Successfully consummating negotiations in commercial real estate isn’t just about successfully negotiating the price…it’s about communicating to the other side that you’re someone they definitely want to do business with.
How you negotiate, the offers and the counteroffers that you make, and your specific style when negotiating sends a message to the person on the other side of the table. It also lets them know whether or not you’re a worthy opponent. In addition, it lets them know whether, despite the fact that you’re trying to get the best deal from them, you seem to be a fair and reasonable person. On top of all this, it also lets them know whether or not you’re a shark who should be avoided.
With respect to the latter, how do you feel whenever someone makes you an offer and then later on takes it back, giving you a considerably worse offer in the process? It makes you not want to do business with the person, doesn’t it?
Don’t be one of those people.
In the business world, you’ll oftentimes be dealing with tough negotiators. When a tough negotiator comes up against a weak one, there is oftentimes a lack of respect for the weak negotiator that then comes into play, and you don’t want to end up being the person who’s not being respected. Not to mention the fact that you’ll end up giving away much more than you need to be giving away in the negotiations, too.
Negotiations between two seasoned business professionals can be like two bulls circling each other. You’re feeling out the person on the other side, looking for both weakness and opportunity, while protecting your own best interests at the same time, too.
Now here’s where it gets even more interesting…the better you are at negotiating, and the better you are at keeping the other person interested in continuing on in their negotiations with you, the more successful you’ll be at closing transactions. There is a certain dance, a certain magnetic attraction that can take place between two principals when both of them are good at negotiating, and continually suggesting alternatives that will keep the other person interested.
The worst negotiators in the world oftentimes are the ones who play hardball very quickly within the negotiations, and soon offer a “take it or leave it” position to the other side. While they may feel strong and powerful in doing so, they may end up having vacant units and vacant buildings for much longer than the other owners who are really great at negotiating. These “hardball” negotiators can make the person on the other side feel like they don’t even want to do business the person, making them feel that they just want to walk away from the negotiations instead.
When you’re good at negotiating, the person on the other side doesn’t want to walk away from the table…they just want to find one more alternative that could really make the transaction work. This in turn will keep you in the negotiations much longer, leading to you successfully consummating your transactions a much higher percentage of the time.
So be polite and congenial within your negotiations. Project that while you may be tough, that you can also be fair and reasonable. In addition, look for alternative ways to give and take during the negotiations that will still yield a great transaction that can really work for everyone.
When you’ve finally become this kind of negotiator, you’ll end up successfully closing a much higher percentage of all of your commercial real estate transactions.
