Negotiating a commercial real estate (CRE) deal, including the lease, can be the most difficult part of buying or selling an investment property. When you’re ready to get down to brass tacks, you’ll find emotions run high from everyone involved trying to reach their goals, and sometimes, those goals are not compatible.
Although it may seem difficult, there is a way to get through negotiations in one piece with the desired outcome if you follow our 3 Tips to Successfully Negotiate a Commercial Real Estate Deal.
1. Know the Buyer or Seller
It is as true in the commercial real estate business as it is in any B2B or B2C company – knowing your customer is imperative to making the sale, which is why it is critical to get as much information as you can about the buyer or seller.
Let’s say you’re the CRE buyer, and Westwood Net Lease Advisors represent your best interests. Your buyer’s advisor will research the seller and find out as much as possible about how he or she operates, and learn about the seller’s expectations and motivations for selling. Your advisor will also perform due diligence on the property and the lease to look for anything that may take away from the property’s value, including hidden lease clauses.
Once we understand the other side, in particular, their reasons for wanting to buy or sell the property, this will help you craft an attractive offer.
2. Look Beyond Price
You’ve heard of win-win deals. Most likely when you think of the term you cringe, imagining a scenario where you both have to give up more than you really want to in order to get the deal done. However, successful commercial real estate investors know that in order to get to the win, you need to find a way to help the other side say YES. That means you need to look beyond price and decide which factors are important to the buying/selling negotiations.
- Is there financing involved?
- Is the lease a strong lease that benefits both parties?
- Is the property turn-key?
- Is the property easily re-tenantable?
- Is it in a prime location?
- Does it have a current, reliable tenant?
- Are there tax opportunities?
When it comes to triple net (NNN) investing, the long-term, guaranteed, low- or no-maintenance leases are so desirable, there is fierce competition for most properties. Knowing what to look for in a property and what sells, in addition to presenting a strong offer to buy or pricing your NNN to sell fast, is a good strategy.
3. Stay Focused on Your Goal of Completing the Sale
There will be moments during negotiations when emotions run high, and you may feel like opting out. At those moments, try not to let your emotions run the show. Stay focused on your goal to complete the sale.
Let’s use the buying example again. If you decide to work with a buyer’s advisor, with your permission and agreement along the way, your advisor will do most of the negotiating on your behalf. This limits the amount of involvement from you to just what’s necessary and gets you to the closing table with less stress and more confidence.
Extra Tip: To avoid buying, selling, and lease negotiation turmoil and uncertainty, engage a Westwood Advisor before you begin the property search or list your property for sale. Even if you’re an experienced investor, with advisor representation, you won’t believe how easy your transaction can be.
To Wrap it Up – In CRE Negotiations, Know the Seller, Look Beyond Price, & Stay Focused
These days, with the online sales cycle being so easy, it encourages the do-it-yourself mentality with just about everything. However, when it comes to CRE, there is too much a stake to go it alone, especially when it comes to buying, selling, and lease negotiations. If you decide to buy or sell a commercial property, we recommend working with a broker or buyer’s advisor who can help you know the seller/buyer and their motivations, look beyond price to what’s really important, and stay focused on your goals. When level heads prevail and the facts speak for themselves, everyone wins!
No-Obligation Conversation with an Advisor
No-Obligation Conversation with an AdvisorAt Westwood, we have our clients’ best interests at heart with every transaction and handle all the negotiations and details, from the very start of the buying/selling process through closing and thereafter. We specialize in 1031 exchanges, triple-net property transactions, and we’re one of the only firms in the country that primarily represents buyers, at no charge. If you’re thinking about selling, buying, or negotiating a lease, reach out today for a no-obligation conversation. 314-997-5227
