Commercial real estate is such a diverse property type across industrial, office and retail property. Closing and negotiating the property deal is therefore specific to the property type and the parties to the negotiation. You have to be the best negotiator that knows the market, the deals, the people, and the regional trends.
The role and rules you set in the property negotiation are critical to your success and the outcomes you get. The normal variables apply at the start such as:
- Lease details
- Contract terms
- Settlement dates
- Occupancy dates
- Subject to provisions of contracts
- Availability of finance etc.
But there is more. The real ability to close more leases and sales deals comes from your ability to ‘inoculate’ yourself from the threats to the deal. This means you must be prepared for the negotiation before you start.
To ‘inoculate yourself’ for the negotiation you have to know all the ‘BATNA’ elements of both parties. This is a common term used by experienced negotiators and means simply one thing. You have to know the ‘Best Alternatives to No Agreement’. When you know the BATNA’s, you can have your answers ready and the strategy ready.
So how can you do this? Both the buyer and the seller (or landlord and tenant if you are doing a lease deal), will have alternatives to fall back on if no agreement is reached. The lesser number of alternatives they have the better, as it will keep the negotiation simpler for you. Whatever their alternatives are, you need to know them. When you work from this position, your negotiations can be more direct and successful. Your property deals will be better as you will be the ‘clever negotiator’ that is well prepared. You will be more aligned to the arguments you present, and it will be harder for the other parties to the negotiation to counter your proposal.
Your client will be one of the parties that you want to help with the BATNA concept. To know their BATNA’s is productive from the outset, and they need to know that. The concept should be discussed with them beforehand because you are to chase the best outcomes for them.
The third party is the person that will not always tell you the BATNA’s so you will have to work them out yourself through clever questioning at the time of property inspection. Whatever BATNA’s they have should be lessened so that they have little alternative than do agree to the property offering.
So the moral of the story is to know the complete BATNA picture of both parties and then to negotiate from a position of strength into that picture. You can see more about this on our website here http://www.commercial-realestate-training.com/