Let's see if he will take our crappy low-ball offer....

Greetings from Cedar Crest, NM….

Going to the zoo today….well, I hope to.  Albuquerque, NM,  believe it or not, has a great zoo.  City of Albuquerque has done a great job there.

Anyway….The Art of Negotiation

It is a fact that if you can master the art of negotiation, you can make the deal better not only for yourself but for both parties.  Yes…both parties.  There is so much to negotiation that investing time and money in learning the art will pay back dividends in whatever investment vehicle you choose.

My business partner, Steve Maxwell, is one of the best I have seen.  I have learned a lot from Steve.  Yes…I have taken negotiation courses but they usually teach on “how to stick it” to the other guy.  Not the way I roll and not the way Steve rolls either.   When both parties win, that usually turns into a healthy long term relationship.

In any case…..

Two key negotiating points ( there are hundreds more but here are just two)

Timing – Be Slow

Taking your time on a deal where you know you are giving away the farm…and feel you have no choice.

For the last few days I have been working with Zach from Jaxon Texas Property Mangement on leasing some vacant space to a nail salon.  Zach, being the middle man, was in a tough battle to get the best deal for us.  The owners of the nail salon business where shrewed and knew what they were doing.  Not only that…but the occupancy rates are dropping and as a result, the price per square foot is going south too.

I was in the position where I had the vacancy for a long period of time.  I had given up on getting another credit tenant in the space and now I was just looking for a solid tenant that could attract traffic and at the same time benefit from the traffic of the grocery store.  I needed to fill the space and I needed to do it at a close to market price.

The nail salon owners were beating us down on price and terms to the point where we did not know which way was up.  I just about gave up and almost gave in.  I had a scarcity mindset and I was thinking…”will this be the best deal I get the rest of the year?”  Luckily, I took my time and ran the deal by my business partners.  By taking my time, the nail salon owners got “itchy” and started to call Zach hoping for a “thumb’s up” on their offer.  Needless to say, Zach was waiting on me.  So, emotionally, the tenants were tied into the deal and already thinking the space was theirs.

Competition = scarcity

While I was taking my time and discussing with my partners, Zach received another offer from, you guessed it, another nail salon.  The offer was much better but they were slow to sign.  When the previous nail salon owners called again, Zach told them that we have another offer that was more inline with what the owners were looking for.  Immediately, the nail salon owners said “we will match the offer.”

In summary…..

Timing and competition are key to helping you close a deal.  In this case, a lease.  Even though the market is going south and vacancies are increasing…and values are dropping.  If you can be patient and add competition to your deal, your chances are good that you can close your deal in a way that benefits you and your “nail salon owner.”  “Rob!  How does that deal benefit the nail salon owners if they now have to pay a higher rent then what they initially offered?”  Great Question…and the answer is that if I would have signed the initial offer, I would not felt good about it and I would have looked for the first chance to find another tenant.  I probably would not go out of my way to help with other leasing items because I felt they stole that space and I was not about to give them more.  On the other hand, by checking the market, the nail salon owner would know they are getting a fair price and not feel taken advantage of.  So…both parties win.

Until next time……rob