S.E.C. Real Estate Observer

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When listening to a formal presentation, we sometimes limit our thinking to finding the benefits in the presented package for our own client. We may hear very powerful reasons for our client to acquire the presented property, but, if there is no compelling reason for the other owner to accept your client’s property, or property that can be acquired by using your property in a three-way exchange, then the transaction will never go together. In order to negotiate a successful exchange, it is essential to consider the benefits in a transaction for the other party, as well as the benefits for your own client.

It is critical that you identify and communicate the reasons why the other owner would prefer owning your client’s property more than his own. By carefully listening to the presentation and later conferring with the presenter, you can learn the motivation and the needs of the other client and how to meet those needs.

Review both your property and your client’s capabilities to find the benefits in your package that will be attractive to the other party, based on the needs and desires of the other party. Often, it is your client’s capabilities, rather than the property alone, that will make the transaction work. Then, point out the reasons that your client’s property can satisfy the other owner’s needs. When preparing your mini-offer or long-form offer, be sure to write down those reasons, either in the mini-offer or in a cover letter, even if the reasons are obvious to you, as they may not be obvious to the other owner.

You may also want to include some information to the other party as to why your client would like to own their property. Remember, there is a high probability that the other party is dissatisfied with his property, or has an ownership problem associated with it, otherwise it probably wouldn’t be available. Therefore, there is a tendency for the other owner to think, “What’s the problem with the property being offered to me, if they are willing to take my property in exchange?” You need to answer that nagging question in their mind. For example, if the other property is a rundown property in need of major repairs, you might say, “My client has the time, experience, and cash to make the necessary improvements to your property, and hopes to make a profit by making these additional investments.” This would help the other party understand why someone would be willing to accept his property.

During negotiations, build on the theme of how your client’s property can meet the needs of the other broker’s client. If both parties truly believe that they are significantly improving their position, then both sides will make extraordinary efforts to close the transaction.