Every day there are things to negotiate in commercial real estate. Preparation is the key to negotiation success. There are different characters and people to adjust to and work with. Are you ready for the challenge? Boost your real estate business with ‘expert negotiation skills’. Prepare for negotiations and situations in advance.
The greater the number of listings that you have, or the more active you are in prospecting, there will be a corresponding lift in negotiation requirements. Some of those negotiations you can prepare for; others not so.
They say that experience and time builds skill, and that would be true in commercial real estate brokerage. However, you can fast track the process by undertaking some practice when it comes to common everyday challenges in brokerage.
Common Negotiation Hurdles
What are some of the most common challenges that you come across in commercial real estate? Try some of these for starters:
- Terms of listing – always know the preferred listing circumstances that you would like to achieve to optimise enquiry and inspection potential
- Commission rates for service – a lower commission is not the ultimate goal of the client. They want a successful transaction. If they push you on a lower commission, remind them of the time and the tasks necessary to drive new business leads and inspections.
- Converting a listing exclusively – if you control the listing stock, then you have a better chance of building momentum on enquiry and target marketing. Capturing an exclusive listing is generally the result of your client contact relationship, presentation process and strategic statements. You can build and practice those things.
- Keeping a listing for the long term even though enquiry is slow – like it or not, some listings stay on the market for a very long time. Identify the reasons for that and tell the client of the ‘hurdles’ that are potentially going to slow the marketing and inspection process.
- Price or rent changes – matching the property to the right rent or price is essential. The buyers and tenants in the market know what the averages are and what their limits are. You must work with those facts. If you have plenty of comparable properties in the location, then you can compare the successes and weaknesses of the area and or property. Use completed transactions as proof of your recommendations.
- Asking for marketing money – there are different ways to promote a property. Are you aware of the best channels of marketing for your location? Can you produce a logical strategy of marketing on your exclusive listings? How will you handle marketing on an exclusive property versus an open listing? You must know the numbers and alternatives. There are ways to explain marketing and marketing ideas. Give evidence of other successful transactions from the location. Be prepared to show a client how marketing works and why that is so. Rank your marketing alternatives by property type and situation.
- Looking to close a contract or lease on terms that are a ‘compromise’ for your client – most negotiations are a compromise in some form. Your client may have some targets in mind, although the property market may be well away from those targets. To close a contract or lease, be aware of the timing pressures, the required documents, the preferences of the parties, and just how much other properties are in the market.
The Rules of Negotiation Today
So, to resolve these things, here are the basic rules of property negotiation today:
- Know the property and the client comprehensively
- Check out all the variables of the situation
- Take support material in hard copy, including figures and graphs
- Understand the elements of the market
- See what you can do with documentation
- Be prepared for all associated questions
- Take a record of all progress, decisions, and disagreements
Take your real estate business to the next level with strategies and practice. Through the process, remember your client and their preferences or targets. Achieve your results through a focused effort.