How to Become a Fearless Negotiator
There’s no denying it — negotiations can make or break your deals.
You spend hours and hours convincing your client that you’re the right broker to help them reach their goals, and you scour the market to satisfy their requirements.
But a poorly managed negotiation can ruin it.
That’s just part of the job when you’re a commercial real estate (CRE) broker.
And here’s the thing: Letting the pressure get to you will only make things worse, because your confidence is a major factor in successful negotiations.
Fortunately, with the right preparation, you can enter negotiations with the conviction needed to secure the terms you and your clients deserve.
4 Pre-Negotiation Tips that Will Help You Broker Jaw-Dropping Deals with Confidence
1. Know what the deal is worth
The best way to approach a deal with confidence is to know exactly how much it’s worth.
And that doesn’t mean how much it’s worth to you, your client, or the person sitting on the other side of the table.
It means how much it’s worth based on current market factors.
That’s why you need reliable COMP data.
According to CRE data provider Reonomy, “Because they can harness historical data of other similar properties, with similar characteristics, that exist in similar markets, comps are often a very accurate way to find the current market value of any asset type, in any market nationwide.”
Before entering a negotiation, review COMP data around similar deals to get an idea of the terms you can expect.
Then, you can ask for concessions and additional value without second-guessing whether your request is reasonable.
2. Determine your walk-away point
Not every deal is salvageable.
At some point in your career (probably more than a few times), you’ll negotiate with someone who’s not acting in good faith.
And if you’re not willing to walk away, you’ll make ill-advised concessions.
That’s why it’s important to determine what terms you’re not willing to accept before you enter a negotiation.
Adam Galinsky, a social psychologist, professor of business, and best-selling author, calls this breaking point the reservation price — “the minimum (for the seller) or maximum (for the buyer) acceptable settlement price within the current negotiation.”
While CRE deals involve a lot more than price, the idea remains the same.
Using COMP data as your anchor point, lead discussions with your client prior to negotiations to determine a mutually agreeable reservation price.
And if you can’t negotiate your way to those terms, walk.
3. Identify other options
A crucial concept in successful negotiations is the best alternative to a negotiated agreement (BATNA).
In fact, Harvard Law School’s Program on Negotiation said it’s “often your best source of bargaining power.”
When you know you have other acceptable options, it’s much easier to stand firm in your demands and walk away when the terms become unfavorable.
Identify alternative deals, and don’t be afraid to mention the fact that you have other options if negotiations start to go sour.
4. Create a game plan
One of the worst things that can happen during a negotiation is getting blindsided.
When you encounter a scenario you’re unprepared for, you’re more likely to react poorly or make concessions too quickly.
Before your negotiation, run through questions, roadblocks, and requests you expect to encounter, and develop a plan for how you’ll respond.
Have a mentor or another broker in your firm roleplay the negotiation with you so you can rehearse possible scenarios and hone your reactions.
Sound like overkill?
According to John Buelow, Executive Vice President of Shapiro Negotiations Institute, roleplaying prior to negotiations can help you:
- Build confidence
- Develop listening skills
- Strengthen creative problem-solving
If you can’t find anyone willing to help out, visualization is the next best option.
Simply close your eyes and imagine the negotiation and how you’ll respond. It may sound hokey, but it’s actually extremely effective.
In fact, Harvard Business Review noted that “visualizing the negotiation in advance further embeds the skills and cognitive and behavioral readiness for the negotiation, increasing the chances of success even more.”
Nail the negotiation
Effective negotiation skills empower you to land favorable deals for yourself and your clients.
Preparing for negotiations — by researching COMP data, determining your reservation point, identifying BATNAs, and practicing your game plan — will help you gain the confidence you need to land the right deals, on the right terms.