The Art of Negotiation

One of the classes I am taking this semester is called Real Estate for the Entrepreneur. So far it has been pretty interesting, with the major emphasis being on how to find and compare appropriate site(s) for your business or investment property.

Part of last evening’s class dealt with the key principles that are involved in negotiating a deal, whether you are looking to purchase or lease. However, it seemed as if the important factors would be applicable to any negotiation. My instructor divided the discussion into two major areas: (a) skills needed to be an effective negotiator and (b) the process of a successful negotiation. I suspect many people know these things intuitively; they are quite obvious. Unfortunately, I am not one of them. I wish I had these simple lists years ago.

Important Skills

  1. Being intuitive & able to understand human behavior
  2. Being practical and understanding the boundaries of what each party wants. Being able to compromise.
  3. Being able to listen. The first offer will often set the tone of a negotiation. You may not end up with something much different than this initial offer as the final offer.
  4. Knowing what your opponent needs and wants.
  5. Having the facts. Do not go into a negotiation without knowing what you are doing.

The Negotiation Process

  1. Know your reason to come to an agreement.
  2. Identify your goals. What do you want? Can you articulate this? Do you know what your opponent wants? Ask them.
  3. Remain unemotional. Do not take things personally. Be willing to walk away if you cannot get what you want.
  4. Who has the power position? You want to have the position of power or to be dealing with a person who is the decision maker. You often do not get the decision maker in the first round of a negotiation. The people holding the money often get to be the decision makers.
  5. Be willing to compromise. You will almost always need to compromise. Focus on creating a “win-win” situation. You are establishing a relationship. Creating a “win-lose” situation would be detrimental to a productive relationship.