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Negotiating Counter Offers in Commercial Real Estate Brokerage

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As negotiators of commercial real estate properties and in sales and leasing, we are frequently attempting to bring two parties together in some form of transaction.  It directly follows that we should refine our skills in the negotiation process.

Success in this industry is a lot easier if you are a great negotiator that can see through and around the negotiation hurdles that can exist.  Every property and client is different so you will require some clear thinking and great interpersonal skills to close on difficult deals.

I want to talk about one form of negotiating and closing and that is the ‘counter offer’.  Just about every seller, buyer, tenant, or landlord will want to ‘counter offer’ on the deal at some point as an attempt to get the best result.  Your job is to close around the facts of the transaction and the needs of the parties.

Here are some tips to help you with this ‘counter offer’ situation:

  1. Remember who your client is in the transaction.  They will be paying your commission and on that basis their requirements should be at the centre of any negotiation.  What pressures are they negotiating under and how can you help them through that?  What are their instructions and have you got that fully understood and documented?
  2. Any offer and counter offer should be in writing.  Verbal offers are of no use in our industry.  People change their requirements and on that basis anything that is ‘verbal’ cannot be trusted.
  3. For a counter offer to be enforceable you must use a legal form of contract or lease that correctly reflects the intentions of the parties.  The document must also comply with property laws and protocols that exist in your town and state.
  4. Take particular care with ‘special conditions’ and ‘subject to provisions’ in any counter offer or contract or lease.  The wording of the clauses and the document(s) must be accurate and enforceable for the property and the parties.
  5. Make sure that the parties to the transaction are correctly detailed on the documents.  Ensure that they are legally able to commit to the offer or counter offer.  Understand that you are working with the decision maker in every case of negotiation.
  6. Any buyers to a contract or tenants to a lease should have been fully qualified at the start of the offer process so you know that they have the capacity to act.
  7. Any offer or counter offer should be supported by valuable consideration in the form of a deposit for the transaction.  Ensure that the amount paid is substantial to show the commitment of the parties to the contract or lease.
  8. Always take and present offers in person with the parties involved.  Do not present offers or negotiate over the telephone as the level of success from a remote location is low.
  9. Any discussions as part of the negotiation should be documented and evidenced in writing.  From time to time you will need to prove what was said and why that was so.
  10. If the client tells you anything about the property, write it down and seek proof of the fact given or information provided.  Some clients do not understand their property completely and this can make a sale or lease situation more complex.

So you can add to this list based on the property type and location.  Importantly, every offer and counter offer taken and negotiated for your client should be professionally and accurately processed.

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