4 Reasons Why Negotiations Go Sour In Business & Real Estate

ID-100147922Negotiations are tough. It’s really a business all on its own. As business owners, it’s important for us to understand that there are things that can kill a negotiation very quickly. When I see a negotiation go sideways it’s usually because someone didn’t take into consideration the person sitting across the desk from them.

1. Lack of Respect

Respect of both parties in negotiations is so important. If you want to kill any deal quickly, throw respect out the window. It’s a lot about understanding the differences in personalities and how the person you are negotiating with is different from you. Recognize that it’s a human being sitting across the desk from you with different needs and wants. Not everybody is the same.

I’ve seen people call the other person down in a negotiation and although it’s obvious that you shouldn’t do that, it still happens. Recognize the quality of the person that sits across the desk from you and don’t shut them out. That’s what I mean by respect. If you shut somebody out, you might as well stop negotiating. If you keep pushing back on everything, all you’ll end up with is a lose-lose situation or maybe a lose-win situation.

A successful negotiation reaches that win-win situation.

2. Lack of Trust

To an extent, trust is part of respect. Of course you can’t go in blind and trust that they will be totally open and honest about everything but that’s not what I’m suggesting.

You need to trust with skepticism.

Coming in with a bit of trust with skepticism allows you to negotiate. If you go in with zero trust, your gut is automatically going to go against everything you hear from the other party because you’re assuming that they are being dishonest.. If you constantly think that they are lying to you, how can you trust them enough to get to a conclusion that you can solve together? That’s why I like to trust with skepticism because you aren’t going in with blind trust.

3. Not Considering Desired Outcomes For Both Parties

Get a feel for what their desired outcome is and also know what your own desired outcome is before entering into negotiations. A negotiation doesn’t usually start and finish in the same session so there’s usually some time to gather additional information and do some homework to help you validate what you have been told. Hopefully that extra research will build your trust and confidence in whomever you are negotiating with.

4. Poor Due Diligence

In the case of negotiating real estate, let’s say you are negotiating a commercial building or a project and the seller says the utilities are $1,000 per month. You’ve got to trust him that utilities are $1,000 a month while going through the negotiation process. If you accuse them of being incorrect, you can’t negotiate.

When you are finished negotiating, it’s time for due diligence. This is when you check to ensure the utilities are in fact $1,000 a month. If you don’t check, then shame on you because I can tell you that the numbers you receive in real estate negotiations for commercial buildings are often incorrect. I’m not saying people are fraudulently give wrong numbers, what I am saying is it’s not unusual to see the numbers skewed for the situation.

For example, the seller show you a utilities bill for the month of September that says $1,000 but leaves out the fact that September is always the least expensive month of the year. He’s not technically lying but if the rest of the year it was $3,000 a month, you are going to need to know that before finalizing the deal.

Cover All Your Bases

These are the types of things you need to watch out for in negotiations or else they might go sour on you. Maintain a balance of trust and healthy skepticism, always have respect for the person across the desk and consider their needs. Most importantly, always do your due diligence.

I’ve been in negotiations where you sit and negotiate based on the numbers and then you finish the negotiation and do the due diligence only to find out all the numbers are all wrong. Does that re-open the negotiations? Maybe, maybe not. That will be up to you at that point in time but the important thing is that you stay vigilant through the entire process. After all, it’s you who will pay for it in the end.

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