Negotiating- Sometimes the Bear eats YOU
Early last week I sat down with the owner of a bank building. The purpose of the meeting was to negotiate the price and terms of a lease for Brixton ( My Company) to rent some prime space. My assistant Tatiana came with me as we were both on the way to the Navona release at the Colony ( A New High-Rise Release). I thought it would be a great opportunity for Tatiana to see some finer points in negotiating. Yeah, right. She saw them all right – but unfortunately for me she saw them more from the other side of the table.
Let me layout the background for you. Brixton is growing fast. Currently we are spread out in various offices at Kelly Carlos Office Center. We want to move into one central location. We want “Class A” space. We want a quality image and an impressive one. There is not much space like that available in Fort Myers. I have looked at it all. We first looked at the Pelican National Bank building a few months ago. In fact we ALL looked at it. We have been picking out new furniture. We drew out diagrams. We looked at new phone systems. Heck, we even have drawings of what our sign will look like when our clients step off the elevator. A month ago we made an offer. It was rejected. The landlord came back to us with his asking price AND told us, by the way, we have added annual increases we forgot to tell you about. My partner and I thought, “Let’s look some more – there must be better space at a better deal someplace.” Well, we couldn’t find any.
I went back to the landlords representative and blamed our walking away earlier on my partner (good guy.-bad guy technique) and set up this meeting. Keep in mind the space has been vacant for three years!
Bottom line is - we signed a lease - on his terms, his price. Sometimes this happens. I mistakenly thought that since this space was vacant for three years, they would be more anxious to have us there than we needed to be there. At the end I even tried the tactic of asking for him to give on a few minor points so I could take something back to my partner. No Luck. He clearly did not need us. The building has no debt, and he wisely did not want any tenant in there at a below market rate. You see, he was dealing from a position of strength.
This is also what happened at Navona this week. WCI released Navona at about 9AM; by 2PM they sold all 100 condos and had 46 or so back ups. In fact, they knew this before they started the lottery process that morning and they raised the prices just before 9AM. They had more buyers than product.
I have talked previously about the various points to negotiate. The article is worth eviewing. Let add a few other techniques I have used successfully in the past:
THE RED HERRING. This refers to an item you put in your offer that stands out but you know you are willing to drop. An example would be all furniture included. You add this knowing you can negotiate this away.
IF YOU GIVE UP, GET. Never give away a point with out getting one. Perhaps you can say, “Okay, I can live without getting the living room furniture, but I am going to need a $3000 credit at closing.”
GET ON HIS SIDE OF THE DESK. Those of you that know me know that I always try to negotiate for win/win. The best way to do this is to imagine yourself on his side of the desk. What does HE want? Try to give it to him. A good example of this is the price on a new condo from the developer. You know that if he lowers the price it sets a precedent. So ask for the granite counter top.
NEVER NEGOTIATE WITH YOURSELF. Don’t try to second guess the seller and his objectives prior to getting a written counter offer. Get it in writing.
RESORT TO A HIGHER AUTHORITY. Your wife, your partner, etc. -Make them the bad guy or make them the staller.
HE WHO CARES THE LEAST WINS. Be prepared to walk away. In my bank example above, the landlord won because he was prepared to walk away from a tenant. One big mistake we made was the landlord could obviously see that we wanted the place and the whole TEAM wanted the place. He had the strength.