This is the first of a series I’m calling 60-Second CRE Tips. It’s a simple and quick tip that doesn’t take much time to digest, yet could be beneficial and useful in your real estate business or entrepreneurial endeavor. Let’s jump in.
Tip #1: In negotiation prep, spend much more time understanding the other party’s intentions. You’ll be better for it.
Negotiations are as much a part of the real estate industry as the buildings themselves. Whether you’re a broker, developer, contractor, architect, etc. you are likely going to be involved in countless negotiations over the course of your career (or your next week). On top of this, each negotiation has different outcomes, motivations, styles, and tactics to consider. If you start by really diving deep into the other party’s perspective, you’ll be in a great place to formulate your plan to seize as much value as you can.
If you’ve ever seen Pawn Stars on the History Channel, you know that negotiations are the central focus of the show (and those wacky things people have stored in their attic). I’m still amazed when countless people walk in knowing they will be negotiating, and end up getting blown out of the water. Better yet, many get offended when they get such low offers on their priceless items. That’s where this tip comes in. KNOW the intentions of the person you’re negotiating with.
When you know the other party’s intentions, you can better plan your own negotiation prep. Pawn shops, even the one in the show, are a place for quick money when no other option is available. The business model is set up to mitigate the business owner’s risk (offer rock bottom prices) while still providing a service to meet demand (people that need money quick). So when people negotiate in the show, they should understand that the pawn shop guys in Pawn Stars cannot offer market rate prices because they’d be out of business fast. It isn’t a part of their business model. Knowing this, one could calibrate their approach by understanding the other negotiator’s position and perspective.