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Keys to Becoming a Great Commercial Real Estate Negotiator

By Jim Gillespie | June 4, 2014

As a commercial real estate broker working on straight commission, your livelihood depends on you becoming a great negotiator. If you don’t become a great negotiator, your deals don’t close, and you don’t earn and get paid commissions. It’s just that simple.

Sometimes becoming a great negotiator means that you’re managing two massive egos on the opposite sides of the transaction—people who would rather cost themselves a ton of money than ever end up feeling that the other side got the better of them during the negotiations. When you’ve been in commercial brokerage for many years, you’ve encountered situations where the two sides got very close to both agreeing on the price, but neither one would then budge from their previous offer in the end. This refusal of them to budge often has much more to do with them not wanting to let the other side feel like they’ve won, than it has to do with whether or not the price that’s being offered is reasonable.

In commercial real estate brokerage, you’re oftentimes dealing with people who don’t need to take any transaction that you’re proposing to them. It’s oftentimes more a matter of whether or not they feel they can win in the negotiations with the other side, and the more entrepreneurial your decision maker is, the more oftentimes this will be the case.

So the better that you become at managing big egos, and at keeping them stimulated and interested in still moving forward with the negotiations, the more successful you’ll be in your brokerage career.

It can feel sometimes like you’re managing two ravenous tigers, with both of them circling right in front of each other, letting the other one know who’s going to win. With this in mind, you’ll want to learn how to maintain the ideal tension during negotiations so that when one of them finally lunges forward and grabs the price that the other one is now offering, both of them will still feel that they got the better of the other one during the negotiations.

This necessitates both skill and a solid understanding of human psychology, which you will cultivate during your brokerage career.

So be committed to learning as you go along. When transactions fall apart and the principals end up walking away from the table, ask yourself, "What could we have done differently along the way to have consummated this transaction?"

Sometimes the underlying problem can lie in the number of offers and counteroffers that were being exchanged between the two parties during the negotiations. Sometimes, if you have a number of different offers and counteroffers that have been exchanged, the energy in the negotiations can just die. This is often because people can just feel that they’ve already given too much, as is indicated by them already having raised their initial offer several times. "If the other side hasn’t been willing to accept any of my previous offers," the principal can then assume, "then they’re just asking me to give them way too much."

So you’ll want to become a master at keeping the optimal level of negotiating tension going on within your transactions, keeping the tigers still interested in circling right in front of each other, to maximize the probability that you’ll then close the transaction.

This is one skill you’ll develop throughout your brokerage career by observing, learning, asking yourself the right questions, and by both developing and utilizing a solid sense of intuition.

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