Negotiating with Empathy: Learn How CCIMs Navigate Difficult Commercial Real Estate Deals

By Rich Rosfelder, Strategic Communications Director, CCIM Institute

When working with less experienced investors, owners, and users, the job of the commercial real estate professional changes. They must guide the deal through all of the messy humanness – the emotions, the competing interests, and the miscommunication – in order to close. The process requires a healthy dose of empathy.

In a commercial real estate deal, empathy means “making every effort to truly understand the goals, objectives, interests, and perhaps even the passions of the parties to the transaction,” says Byron Smith, CCIM, president of Metropolitan Realty Group in Vienna, Va., and a CCIM instructor.

But when time is money, it can be difficult to make the necessary effort. The first mistake that transaction parties make is failing to recognize that each commercial real estate deal has its own set of challenges. “Never trust your assumptions,” says Joseph Larkin, CCIM, SIOR, CEO of First Realty in Denver. “Treat every transaction as new, even if you're negotiating with someone you've negotiated with before.”

Testing your assumptions involves asking a lot of questions – and the right ones. Larkin teaches CCIM Institute's Commercial Real Estate Negotiations course and recommends using the NUMERAL tactic to develop open-ended questions.

Visit the CCIM Institute website to learn more about the all-new enhanced Commercial Real Estate Negotiations seminar, and watch for the Advanced Negotiations Workshop in 2018. For a full list of upcoming courses, visit www.ccim.com/education.

Needs

Determine the nature of each transaction party's needs and wants. Is it more space? A new workplace strategy? A green and natural buffer from retail/commercial uses? The satisfaction of having the city recognize community needs? To clean up an eyesore? Identify the most important needs.

Urgency

Identify the timing issues, if any, and what's driving the urgency of the negotiations. Allot time to prepare. Uncover the pressures and deadlines, real or imposed. Remember that time is money, but beware of the quick deal.

Motivation

This question answers all of the “why” questions and gets at the “hidden” agenda. Why do the parties have the needs they have? Why is time so important? Why negotiate this deal? Uncover the true interests of everyone involved.

Expectations

Discover what all parties expect to obtain. What is your aspiration level? Those who expect more get more. Aim high, but weigh the risks. Always justify and determine your holdout time, and always be able to justify your offer.

Resources

What resources do you have in the negotiation process? This is primarily a financial concern. Ideally, you can increase the size of the pie and share that value. But it pays to evaluate your BATNA (best alternative to a negotiated agreement) throughout the process.

Authority

All parties should understand the process of getting the transaction approved. Does it require a higher authority? Who are the invisible players? Could an outside force affect the deal later on?

Loyalty

Are all parties committed to a fair and transparent negotiation process? Be ready to agree to disagree, and act in a professional manner. Demonstrate your commitment to the process.

In the era of big data and online transactions, your ability to understand the needs of all transaction parties and zero-in on solutions will set you apart from the competition. NUMERAL is just one of the tools that CCIMs employ to create value and foster long-term business relationships.

For more negotiation tips and to learn more about the all new enhanced Commercial Real Estate Negotiations course, visit www.ccim.com.

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