How Simple Negotiations Matter in Commercial Real Estate

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When we negotiate a commercial property transaction, things can get complicated.  It pays to review things and then simplify the position of the parties.  Know what is said and how it is conveyed.  Look for the underlying issues. Understand the other person completely and comprehensively; ask plenty of questions to get to the core issues.   You are the negotiator.

While you cannot control the other person in a property transaction, you can control how you understand the situation, how you respond, and then how you interact with others in moving things ahead.  The choice is always there.


Don’t Lose Control of Negotiation Things

Overreaction can be a common problem for some people in the real estate industry.  The golden rule is that ‘overreaction’ should be avoided at all costs, as you will then set the wrong scene for any compromise or resolve.  It is better to walk away from a transaction or a meeting if the elements of a discussion are becoming volatile or are moving out of control.

There is sometimes much emotion involved in real estate sales and leasing.  The characters of the parties can conflict and drive different focus points.  As professionals in the industry, we are the controlling point for all negotiation things.  Stay in control of all your negotiations.  Here are some ideas to help you do that:

  1. The Essential Facts – There will be elements of the transaction that are critical to your client and the third party. Identify the facts and how the people feel about those elements.  Your client is the key person in the equation.  Work to the targets of your client.
  2. Timeliness – Most property negotiations can lose momentum if too much time passes. When the negotiation has started, keep talking to all the people involved and help them move through the points of decision.
  3. Price or Rent – While the price or rent is never ‘final’, some people will have boundaries on what they think are the limits of price or rent. The only way to work with that challenge is to have comparable details of other property sales and lease transactions from the area.  When an offer is made, get it in legal form and particularly so in writing.
  4. Key Motivational Factors – What is the key factor in the negotiation for the client? What will they regard as a positive outcome?  Move towards that number or situation through a series of smaller decisions and discussions with the parties to the transaction.  Big ‘negotiation hurdles’ can be broken down into smaller matters.
  5. Capture the Intentions on Paper – If someone is ready to make an offer or counteroffer, then get it on paper. Make the offer ‘legally strong’ through the right documentation and payment of monies.  Verbal offers and the comments of the parties to a sale or lease are of little consequence in commercial and residential real estate.  Commitment to a transaction is required in writing.
  6. Follow-Up the Documentation – When an agreement is reached it is not finished; there are still other things to do. There are many things to pull together as part of the property transaction.  Stay ahead of the issues. Ensure that all parties to the contract or lease are on task when it comes to completing the elements of the transaction in a timely way.  Don’t leave the transaction to others to finish off.  Ask questions and keep people talking.  Commitments are required to conclude a property sale or lease.

From all these factors you can see the benefit of control in any property transaction.  Don’t complicate things in any real estate transaction.  Ask questions and break down any complexity into separate stages, facts, or decisions.  Work for your client in all ways possible.

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