and processes ready.
When you ‘vaccinate’ yourself for the negotiation process, you have your responses and ideas ready on all the critical matters of the negotiation. Remember that the client or prospect has had days or even longer to prepare their thoughts and targets for the negotiation. They know you are coming today to see them and they have their ideas and targets ready. They may have even been ‘primed’ by another real estate agency with ideas to derail your intentions.
At the very least to ‘vaccinate’ yourself for the negotiation you should take 30 minutes or so in review all variations of the essential parts of the property negotiation before you arrive.
Consider a negotiation with a seller to list a commercial property. The key elements of the negotiation will be things like:
- Price of the property
- Method of sale to be used
- Timing of sale
- Marketing strategy that suits the property
- Target market to be attracted in the marketing
- Marketing funds to be paid by the seller
- Contract methods and documentation for the sale process
- Method of inspecting the property
When you look at the list and pick just one of the elements such as ‘Methods of Sale’, you can break it down into what I call the ‘vaccination’ list around which you will have to have your answers and targets. For example:
- Auction of the property
- Tender of the property
- Expressions of interest
- Sale at a price
- Sale with no publicised price
- Exchange
- Off market listing
- On market listing
Not all of these will be desirable methods of sale given the property, your current market and your location. To ‘vaccinate’ yourself against the client’s ideas in the listing negotiation, you have to be prepared. You have to know your targets and be prepared for what they may prefer. What will you say regards all of these methods of sale and what will be your counter proposal if the client chooses say the method of ‘Sale at a price’ when you know that the property should go to auction?
Be prepared for the negotiation surprises, and have all your team on the same page before you get to the meeting. Know who is to be the key negotiator and set the roles of the other members of your team.
As the commercial real estate expert you have to be questioning and interpreting all the way up to and through the negotiation. Given that you are in negotiation sometimes 4 or 5 times per day in different deals, on different matters, and on different properties, the mental challenges can be daunting. Remember to ‘vaccinate’ yourself and your team for every critical negotiation and do that well before you arrive at the meeting. This process will help your listing conversions and negotiation outcomes.