The science behind winning offers in a real estate negotiation
Thinking about selling real estate but haven’t decided on the price?
That’s fine. Good, even.
Because contrary to industry opinion, you have a better chance of making more money when you let interested buyers make the first move.
The fact of the matter is, most commercial real estate is priced by the owners or the brokers. It’s just the way it’s done, except for high-value investment real estate, where you need to engage with the broker to get their guidance.
But generally speaking, most brokers will seek to get a price from the owner.
Now you might say, “But John, wait a second…not putting a price on my property puts the onus on the buyer, which may frustrate them.”
To which I will say, “I will agree with you, but the pain associated with frustration is short-lived and often reveals how strongly the buyer wants the property.”
Two reasons why this works so effectively:
First, because it’s been scientifically proven that extreme discomfort only lasts for 8 seconds.
(Which made me feel better when the Cardinal Classic cycling team at the training camp rode 225 miles and climbed 21,500 ft in 4 days of training! Ouch!)
So while you may cause potential buyers a little discomfort, it won’t last long.
Second, because research psychologists Amos Tversky and Daniel Kahneman at Harvard pondered this question back in the 1970s.
They found evidence suggesting that it’s a good idea not to price real estate that is difficult to value, or where there are few comparables.
When you don’t list a price, you may frustrate a potential buyer into making a run at your asset.
It sounds counter-intuitive, and it is.
But being prepared with a negotiation strategy, and sometimes using such tactics, are how you succeed in commercial real estate.
And when you have every possible negotiation tactic lined up in an actionable playbook? You make more money on deals than you thought possible.
Which is why at Cardinal we use The Win-Win Negotiation Worksheet™ to answer these types of questions and to establish the negotiation strategy before going to market.
In fact, we used The Win-Win Negotiation Worksheet™recently to sell 1,036 acres just south of Charlotte on the Catawba River. Our client, Bowater, used a beautiful tract of land as an experimental tree orchard and retreat for their executives.
Located 30 minutes from Uptown Charlotte, it was exactly the type of property that Sen. Robert Pittenger’s “path of progress” land fund bought not long ago, and he let me know in no uncertain terms how irritated he was that we would not price the property.
But this was the type of property that you did not want to put a price on. The Senator was angry with me, and he was not the highest bidder, but he hired us soon after to sell land his family-owned, only under the condition that we used the same process as selling the Bowater tract!
The story’s moral is that when you use proven negotiation tactics at the right time, you win.
And when you use a tool like The Win-Win Negotiation Worksheet™, you increase your chances of success to an almost unfair level.
Interested in getting The Win-Win Negotiation Worksheet™ for your own deal? We’re standing by to walk you through it and help you get a better deal than you thought possible.
Give us a call or shoot us an email, and we’ll chat.