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Join us for a workshop led by top expertise in commercial real estate negotiations. Learn key negotiation strategies and techniques to excel in deals. Understand distributive and integrative bargaining, strategic preparation, and successful negotiation system implementation.
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Welcome Commercial Real Estate NegotiationsSession 1 If I had eight hours to chop down a tree, I'd spend six sharpening my axe. -- Abraham Lincoln Day One
Joseph Larkin, ASC, CCIM, MCR, SIOR Denver, CO Senior Instructor CCIM Faculty – CI 103 Instructor of the Year Over 35 years of commercial real experience
Simple Negotiation Exercise • Pull out a business card. • Meet someone new. • Introduce yourself. • Exchange Business Cards. • Where are they from?
First Assignment: Find out which of you traveled farther to attend this workshop. If you’ve traveled farther than your partner, give him/her $1. (If you don’t have currency, give a credit card, license, or any item of value.) If you’re the unfortunate traveler, negotiate with your partnerto get your money (or item of value) back.
Simple Negotiation Exercise What Worked? What Did Not Work? Why?
Questions • What is the purpose of negotiations? • What does it mean to succeed in negotiations? How do you measure success? • How do you prepare for negotiations? • When do you walkaway from negotiations? • What are the characteristics of a good negotiator?
Great Negotiators Great Negotiators areActive Listeners Probing Synthesizing Bridging Reflective Listening
Great Negotiators Great Negotiators UnderstandPersonality Styles
Great Negotiators Thinking Styles
The more you sweat in training, the less you bleed in battle.– Motto of U.S. Navy Seals Negotiation Overview Module 1
Negotiations Overview Our Session 1 Negotiations Overview
Overview Group Discussion: Question: • Is there Win-Win Negotiations in the Commercial Real Estate Industry? • Explain Your Answer.
Overview Zero Sum Game • Game Theory Approach • Interests are Based on the Negotiation outcomes is finite • The pie is a definite size and the goal is to get the biggest piece • You need to process every potential outcome using “What-if” scenarios
Overview Prisoner's Dilemma • A Pair of criminals are put in separate rooms • Each are told the other is cutting a deal to get a shorter sentence • Everyone acts in the own best interests • Each person lacks information
Overview Distributive Bargaining • a/k/a “Competition” and is adversarial • Emphasizes positional “bargaining” • Uses “tricks” to defeat • Debate requires parties to defend position until the other gives up, compromises, or deal fails • Typically one time deals
Overview Distributive Bargaining • Car salesman approach • Hard on the problem and hard on the people • It does has a place and may be part of interested based bargaining • High Low Game • John Nash
Overview Integrated Bargaining • Cooperative Mode or Collaboration • Client focused and Needs based • Leads to most effective substantive outcomes • Successful at developing long term relationships • Requires deep thinking to be a successful negotiator
Overview Integrated Bargaining • Win-win or Interest Based • Hard on the problem soft on the people • Outcomes are better than the Zero-Sum Game • All parties can enrich each other • Focus on the interests not the position and reconcile them with creative options
Overview Position Verse Interest • Interests are the why you established the position • A position is determined by the sum of the interests and is established by that party that puts forward the position • We must be done by 7:30 today!
Overview Sample Interest Chart
Overview Real Estate Negotiations Today • Are more complex – Team Negotiations • Take Longer to Conclude • Non-monetary issues which are hard to measure but add value • Availability of information • Involve many stakeholders – Chart the stakeholders
Principles & Practices Which One do You Use? Distributive Integrative
Negotiators A Great Negotiator . . . • - Understands Distributive and Integrated bargaining • Develop a “Stakeholders Chart” for each negotiations • Evaluates everyone involved in the transaction
“A negotiator should observe everything. You must be part Sherlock Holmes, part Sigmund Freud.” -- Victor Kiam Four Basics Key Concepts on Negotiations Module 2
Your Starting Point Our Session 2 “Your Stating Point”
Your Starting Point How to prepare for negotiations A good negotiator develops a strategy and a system for successful negotiations and implements that system!
Strategy BATNA • The Best Alternative to a negotiated agreement – the preferred course in the absence of a deal • The minimum threshold for a negotiated deal • How flexible a party is willing to be, and what trade-offs it is willing to make • Sometimes not the most obvious
Strategy Reservation Price • Also referred to as the walk-away is the least favorable point at which one will accept a deal • Derived from your BATNA but, not necessarily the BATNA • Used in trading up in a location
Strategy ZOPA • Zone of Possible agreement • A range of a deal that satisfies both parties • The set of agreements that can potentially satisfy both parties
Strategy Value Creations • Value creation through trades • Improving your position by trading values at their disposal • Trading value is parties lose little but gain greatly
Great Negotiators A Great Negotiator . . . • Prepares ahead of time • Improve position by improving BATNA, ID other side’s BATNA and Weakening the other side’s BATNA • Focuses on Value Creation
“Diplomacy is the art of letting someone else have your way.” -- Sir David Frost The Negotiation ProcessNine Steps to a Deal Module 3
“Place a higher priority on discovering what a win looks like for the other person.” - Harvey Robbins Table Tactics Module 4
Table Tactics Tactics Getting the other side to the table Making a Good Start Anchoring Tactics for Distributive Bargaining
Table Tactics 1. Other side to the Table • Getting the other side to the negotiations table • The other party must have something desirable and……. • One’s own objective will not be met without giving something in return • Offer incentives • Not interested in the status quo
Table Tactics 2. Making a Good Start • Opening conversations • Setting the ground rules • Establish how and when you will communicate • Agree to disagree • It’s a small world
Table Tactics 3. Anchoring • A basic mistake is making the first offer without completing the research • Anchoring is psychological • If you have a great deal of information anchoring can be an advantage
Table Tactics 4. Tactics for Distributive • Tactics for distributive bargaining greediness, ambition, satisficing and compromise. • Set a range of best target and walkaway target • Draft a package that cushions your favorite topics.
Great Negotiators A Great Negotiator . . . Understands the other side’s interests and wants to induce negotiations Makes a good start Knows when to anchor first Understands the tactics for distributive negotiations
“In business, you don’t get what you deserve, you get what you negotiate.” - Chester L. Karass Tactics Module 5
Tactics Tactics Tactics can be used throughput the negotiations process. Be aware there are counters to all tactics that can be used against you!
Tactics Flinch • Jump • Act Quickly • “Is that US dollars?”
Tactics Deadlines and Timelines • Pressure • Are you really at the bottom line? • Possible change expectation level • Most are imposed on you by yourself • Use it 5% of the time • Most don’t use this tactics enough
Tactics Car Salesperson • I’ll be right back • If it wasn’t we are closing the month out today – we are going to do some crazy things today • AKA the Elevator
Tactics Neutralize the Authority • What is the process to approval this transaction? • Bring the manager out – do you have the authority to sell this car
Tactics Big Pot – at the end • Used at the end of the negotiations • We are almost there but I need free rent, TI and parking!
Tactics Smoke-Out • You led me to believe we are done! • I can do all of that. If there was one thing to make you whole
Tactics Bogy – I love you! • Trade emotion for economics • Trade love and emotion for economics • Shifting the bad guy “I don’t have enough money to close”