Negotiating With Commercial
Since it appears most commercial properties want and offer first before they release information that helps one better analyze the property, I am assuming that if while you are doing your due diligence you find something that affecrts how much you want to offer, you would then begin negotiating period.
How receptive do you find sellers in this phase?
Do you offer full price, or close to, and then negotiate down once you find there financials don't support, or there is deferred maintenance?
Do you ask for reserve to be set aside for deferred maintenance, or ask for a lower price, or does it matter?
My technique is to offer the lowest price I can get. I do not offer high and assume I will go down. I offer low, get a deal, and then assume I will go down when I find the NOI is not really what was represented, etc.
If everything is as represented, then I am happy with the deal.
Negotiations never stop.
One deal I had was a 12 unit commerical office. The seller represented that the roof was four years old. (He never went to see it, it bought it witht htat representation)
We made a good deal on the building. During due diligence I discovered the roof needed to be replaced. Instead of reducing the price, I asked HIM to replace it. He did.
It turned out to be one of the smartest moves I ever made. When the roof was being done ( A two story building mind you) It rained. It rained BAD. He wound up flooding three top tenants and had to re drywall the ceilings all across the top.
I was so glad I negotiated it this way.
Gregg
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Gregg Fous
Investor/Developer
"Developers Make it Happen"[ Edited by GFous on Date 11/20/2003 ]