Negotiation Tactics for Selling Commercial Real Estate
When it comes to real estate negotiating, almost every aspect of a deal could conceivably be on the table. If the market conditions are right, sellers can demand that buyers waive their inspection contingency, refuse to pay the buyer’s agent commission, or many other conditions. It all depends on how refined your negotiation skills are.
Realizing that you can ask for nearly anything at the negotiating table can be overwhelming or tremendously freeing. After all, you could get yourself the deal of a lifetime with the right negotiating tactics. Let’s explore some tried-and-true strategies to get the best deal when selling your commercial real estate.
1. Know the Local Market
Everything flows from the local market conditions. In a tepid market, residential sellers can pay a 3% commission, while in a hotter market, they can often find agents willing to accept only 1% commission. That 2% may not sound like much, but it can translate to thousands of dollars of savings.
The same applies to commercial real estate. Understand the market you’re selling in by conducting market research and analysis, and adjust your strategies accordingly. While the national commercial market is more tepid than in years past, there are still plenty of lucrative pockets around the country where sellers still have leverage. Use a tool like Crexi Intelligence to get a comprehensive market overview to know how to best position your property.
2. Bring Data
As a listing broker, the best way to make a convincing case to your seller is with hard facts. In your market research, find comps of similar transactions and use those numbers to reinforce your arguments. Sellers may find it easy to resist your requests, but ignoring objective numbers is much harder.
Additionally, presenting evidence and case studies shouldn’t just be a long recitation of facts and numbers. If you want your presentation to be persuasive, include visual aids like charts, graphs, photos, videos, and slideshows.
3. Consider the Timing
The commercial real estate market goes through hot and cold phases like any investment market. Of course, you can’t control when a buyer comes to you, but understanding the pace of the present market moment should shape your negotiating strategy, especially if the buyer is under time pressure.
4. Zoom Out
Don’t get too fixated on your side of the deal. Look at it from the buyer’s side, too. Figure out what their must-haves might be, and be ready to deal with them. Talk to the buyer and ask plenty of questions. In many cases, you don’t have to guess or decipher the buyer’s real position— they’ll tell you if you ask!
5. Listen More Than You Speak
Silence at the negotiating table can be one of the strongest positions. Make a point of only saying what’s necessary to engage the buyer. Let them reveal their motivations and needs so you can negotiate accordingly. At the same time, avoid exposing your own motives as much as possible to retain leverage.
6. Roleplay and Prepare
If you’re not a seasoned negotiator, consider practicing your negotiating with a trusted friend or colleague. Practice tactics like instilling urgency, highlighting benefits, and mirroring and reciprocity. Get enough practice to build a baseline of comfort when you’re at the negotiating table for real.
7. Hone Your Closing
Negotiating the sale of your commercial property will likely be a long process, and many negotiations could go on indefinitely. But there will come a point when the deal is as good as it’s going to get for each side, and it’s time to get the sale over the finish line. That’s when you need to be able to close the deal.
8. Stay Calm
Negotiations can get heated, especially when there’s a lot of money at stake, and each party is under pressure to get the best deal possible. But negotiating from anger is never a good idea. Keep calm and collected, and don’t tip your hand to the other side.
Keep positive emotions under wraps, too. If the buyer can see that you’re excited to finish the deal, they may take advantage of your eagerness with some last-minute clawbacks.
9. Give and Earn Trust
The more you and the buyer trust each other, the smoother the negotiation. Be consistent, transparent, honest, and open; negotiate in good faith and keep your word. Once the buyer understands that you mean what you say and can be depended on, they’ll likely reciprocate.
10. Be Patient
A commercial real estate transaction can take a long time, especially when you’re selling a high-value property like an office or apartment building. Remember, it’s a marathon, not a sprint; stay patient, even if the negotiations drag out for months or longer.
11. Don’t Frontload Your Demands
As the seller, you’ll likely have certain must-haves and red lines that you highly prioritize. But don’t dump them all on the table up front, or you could provoke resistance in the buyer. If they’re savvy negotiators, they’ll leverage your demands to get equal concessions.
Instead, introduce them over time in a manageable way. No single demand is likely to provoke massive resistance, so you’ll have a much better chance of getting all your needs met without giving up a ton in return.
12. Everything Isn’t Necessarily About Money
Don’t get fixated on price as the only arena for negotiation. Non-monetary incentives, such as flexible closing or perks like custom attorney-approved lease packages, can often be as effective as a price concession.
13. Walk Away If You Have To
The cliche about always being willing to walk away from the negotiating table is true; sometimes, saying ‘no’ is your best move, especially if negotiations are deadlocked and the other side is dug in. Sincerely walking away from the table is often the most effective way to reset the negotiation or at least avoid ending up in a bad deal.
If you're ready to find your next investment and bring these negotiation tactics to the table, get your property search started with Crexi.
Ben Mizes is the Co-Founder and CEO at Clever Real Estate, the nation’s leading real estate education platform for home buyers, sellers, and investors.
