The art of give and take: Negotiation in property management

Laurie Mega
| 8 min. read
Get the latest industry insights.

Published on August 21, 2020

Good negotiation skills matter in every discussion with every party you deal with in your business. But being a good negotiator doesn’t mean you’re skilled in the art of deception or adept at squeezing the best possible deal for yourself while leaving the other party wanting.

Being a good negotiator is all about listening, discussing, and collaborating to get the best deal for both parties.

In this article, we’ll discuss the steps to conducting a good negotiation and relay some advice from experts in the field.

6 Steps to Follow in a Negotiation

You may have heard the old adage: The best deal is the one where neither party is happy. And to an extent that’s true. In a successful negotiation, both sides have to make concessions to meet somewhere in the middle and strike a deal.

It’s important not to go into a negotiation with a win-or-lose mindset, but to treat it as more of a discussion between two parties.

That said, there are steps you should take with every negotiation. They still may not bring you to an agreement with that particular party, but that’s okay. Every negotiation gets you closer to finding exactly what you’re looking for in the kind of deal you’re making.

For example, if you don’t come to a satisfactory agreement with a lawn service, you can take what you learned from the previous negotiation to another service and find the right fit.

#1: Do Your Homework

The first step in a successful negotiation happens before the negotiation even begins, and that is to do your homework. Before you step up to that negotiation table, have as much information as you possibly can at your disposal.

Get yourself familiar with the topic at hand. If you’re negotiating fees with a prospective owner, be familiar with what other property managers in your area charge for the same services. For salary and contract negotiations with employees, take a look at the market rate for the position you’re offering. And for vendors, get a good idea of the average rate for services in your area.

Do your research on the party you’re negotiating with, too. For renters, take a look at their rental history. For owners, see if you can talk to a previous property management company to get an idea of how they are to work with.

#2: Establish a Process

Before you begin negotiations on anything else, make sure both sides understand what the entire process is for reaching a deal. You both should be clear on how long the negotiations should take, who the stakeholders are and who signs off on the final deal, especially if it’s someone not actively taking part in the negotiations.

Once a process is established, stick to it.

#3: Go in With a “Learning Mindset”

Deepak Malhotra is a Harvard Business School professor and expert in negotiation. In his YouTube series, he advises viewers on how to approach a negotiation.

“There are no right or wrong mindsets, but there are better, more advantageous mindsets,” he says. In fact, he strongly suggests walking into every negotiation with a learning mindset, where you are gathering information as you speak to the other party.

There are four things, he says, negotiators should be learning during every negotiation:

  • Interests: What is the other party hoping to get out of this deal? What is their end goal?
  • Constraints: What are their restrictions? What can’t they budge on, for whatever reason?
  • Alternatives: If they don’t make a deal with you, what are their alternatives? Will they go to another property management firm or another apartment complex? What are the potential tradeoffs?
  • Perspectives: What are their thoughts on this process? Is this a big deal for them or not? What do they think of you?

Ask questions to get answers to get a better understanding of the other party’s interests, constraints, alternatives, and perspectives. You can use that information to get a good deal that makes both parties happy.

#4: Actively Listen to the Other Party

Negotiation experts use a tactic called active listening. Rather than sit down and start talking, turn your attention completely to the other party and really listen to what they have to say.

Black Swan Negotiations, which is owned by former FBI negotiator Chris Voss, recommends training your brain to listen completely and without bias; to keep your attention trained on your subject without letting your mind drift.

Black Swan calls active listening “listening with tactical empathy.”

Although we call this approach “listening,” it’s more than just an auditory exercise. It involves paying attention to nonverbal cues like body language, tone, syntax, energy, context, and environment. By piecing all of these clues together, you’ll be able to uncover what someone is really telling you—which may be different than what they’ve explicitly said with their words.

Show the other party you’re listening completely by sitting upright with your body facing them. Make eye contact and keep your hands at rest. When they’re finished talking, repeat back what they said in your own words.

7 Habits of Highly Successful Property Managers Guide

You will discover creative ways to identify and eliminate routines that are no longer benefiting your business.

Download

#5: Make Concessions You Can Afford

Making concessions is part of the negotiation process. If you got everything you wanted, it wouldn’t be much of a negotiation, and the other party wouldn’t be very happy. When it came time to renegotiate, they would probably start looking for another property management firm.

