Knowledge Improves Ability as a Negotiator
In negotiations, one's areas of expertise are not only defined by his mastery of the art of the process but his mastery of the issues being negotiated. You cannot expect to negotiate an outstanding real estate transaction unless you are well versed in the economic, cyclical nature, demographic, and geographic aspects of the specific real estate segment you are considering.
Negotiating is not just the process of bartering. It involves creating value from ideas and altering wants and needs to achieve an accord that is compelling enough to get both of the parties to agree. A negotiator cannot achieve this without being well informed of the subject matter.
A mediator, on the other hand, needs a working knowledge of the subject matter but need not be an expert in the field. His or her role is to bring structure to the settlement discussions and help forge a viable solution. Mediators are not creating value for their own accounts. They are seeking to introduce enough avoidance value so the parties can agree to settle for less than they feel they are entitled to in order to avoid the risk of losing more before a judge or jury.
A negotiator's ability stems from his or her knowledge of the collateral being discussed. The ability to negotiate is a hidden asset skilled negotiators possess. Frequently, they hide this attribute by feigning limited experience or lack of knowledge in "handling" such matters to put the other person at ease. This also may give the other person a false sense of superiority.
When a skilled negotiators meets the other negotiator for the first time, he or she will take the time to learn whether the other person is knowledgeable about the underlying subject matter. Many landlords are able to outwit and out negotiate corporate representatives from very large, powerful companies simply because they know more about the subject matter. Corporate employees handling real estate acquisitions for restaurant and retail companies often know a lot about real estate and very little about their industry. Landlords, on the other hand, are extremely well versed in the shopping center business, the economics of leasing and the dynamics of their tenancies. If you are a corporate negotiator, it is wise to learn the basics of how your business is run, what it takes to make a location profitable, how the occupancy costs impact cash flow, and what the drivers are that generate a strong top line. Being armed with this knowledge will enable you to meet the challenge of a well-prepared landlord and seek viable lease terms for your company.
It is not about how cheap you can get a property. It is about getting a property at a price that allows your company to make money.
Similarly, when negotiating to buy a home, you need to focus less on the cost than the affordability of the purchase price and mortgage terms.