Whether you’re buying, selling, or renting commercial property, it’s crucial to understand and use certain negotiation tactics to your advantage. In this blog post, we’ll take a look at some important commercial property negotiation tips that buyers should keep in mind when negotiating for their next property.
When it comes to negotiating the purchase of a commercial property, negotiation skills are very important. Not only to negotiate better pricing, but to be sure you are receiving what you paid for, and to avoid a lot of future headaches. Below, you will find 10 important commercial property negotiation tips that every buyer should keep in mind.
1. Start Early
When it comes time to make an offer on a commercial property, you will want to do as much research as possible. If you can, visit other properties that are about to sell. Talk with the property owner or property manager to learn about the property’s strengths and weaknesses. And don’t be afraid to ask them questions. The more you know before you start, the better prepared you will be to negotiate.
2. Ask For Concessions
Concessions: Rather than starting negotiations from the highest price, consider starting with a lower price that is acceptable to you. Then, make concessions in varying degrees, depending on your position.
For example, you could offer the seller a discounted, fixed price. If the seller still refuses to compromise, you could counter with a higher offer. Always remember to establish your parameters as clearly as possible, including your maximum and minimum price.
3. Be Flexible
Don’t be too specific with your requests. Instead, focus on the big picture. Explain to the seller how important the property is to you and your company. Tell them how you envision using this property to your advantage.
4. Present A Clear Plan
Show the seller that you’re committed to buying their property, and explain why. Explain why you want the property, and why you’re willing to pay the price you’re offering. Be as detailed as possible, so that your seller can know exactly how you intend to use the property and to plan accordingly.
5. Be Prepared
When you’re negotiating with a seller, always come prepared with as much information as possible. Do your homework. Know everything you can about the property, the seller, their previous sales, and many more.
6. Have An Exit Strategy
Always have a plan B ready. Have an alternative in mind, just in case things don’t work out. For example, if the seller refuses to come to terms, you could then close the sale with another company. Check with more than one agent, or research other properties.
7. Meet On the Property
When meeting with your property agent, try to arrange for a showing on the property. Getting to the property can give you a better idea of the actual value, as you will likely notice things after seeing it in person, and help you form an opinion about the property.
For instance, you might notice problems with the property after walking it, such as cracks in the walls, a leaky roof, or a bad paint job. Your opinion of the property will help you better negotiate your offer, as you will know what problems the property has.
8. Create a Reasonable Offer
Commercial property negotiations can be difficult, and your offer should reflect this. The asking price for a commercial property is usually well over its actual value. So, when negotiating, you should consider offering the minimum amount necessary to obtain the property.
9. Consider The Present Value
Always consider the present value of the property. Every commercial property has a certain value, and this value is determined by its current use. So, when determining your offer, you will want to consider what the property is worth in its current use. If the property is being used as an office, for instance, you will want to offer an amount that justifies the new office development.
10. Understand The Market
Understanding the market will help you decide if the purchase is worthwhile and if it’s a good investment. It also helps you understand what to expect when negotiating for your commercial property.
One way to figure out how much commercial property is worth is by comparing it to similar properties currently on the market. This can give you an idea of how much demand there is for that type of property, as well as what kind of price tag will be expected.
Besides, you should also consider whether or not there are any restrictions or zoning changes coming into effect soon that could affect the value of the building, such as new construction nearby or new zoning laws which may change who can operate in those buildings.
Asking about any risks associated with purchasing this particular property will help inform your decision and your negotiation strategies moving forward because it’ll increase your understanding of both positives and negatives attached to this particular purchase.
Summary
Commercial property is a big investment, so it’s important to do your research before you buy. You need to understand the market and be aware of any fluctuations in prices or demand for commercial space.
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