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For Beginners: How to Negotiate Your Commercial Real Estate Buys

Published: 05-06-22 Category: Buying

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

Negotiating a real estate purchase is much more than just agreeing to a price and closing the deal.

The real estate market is competitive and sellers are constantly looking to get top dollar for their properties.

This means that you need to know how to negotiate a real estate purchase if you want to close the deal.

Negotiating a real estate purchase can help you get a better deal if you are willing to put in the time and effort to get it.

Negotiations are also a two-way street, and you should never feel like you are being pushed into making a deal you don’t want to finalize. Instead, you should view negotiations as a chance to get the best deal possible.

To successfully negotiate a real estate purchase, you need to understand how to effectively communicate with the seller.

Here are some negotiation tips to help you get started.

First, Place Yourself in the Seller’s Shoes

Before you approach a real estate seller, you need to put yourself in the seller’s shoes. This will help you understand their perspective and how to negotiate with them.

Do they need to sell quickly? How long has the property been on the market? How many total commercial properties do they have?

A seller’s motivation is one of the most important things to understand before you approach them.

Understanding their motivations will help you approach them in the right way and get them interested in working with you.

For example, if a seller is close to retirement, they might be more willing to negotiate because they need the money quickly.

All of these things can make a seller more willing to negotiate with you, making it important for you to put yourself in their shoes.

Thorough Seller Research Is a Must

Conducting thorough research into a seller is the only way to know how to negotiate a real estate purchase.

You need to spend time researching the seller’s motivations for selling, if they will be willing to negotiate, and how much they are hoping to get out of the deal.

Look up their existing real estate listings to make sure you understand what properties they’ve put on the market and what their asking price is. You can also get a good feel for the property’s fundamentals, location, and the seller’s goals.

Have a Back-Up Plan in Place

You need to have a plan before beginning negotiations. This includes figuring out what information you will need, looking at the neighborhood and the competition, and knowing your goals.

If you are not sure what you want from your real estate purchase, it can be hard to figure out how to negotiate.

You need to have a goal in mind before you begin any real estate negotiation process.

If you aren’t sure how well you’ll do negotiating with the seller, it’s a good idea to come up with a backup plan.

This could be as simple as having other properties to consider. That way, you can change your focus if negotiations don’t go as well as you’d like.

Never Negotiate Important Points Over the Phone or Email

You might think that you can use email or another medium to negotiate a real estate purchase, but there are a few things that you need to know.

First, you shouldn’t negotiate the terms of the sale in an email. This can lead to miscommunications.

In certain situations, it can also be unprofessional to negotiate a purchase by phone. It is generally best to facilitate negotiations in person.

This way, you can get a feel for the seller’s body language and pick up on neurolinguistic clues throughout the negotiation.

Never Negotiate With Desperation: Act Like You Don’t Need the Deal

One of the best ways to get the best price for your property is to act like you don’t need the deal. You never want to come across as desperate to buy the property.

This will make it easier for you to negotiate a better deal.

This is especially important to consider when negotiating a commercial real estate purchase.

There are many different properties for sale, so you never want to make it seem like you need the property that’s currently being offered.

Never Negotiate With Too Many Words

Try to avoid talking too much during a commercial real estate negotiation. You could end up revealing more than you want or need to.

Remember that you aren’t just negotiating a price. You should also try to negotiate things like closing dates and other details of the final deal.

Every good negotiation process needs to have an end goal. You should know when you will be willing to walk away from the deal.

A good rule of thumb is knowing when you’ve reached the limits of what you can do to negotiate a good deal.

Once you have determined the end goal, it will be easier for you to determine how much you are willing to pay for your property.

Listen More than You Speak

To successfully negotiate a real estate purchase, you need to understand how to effectively communicate with the seller. You need to be patient and try to understand what they are saying.

When negotiating a real estate purchase, you want the seller to feel like you are listening to them.

This will help you get the best price for your property, while also making sure that they get what they want.

One of the best ways to do this is to take notes during your negotiations. This will help you remember everything that is said and make it easier for you to negotiate the best deal.

Sometimes, It’s Better to Focus on the Close, Not the Price

The difference between a good negotiation and a bad negotiation can be determined by the ability to close the deal.

If you focus too much on the price instead of the close, the negotiation could go bad and result in either a missed opportunity or a bad purchase.

Instead of focusing on the final price, think about ensuring that you close the deal. This decision should be reinforced by your seller research and your commitment to the purchase.