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Negotiation tips for commercial real estate transactions

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

  1. Don’t let contract negotiations come and go more than twice – the further back and forth, the more difficult it will be to reach an agreement. Round 1 and both are focused on the sale. Round 2 and the focus shifts to money. When you get past Round 2, the parties can start to get fussy, start to resent each other, and lose focus. So problems can become personal.
  2. Focus on completing the sale. Don’t be misled by emotions, unimportant details, unforeseen challenges, or difficult situations that arise.
  3. Endeavor to put all subsequent contractual offers and relevant details in writing. This avoids the misunderstandings, misrepresentations and omissions that normally accompany verbal communications and lead to a disruption in the process.
  4. When you make a concession, ask for something in return. You may not always get it, but the fact that you have relented on an issue should give you the position to ask and often receive something in return. Just asking and not receiving it prevents the other party from continuing to ask you and your Client for concessions.
  5. It is best not to accept the first offer too quickly or too easily. Wait at least a few hours. When discussing it with the other agent, do not discuss the ease of obtaining the property under contract. The other party will immediately think they made a bad deal, and from that point on, the closing process can become more difficult than it should be.
  6. If you come to a standstill, change your focus and solve less complicated problems. Then go back to the difficult ones. The process will go smoother and once you’ve worked through the easy ones, momentum will help get things done.
  7. 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 this or that information” so that you can provide a more meaningful answer.
  8. To back up your position, trust the precedent. Suggest that this is the way problems like these are usually approached or that you have done this or that thing before with great success.
  9. Ask the other party for something that is not critical to making the deal, so maybe you can trade this article for something more important to you.
  10. 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 fast as you want it to.
  11. 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 that later create animosity.
  12. Work to win / win. To have a successful negotiation, both parties must win on some points. Give and take. Strive to accomplish most of your goals with the understanding that the other party is trying to do the same.
  13. Present all the facts to your client. It is your fiduciary duty as a real estate agent to know the client all the facts related to the negotiations, good and bad. Do not push for a higher dollar offer if other terms of the offer put the Client at undue risk.
  14. Remember who you are negotiating with. Sooner or later you will return to the table with the same agent. Don’t burn bridges by transacting in a less-than-professional manner.

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