Go into every negotiation knowing where you can concede and where you can’t. Make your concessions as graciously and generously as you can without hurting your own interests. It will make the other party happy and move them closer to finalizing a deal with you.

#6: Lock Down the Deal in Writing

You know you have to get that lease or owner contract signed. But it’s important to get the results of every successful negotiation down in writing. Contracts with vendors, employees, and legal teams are just as important.

Negotiations With Different Parties

Different parties you deal with want different things from you. Owners want excellent service at a fair price. Residents want a great place to live with the amenities they want, and they also want a reasonable price on rent. Your staff want job security along with good pay and benefits.

No matter which party you’re dealing with, the negotiation skills you bring to the table will be the same. It’s how you apply them that will differ.

Owners

Property managers will be looking to negotiate your base price as well as fees. Be sure you understand their properties fully so that you don’t get stuck providing a service you’re either not getting paid for or not getting enough money for.

Residents

Residents are looking for the best rent deal out there. They may also want to negotiate on security deposits and fees. You may have no wiggle room on some of these numbers, which are agreed to by the property owner. This is the perfect opportunity to underscore value over price (we’ll talk about that in a minute).

Vendors

Vendors want your business, so here is a situation where you have more of the advantage. You can use your negotiating techniques to get the best deal for your firm and your owners.

Staff

Prospective and current staff may look to negotiate salary or vacation days. Make sure you understand the market rate for your staff positions before making concessions.

Negotiation Dos and Don’ts

As you approach a negotiation, there are some important lessons to keep in mind.

Do Tell the Truth

It’s important to be honest in negotiations. If you’re called out on a lie, you lose the trust of the other party, and you probably won’t get it back.

Don’t Tell the Whole Truth

Telling the truth doesn’t mean you have to tell the whole truth, according to property manager Tom Sedlack, who did a presentation on negotiation for the National Association of Residential Property Managers (NARPM).

He points out that not disclosing everything can feel dishonest, but it’s perfectly fine to protect your own interests.

“You don’t tell the other party that you have to get the sale to meet your end of quarter sales quota,” he says in the presentation.

Do Relay Your Message With More Than Your Words

It’s not just what you say that makes the deal. It’s how you say it. Eye contact, hand gestures and postures that convey your genuine attitude and put the other party at ease, smiling; these are all ways to use non-verbal cues to help move the deal along.

Don’t Apologize for Your Price

“The moment you do that, you just handed them the right to haggle with you on price,” says Malhotra.

Rather, you should be talking about the value you bring to the table. The better answer to “the price is too high,” is to put a spotlight on value and the number of people who are using your service despite your price.

Don’t Be Afraid to Walk Away From a Deal

Sometimes a deal just doesn’t work out. If you come to a point where you realize that a particular deal will do nothing to help your company or your owners, then it’s okay to walk away. Don’t feel like you’re committed to the other party just because you entered into a negotiation with them.

A lot of people get anxious when they hear the word negotiation. They see it as a battle rather than a chance to have a meaningful conversation that results in the best deal possible for all parties involved. If you change your mindset, do your homework, and go in with a willingness to listen and make concessions, chances are you’ll come out with a positive experience all around.

Read more on Team
Laurie Mega
Laurie Mega

Laurie Mega has planned, written, and edited content on a variety of subjects. Her work has been published by HomeandGarden.com, The Economist, Philips Lifeline, and FamilyEducation, among others. She lives in the Greater Boston Area with her husband and two boys.

Trending Stories For You
Scaling The PM forecasting mindset
No one can deny that 2020 has been a year of change, and as entrepreneurs, agility is what we thrive on. With every new obstacle…
Daniel Craig
| 5 min. read
COVID-19 How to run flawless, virtual HOA board meetings: Tips from a pro
Since the beginning of lockdown, property managers have had to come up with innovative ways to keep their residents safe while still providing the best…
Laurie Mega
| 8 min. read
Accounting & Taxes How does a 1031 exchange work? What property managers should know
Established real estate investors and property managers are likely already familiar with 1031 exchanges. The concept itself is simple: Reinvest the proceeds from the sale…
Amanda Maher
| 5 min. read

Be a more productive
property manager