When it comes to negotiation, there is a spectrum that exists. On one end lie people who are flippant, unaware, or nervous. On the other are people who are measured, savvy, and confident. Most brokers are somewhere in between. You can move toward the confident side of the spectrum by equipping yourself to achieve directed, successful outcomes.Here are three tools you can use.
- Identify your most important deal points. Nail down where you want to be at the finish line. Even better, write down that information. Prioritize your deal points, determining which terms are most important to your client and which are less consequential. Identify where you would like to be in each priority area—and put that in writing.
My team represented the seller of a vacant office building. Our client indicated price was important, but more significant was closing the deal by the end of the calendar year. With that information, my team could structure the deal to agree with the buyer on some key deal points to support meeting the preferred closing date.
- Understand the other side’s key deal points. The negotiation table has two or more sides, and we can’t get to a destination without helping the other side. Encourage the other party to explain significant deal points. Then find ways to work within the framework of achieving their goals, addressing their concerns, and finding solutions to their problems. Doing this will clarify the value of bargaining chips, less meaningful deal points that you can give up to get a concession of value.
- Gather and leverage the data. We represented a buyer of a residential-style office building in a park with dozens of similar-sized office buildings. My team cherry-picked comparable sales and made a case for a purchase price of around $90 per square foot.
The seller’s representative countered that the purchase price should be closer to $100 per square foot and submitted comparable sales as justification. As we dissected both data sets, we could see that many of the seller’s comparable sales had been renovated, while the property being bought needed cosmetic renovation. That was telling from a qualitative analysis, but the case was most convincing when we put both sets of sales comps on a line graph to show the trend in sale price per square foot over time. The graph helped both parties understand the current value of the property as the next data point in a trendline. Ultimately, they agreed on a price that equated to $87 per square foot.
Adding these practical tools can increase your negotiating confidence and support successful outcomes for you, your team, and your clients.