Negotiate to Win
Hard work is the secret to closing a deal.
used to think that I was a good negotiator. I thought that I had been born with
an instinctive knack for negotiation, imbued with gifts that made me capable of
representing my clients better than anyone else out there.
it turns out, I was wrong. What I discovered along the way was that great
negotiations require nothing less than donkey-work. Embracing the drudgery
involved is the best thing that any truly committed negotiator can do.
experience detailed below sums up the critical importance of putting your nose
to the grindstone when it comes to real estate negotiation. In all likelihood,
you’ve experienced something similar. Since commercial real estate
professionals are involved in negotiations at every turn, why not learn how to
do it the right way?
I represented a landlord who was anxious to lease 62,000 square feet of office
space to the American Red Cross — no small coup. This was during a very
critical time for the landlord’s business park. Having recently lost three
high-profile tenants, the complex was effectively 72 percent vacant, with one
building entering foreclosure. The landlord speculated that brokers were
resisting bringing new clients into the park.
we were willing to do the necessary legwork, our team succeeded in leasing the
space to the Red Cross. The donkey-work gave us a concrete understanding of the
decision-making process of both sides. Through this, we were able to map out
the landlord’s range of acceptable terms, the tenant’s specific needs, and all
of the alternatives open to us.
wasn’t a quick or simple process. Negotiations lasted almost 12 months. But in
the end, we were able to serve up a win-win solution that assured the tenant a
fair price and also enabled the property owner to re-establish a momentum that
eventually led to leasing 180,000 sf and stabilizing the business park.
A Learning Experience
do everything right and not everything went smoothly. There was an excessive
amount of time spent responding to a 96-question request for proposal. In
addition, a lot of time was wasted running around collecting information that
turned out to be unimportant.
we learned from our mistakes. If I had a chance to turn back the clock and cast
a to-do list into my unknowing hands, this is what I’d include:
copious notes from the beginning. You’ll never regret taking too many notes.
toward a clearer understanding of the issues important to both landlord and
tenant. For example, I have vivid recollections from the tenant showings about
important lease terms, but I was getting different messages once the meeting
was over. Also, I assumed that the landlord would dig in its heels and stick
with the terms that it required in the past— but this time it was different.
Probing both sides led me to change my mind about the range of parameters for
those sometimes-awkward questions that are necessary to understanding each
side’s best alternative to a negotiated agreement. I start every showing by
asking the broker how much time is available. If she answers “20 minutes,” I
say to her client, “In 20 minutes, what will you have to see to either rule
this space option out, or put it on your shortlist?” Then I show them those
on a face-to-face meeting to discuss a lengthy RFP before responding to it.
In-person meetings can accomplish a lot, not the least of which is a better
understanding of the landlord’s full set of interests.
Avoiding Deal Fatigue
real estate brokers share aninnatedoggedness that’s critical to
getting across the goal line when deal fatigue sets in. However, that very same
level of persistencecan become a trap, causing a broker to lose sight of
the forest for the trees. To prevent this, it’s imperative to back away and
take the necessary time to prepare before launching headlong into negotiations.
the negotiations for the American Red Cross deal, I employed the principles
laid out in a negotiation worksheet developed by my company that we have coined
the “Prepared to Win-Win” worksheet. This habit enabled me to accomplish a
number of things, including a constant focus on my client’s objectives and an
understanding of the tenant’s needs and viable alternatives that served its
using this negotiations worksheet for nearly five years, I have found it to be
an incredible resource. It allows me to prepare with confidence, especially
when juggling multiple transactions. Most importantly, the worksheet helps me
formulate the right questions to ask to stimulate dialog and foster novel
Culbertson is founder and partner of Cardinal
Real Estate Partners LLC in Charlotte, N.C. Contact him at
email@example.com. To download a copy of the “Prepared to Win-Win” worksheet, visit
www.cardinal-partners.com and click on Resources.