The Easy Way to Secure Your Commercial Property Deal Fast, Before it Goes From All Steam Ahead to – Dead In The Water!

Whether you’re looking to sell, buy or lease a commercial property, you must resolve to be negotiable on either, terms or price or risk facing the deal stalling ‘gap,’ that has stopped many seemingly simple property deals in their tracks.

The best way to define the ‘gap’ is the difference between the owner’s expectations of the highest possible price and best possible terms and the buyer’s expectations of the lowest possible price and best possible terms.

Creative negotiating skills are essential in closing this ‘gap’ and can save you valuable time and money. Below are the 9 golden rules that will help get your deal over the line without the energy draining, time consuming, costly holdups that plague most commercial property transactions.




1.    Market Knowledge is Power – What Shape is the Perth Commercial Property Market In?

Get familiar with your area. With the resources available on the internet today it’s never been easier to familiarise yourself with the Perth commercial property market. Jump on the net and scroll through the current Perth commercial property listings in your area. You’re looking for commercial properties that are similar to your own.

As a guide when looking for comparable properties look for the following:

  • Land area

Is your commercial property larger or smaller in land content?

  • Building size and quality

How does your commercial building compare, is it older or newer, do you have more or less office space or warehousing?

  • Location

Does your commercial property have more or less exposure than those already on the market?

  • Zoning

There’s no point comparing to retail properties if yours is zoned for industrial!

These questions should help you assess the value of commercial properties in your area. Avoid lengthy vacancy and marketing periods by staying current with the market. Too many property owners/buyers struggle to sell or buy a commercial property because their expectations are out of proportion to the current market.

Save yourself time and money and research your market.

Avoid this step at your own peril!

Now you have a rough guide for property values, let’s look at some negotiation tactics to help you along the way.

2.    Time is One of Your Best Indicators

Time is one of your best indicators, if your property is sitting on the market and expensive holding costs are chewing into your bank balance, there is generally one reason, it’s simply over–priced. The market hasn’t met your expectations and it’s probably time for a price correction. Over the course of the sales/lease campaign the agent will also receive market feedback which, when coupled with the period the property has been on the market is a powerful indication of whether a price correction is needed. Depending on your motivation to sell/ lease now’s your time to make the corrections, before the property becomes stale.

From the buyer’s perspective, if you’ve been looking for a commercial property for a while and can’t seem to find anything that meets your criteria, perhaps you need to have a look at your budget – have you been bargain hunting up until this point? Maybe it’s time to get serious about your business needs and consider allocating some more funds to your property search?

3.    Price Isn’t the Only Factor – Terms and Conditions are Equally Important

When considering offers, remember – price isn’t everything.  Terms and conditions are often overlooked in Perth commercial property transactions but are as important and in many cases more important than the price itself. Commercial property terms can be negotiated in numerous different ways including.

  • Short settlement periods

If the property settles in a short time frame will this lower the price?

  • Initial rent free periods

Many vendors are happy to provide a brief rent free period for the lessee to move in and establish their business.

  • Lease period

Could a lower price be negotiated if a long term lease is agreed upon?

Often at the end of the initial negotiations there’s still a ‘gap’ between the buyer and the seller’s price expectations. Concessions on terms and conditions may be the best way to initiate price movement at this stage. It’s important to understand the other party’s motivations and needs. If you’re aware of their needs you can make concessions towards their ideal outcome whilst still achieving your objectives and allowing a deal to be struck.
4.     Try to Get Something in Return For a Concession to the Other Party

By receiving something in return for a concession, you’re gaining ground with your negotiations and encouraging a neutral playing field. You want to eliminate either party gaining a position of power.

As an example: you might agree to a pay full asking price for a property, subject to new air conditioning being installed in the office, at the cost of the vendor.


5.    Be Aware of Your Wants Vs Your Needs

At the start of a negotiation you should always ask yourself what you are aiming to achieve out of the negotiation, and in particular what are your wants vs your needs. During a negotiation you should always be aware of your position in relation to your wants and needs. What you want is usually a very different thing compared to what you need. For example everybody wants the Porsche and the 5 bed, 3 bath double story home, but in reality what do we really need to survive from day to day? Most people would say a Holden commodore or a Ford Falcon and a comfortable home with a roof and four walls to protect them from the elements right? By being aware of your wants vs your needs you’re in a much better position to adjust your negotiation strategy if the need arises.


6.    Always Base Your Judgments on Sound Property Research and Not Your Emotions

If you’ve done your market research and spoken to some commercial agents who are specialists in your area, you should have a fair idea of what commercial property is selling/renting for in your suburb.  A word of caution… it’s easy to become emotional when you enter into negotiations for a commercial property and it’s perfectly natural considering the large sums of money involved. You must resolve to think of this deal as nothing more than any other business dealing and refuse to let your judgement be skewed by your emotions.  If at any point you feel overwhelmed you should review your market research, take stock of the situation and ask yourself these questions:

  • What is the reality in this situation?
  • What does my research suggest the property is really worth?
  • Am I going to get a more suitable property/offer elsewhere?
  • What’s the opportunity cost involved in missing out on this property/rejecting this offer?

7.    Maintain Your Flexibility Throughout the Negotiation Process

The party that has the most flexibility in a negotiation is the one who has the most power. In order to be a successful negotiator, avoid digging yourself into a position with statements like ‘this is my highest offer’ or ‘that is the lowest I am prepared to go’, the ability to avoid these type of statements helps to maintain your flexibility which is the key to any successful negotiation.

In order to negotiate property deals successfully you need to remain firm on your principles while maintaining flexibility. By maintaining flexibility you can offer reasonable solutions to the other party in order to resolve any ’stand offs’ or ‘stalling’ of the negotiation process. An example would be a buyer who has a principle of achieving an 8% return but is willing to accept a variation in terms such as a delayed settlement.

8.    If Negotiations Become Tense, Always Focus on the Underlying Problems Not the People

During a negotiation process that may involve large sums of money and huge amounts of physical and emotional energy the negotiations can reach a ‘stalling point’, where no resolution seems possible. It is at this point that emotions are tested and irrational behaviour can present itself and result in failed negotiations. It is essential to stay focused on the underlying issue and not to focus your frustrations on the other party rather than the problem at hand.
Identify the underlying problems that may be holding back the negotiations. It is also important at this stage to think about the real motivation of the other party and how the negotiations can be fine -tuned to meet their needs.

9.    What’s Your Motivation?

Always keep your motivation for initiating the negotiations in the first place in the forefront of your mind.

  • What is your ideal outcome?
  • Why are you buying/selling/leasing this property?
  • How is this property deal going to affect your life or business?

If you are interested in Perth commercial property and would like more information on purchasing, selling or leasing commercial property, please contact Anna Lynch.