Power Negotiating for Realtors

Sometimes, too much is too much! A realtor’s ability to negotiate a particular transaction is often based upon the client’s bargaining position. Often, this is overlooked.

Naturally, if the client is in a very strong position, then few, if any, concessions will be granted. A client in a weaker position will have to offer some concessions in order to get the deal done.

The problem most commonly encountered is the failure on the part of the negotiator to realize and appreciate their own client’s bargaining position.

Let’s assume that the client wishes to rent a small storefront of about 300 square feet in a good location in a rather large and thriving commercial plaza to sell newspapers and various confectionary items.

The location is right across the hall from one of the anchor tenants, so traffic is virtually guaranteed. The landlord, a major owner of commercial retail space has a standard form lease which has been drafted to suit its circumstances.

The difficulty from the perspective of the newspaper stand operator will be to have any serious changes made to the landlord’s standard form lease. Possibly, an anchor tenant might be able to negotiate, but not someone looking for 300 square feet.

However, day after day, agents will seek to negotiate substantial terms contained in the standard lease form. This is usually undertaken recognizing that some of the provisions are rather one sided, which is of course true. But, it’s still not negotiable. It’s not in the best interest of the landlord, and it’s often foolhardy. It would be far better to review the document carefully, and determine whether the document in its entirety is acceptable.

So, what happens? The agent spends countless hours drafting significant concessions. Finally, the offer is submitted. Time passes and the agent inquires about the status. Actually, there is no status. The landlord will not sign it back. The landlord will not even incur the expense of having their lawyer’s look at it.

The deal dies! It didn’t have to, but the newsstand operator is now off to another location. Facing similar circumstances, the client will likely have similar results. No deal.

Finally, the client either fires the agent, or they both “give in” and sign something that a landlord will accept.

The problem at the outset was an inability to determine the client’s bargaining position. This happens to many new agents who are inexperienced. Rarely, does it happen to a seasoned professional. And while they may get good marks on an exam, they are not getting good marks from their clients.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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