By Linford Good, Senior Vice President - Brokerage Services, High Associates Ltd.
This is the ninth in an 11-part series of understanding the key ingredients in all successful real estate transactions.
The foundation of any effective business deal is a trustworthy relationship. In real estate, we must understand four crucial components of the transaction in order to be successful: Letters of Intent, Agreements, Offer Language, and Counter Offers. Whether you are buying or selling, understanding how to interact positively and proactively throughout the transaction will allow you to come away with the best deal you can get.
Because buying real estate is such a big decision, it’s important to document every step of the way. A Letter of Intent is created by the buyer and outlines his or her interest in moving forward in the deal. The document’s purpose is to minimize misunderstanding and clearly communicate the terms of the possible purchase before a commitment is made. Letters of Intent are a helpful way for buyers to outline financing and define the structure of the purchase.
Letters of Intent are beneficial for buyers; however, brokers prefer to move straight to an Agreement. The fewer steps there are along the way, the more time is saved on all ends of the deal. Moving straight to an Agreement lessens the opportunity for loopholes in the deal, assures that both parties are serious about the purchase, and creates less likelihood that the buyer will back out of the transaction.
Whether the negotiation process skips straight to an Agreement or moves through multiple revisions of a Letter of Intent, it’s important for all involved parties to navigate the interaction with positive, professional and proactive Offer Language. Renowned negotiator Herb Cohen is the author of the New York Times bestselling book You Can Negotiate Anything, in which he shares his ideas on best practices of negotiation strategy. In his work, he explains that Successful Offer Language can be broken down into three significant points:
One other component of excellent offer language is understanding the art of Counter Offers. One must expect and be prepared for this back and forth dialogue, and must maintain professionalism, authority and trustworthiness throughout the process. The goal of a seller during the Counter Offer process is to come away with the highest price and the best terms possible. A willingness to negotiate is crucial on both ends of the transaction, and as a seller, you must be prepared with what you’re willing to offer a buyer depending on their specific circumstances.
In order to be a successful real estate broker, you have to be aware of these important skills. Be sure you know all the details about and worth of the property, execute the discussion with strong sales and marketing techniques, come prepared with knowledge of legal and financial matters, and maintain a positive reputation with an understanding of the market. Carry the transaction dialogue with well-executed Offer Language, and keep in mind the three points of understanding time, asking questions, and holding onto the power position.
By putting these methods of successful negotiation into action, you can navigate a relationship that is trustworthy, honest, and long-lasting. Now that’s something to shake on!
This article is intended to be an overview of commercial and residential financing. It does not purport to give either legal or financial advice. Before taking any action, you should consult with with your attorney or real estate adviser.
Linford L. Good is Senior Vice President of Brokerage Services for High Associates Ltd. He is responsible for managing the brokerage activities of the sales/leasing team. The brokerage activities include selling or leasing industrial/commercial properties for corporations, private industries and individual investors.
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