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Tips for More-Effective Commercial Real Estate Negotiations

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Discover NUMERAL, a tactic that helps CCIMs negotiate difficult commercial real estate deals. CCIM Institute invented the language of global real estate investment. Learn more at www.ccim.com.

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Tips for More-Effective Commercial Real Estate Negotiations

  1. 1. Tips for More-Effective Commercial Real Estate Negotiations
  2. 2. By using NUMERAL, a mnemonic How do you uncover information in the negotiation process?
  3. 3. We often assume… “They will never pay that much.” “We've got to have it done in 60 days.” “There is a lot of competition.” “They would never be interested in this option.” “They don’t have enough money.” “I’m sure we’re not the top bidder.”
  4. 4. Don’t trust your assumptions.
  5. 5. Used to: • Develop open-ended questions • Create a process for successful negotiations • Uncover needs and wants • Test your assumptions NUMERAL
  6. 6. Needs Urgency Motivation Expectations Resources Authority Loyalty NUMERAL
  7. 7. Needs NUMERAL Determine the nature of the needs and wants. Is it: • More space? • A new workplace solution? • A green and natural buffer from retail/commercial uses? • The satisfaction of having city recognize community needs? • To clean up an eyesore? What's the most important need?
  8. 8. Urgency What are the timing issues, if any, and what is driving the urgency of the negotiations? • Allot time to prepare. • Identify the pressures. • Time is money so use it. • Beware of the quick deal. • Uncover the deadlines, real or imposed. • Ask questions to determine if parties have any time issues. NUMERAL
  9. 9. Motivation This answers all of the “why” questions. • Why do you have the needs you have? • Why is time so important? • Why negotiate this deal? Uncover the true interest of everyone involved. NUMERAL
  10. 10. 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. • Always be able to justify your offer. • Establish realistic expectations in the negotiations process. NUMERAL
  11. 11. Resources What resources do you have in the negotiation process? • Information is power. • What are the tangibles and intangibles? • Can they apply political pressure? • Is litigation one of the tools they possess? • What can they bring to the table? • How do you increase the size of the pie and claim/share that value? • Evaluate your BATNA (best alternative to a negotiated agreement) throughout the process. NUMERAL
  12. 12. Authority What is the process of getting this transaction approved? • Does it require a higher authority? • Who are the invisible players? • Understand the sources of power. • What type of authority are you negotiating with? Could an outside force affect the deal later on? NUMERAL
  13. 13. Loyalty Is everyone committed to the negotiation process? • Find out if everyone is committed to working together fairly. • Agree to disagree. • Act in a professional manner. • Demonstrate your commitment to the process. NUMERAL
  14. 14. NUMERAL Why use it? Because information gathering is an essential step in finding a better deal for both parties.
  15. 15. For more negotiations tips, check out the article “Negotiating Difficult Deals” from Commercial Investment Real Estate magazine. CONTINUE READING
  16. 16. To receive weekly commercial real estate tips and course updates, join 30,000 commercial real estate pros who receive our education newsletter. SIGN ME UP