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THE ART OF NEGOTIATING WELL
Sharpening your negotiation skills is critical if you're going to succeed in buying or selling commercial property!
First, remain calm. Logic and strategy, not emotion, should drive you. It may not be so easy for the other party to stay cool. A lot is at stake. If it gets too hot, don't push. Take a step back to reevaluate, go over the deal on the table and relax. Cool heads must prevail.
Start with the 'easy yeses' or items that the other party may easily agree to, to get negotiations started on a positive.
Think in terms of allowing the other party to receive some concessions. 'Going for the jugular' is counterproductive and could harm you in both present and future deals.
Be well informed about the property you wish to buy, if you are the buyer, and as much as possible, about the buyer if you are the seller. Find out as much as possible about their motivation, personality type, style. And make sure you have done as much due diligence as possible going in if you are the buyer, to keep your plans moving forward.
Be open minded and flexible. The best deals are 'outside the box' and no two are alike.
EVERYTHING is negotiable. Very little is carved in stone.
BE HONEST. A lack of trust could kill your deal before it starts.
Be cordial, polite, respectful and likeable. IT MAKES A DIFFERENCE.
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So You Want To Buy A Commercial Property?
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CommercialBHC.com -- Next Wave Real Estate Investments, LLC
Timing Your Purchase, Due Diligence, Negotiating - A Few Pointers
DEFINE YOUR OBJECTIVE
. Are you an investor, business owner or what? If you're planning to INVEST in commercial property, what is your financial goal?
BUSINESS OWNERS. What do you NEED in a property that would make it worthwhile to go to the trouble and expense of MOVING your business?
TAKE A LETTER? As busy as you probably are, you can't possibly remember everything you need to know or find out. Take a legal pad with you and prepare to commit your requirements to paper. Your COMMERCIAL SPECIALIST should be a step ahead of you, taking copious notes. Doing this before and during your visit to candidate properties will ensure you don't miss any key info.
ROUND ONE! It's often a good idea to begin with a letter of intent, rather than a detailed offer to purchase. The reason is twofold: first, you can ascertain if the items of primary importance will be deal breakers. Second, it will save time and set the stage for smoother negotiations.
NOT ALL THINGS. In addition to your COMMERCIAL SPECIALIST, you need to have an ATTORNEY and CPA/TAX PROFESSIONAL involved in your purchase.
LEASE OR PURCHASE, OR BOTH? It may be prudent to lease in a particular location if you know or expect your business will rapidly expand. A lease option gives the buyer the option, but binds the seller. A lease purchase binds the buyer as well.
TOP GADGETS. The best thing to take with you is a digital camera and voice recorder. Better still, both combined. A handheld 'handycam' suits many.
HOW MUCH SPACE DO YOU NEED? The difference between gross and useable square footage is that the former includes the exterior walls. If they are very thick, your useable SF could be significantly less.
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Tips For Creating An Excellent Deal
Everywhere in the Universe is BALANCE. And when dealing in any type of goods, creating a WIN-WIN situation will set the stage for future successes. Even in commercial real estate, where the fortunes of corporations and the future of small businesses literally hangs in the balance, the savviest professionals know the value of a well crafted real estate transaction. Trade offs are common in all negotiations. Here are some trade offs you might see or make in your commercial transaction while at the negotiation stage:
* If you're asking the seller to carryback finance, be prepared to make a larger down payment.
* If you are paying your own buyer broker, the seller may discount the asking price.
* If you or someone else extends a personal guarantee, the seller should offer better terms or be willing to carryback finance.
* If you need a longer escrow period, be prepared to make more than one earnest deposit at agreed upon points of time.
* And of course, an all cash transaction should give you room on the price!
* If the seller has complete and current information about the property such as inspections, complete financial records that make buyer due diligence easier, you may be asked to limit or eliminate contingencies.
* With a high or full price purchase offer, seller may be more willing to make repairs or warranty items beyond Close of Escrow.
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