Blue Dirt
Blue Dirt: Commercial Property Investing delivers expert insights and strategies for building and managing a successful commercial real estate portfolio. Whether you're a seasoned investor or just starting out, this podcast uncovers market trends, financing tips, and key investment principles to help you thrive in the industry.
Blue Dirt
Beyond Price: The Art of Commercial Negotiations
The psychology of negotiation often trumps the mechanics of contracts in commercial real estate—a lesson learned the hard way by many investors. In this eye-opening episode, we share a transformative story about recognizing when someone is negotiating with you rather than simply refusing to honor an agreement, completely changing how deals are approached.
Beyond just focusing on price, successful commercial real estate negotiations require understanding what truly motivates all parties involved. We explore how creating win-win scenarios depends on identifying key elements beyond the bottom line—whether it's favorable bank terms, seller financing, improvement credits, or creative lease structures. The discussion reveals why your investment success is fundamentally determined "on the buy," not just when you eventually sell.
We dive deep into the Letter of Intent process, breaking down how this "conversation in writing" sets the framework for successful transactions. From the nuances of triple net versus full service leases to strategic approaches like calculated silence and transparent sharing of investment models, the episode provides actionable tactics for moving deals forward while maintaining firm positions on essential terms.
Perhaps most valuable is our candid discussion about maintaining reputation in the tightly interconnected commercial real estate community. When time kills deals, relationships preserve opportunities, and knowing when to walk away proves as important as knowing when to move forward. Whether you're negotiating purchase agreements or complex lease terms, these principles apply across all commercial real estate transactions.
Ready to transform your approach to commercial real estate negotiations? Listen now, and discover why understanding psychology might be the most valuable skill in your investment toolkit.
Learn more about Blue Commercial Properties on our website.
Welcome to Blue Dirt, the podcast that digs deep into the foundation of commercial real estate investing. Unlike most real estate shows that focus on dealmaking and market trends. Blue Dirt gets into the nuts and bolts of what truly builds long-term value the building itself. We break down how to spot deferred maintenance before it costs you, why a solid preventative maintenance program is a game changer and how triple net leases can maximize your investment returns. We'll also explore the importance of strong landlord-tenant relationships and how they drive stability and growth in your portfolio. Whether you're a seasoned investor or just getting started, blue Dirt gives you the practical knowledge to make smarter, more profitable decisions in commercial real estate. It's time to get your hands dirty and build value from the ground up. Let's dig in. Welcome to the Blue Dirt podcast, where even idiots can make a killing in commercial real estate. Today we're going to talk about negotiations. That's right, both for sale, lease and some other deals that we want to just kind of share our insights on negotiations. So the two questions that we hope to answer today are what are the core principles that guide successful commercial real estate negotiations across every stage? And, number two, how can investors stay firm on key terms while still moving a deal forward. So, donnie, without further ado, oh yeah, I'll tell you. I'm going to tell you my.
Michael Carro:I'm going to first start off with a story I like stories Of a deal that I did. It was. It's kind of interesting. So I was a new agent. We're talking this has been a while ago, probably 15 years ago. By the way, I got into commercial real estate when I was 40. So I was later in my life and now I'm 57, been at it for 17 years, absolutely love what I do, have a complete passion for it and keep doubling down and just absolutely love what I do, have a complete passion for it and keep doubling down and just just absolutely love what I do. I feel blessed every day. So, but I am a newer agent at this point in time and I had a guy call me up because I did a lot of restaurant deals. I love restaurant deals, I know them better than most people and it's just kind of a passion of mine. And he calls me up and says, hey, listen, I've got a subway that I want you to try to lease out for me. I'm like, great Now.
Michael Carro:So I go meet him and the subway was inside of a truck stop. I didn't know that. So I'm like, okay, fine, and I'm a diligent young agent, and I brought a know that. So, um, I'm like, okay, fine, you know, and I'm I'm a diligent young agent, and I brought a listing agreement. And he's like, oh, no, no, no, listen, I've got a bunch of agents working on this for me. So you know, I, but I know you do a lot of restaurants, just bring me a deal, I'll pay you. And I said, oh, okay, and so I just kind of brushed it off, ignored it. I mean, he's not working, I'm not working for him, I'm just, you know, I guess, keeping my ear out and listening to see if there's anything that happened.
Michael Carro:So, anyways, two days later he calls me up hey, any luck? And I said, can I come see you? And he said, sure, come on. So I go out there and I bring a listing agreement for the entire truck stop and so I'm talking to him and I said, hey, listen, I'd love to work on this for you. Um, and he goes oh, I know, I appreciate it. I said, here's a listing agreement. He says, no, I don't. I told you, I've got a bunch of people. And I just told him. I said, listen, you say you have a bunch of people. And I just told him. I said listen, you say you have a bunch of people, but you actually have nobody working for you. You sign this document and I will be the one working for you. And he looked at me and I'll be darned if he didn't sign the listing agreement for the entire truck stop. So we go out to market and get the entire truck stop under contract for. And get the entire truck stop under contract for I think it was $2.2 million and I had a 6% commission on this. I mean I'm like whoa, biggest paycheck ever, at $2.4 million, to be specific, because it was a hundred and let's see what the heck was it. Anyway, it was a lot of money for me.
Michael Carro:So we get to a successful closing. I'm high-fiving and he says, yeah, sorry, I'm high fiving. And he says, yeah, sorry, I'm not paying you. And I'm like what? I mean I'm blowing a gasket here. I'm like so I was. So I go to my agent. He's like Mike, no, you're owed that commission, blah, blah.
Michael Carro:So he sends me to this attorney and that was, I guess, his in-house attorney and I sit down and I mean I was diligent. I mean I had a book two inches thick with all the emails and the contracts and all my emails with the buyer, everything. And the attorney looks at me and he, well, he goes through the book, really spends maybe five minutes. And here I am. I mean I spent probably 50 hours putting this package together and he looks at it and and and he closes the book. He says, mike, why are we here? And I'm like, well, because this guy doesn't want to pay. I mean I'm just you know kind of flipping out. And he says, no, why are we here? And I'm just you know kind of flipping out and he says, no, why are we here? And I was like his name was Dan. I said yeah, I don't know.
Michael Carro:I don't understand the question. I mean, I know why I'm here. He says we're here. He says, listen, this guy, he knows he owes you the money, but you're failing to realize he's negotiating with you. He's going to pay you, but he just doesn't want to pay you the full amount. And you're failing to understand that this is a negotiation.
Michael Carro:And I'm going to tell you what the comfort that that gave me, and also the fact that I was a flipping moron, that I didn't see it.
Michael Carro:And once I understood that this was all psychology and not contracts, I was playing the cards, not the player, to quote more of a poker term the player, to quote more of a poker term.
Michael Carro:And I'm going to tell you what that 10-minute meeting with that attorney has completely changed my life on how I deal with negotiations and how I deal with people, and it's a lot more fun and a lot more relaxed, because once I truly understand the motivations of the individuals, then I can solve their needs. So the first thing that I'm always focused on is how can we create a win-win scenario? And so many people are focused on one thing and that's price. But when you're buying a property or leasing it, there's a lot of terms that are important, and the better you can actually understand the seller's desires, wants and needs and the buyer's wants and needs, the better that you can be at bridging that gap between a sale and those same attributes hold true to a lease. So, um, I'm going to pause there and see if you have anything you want to add to that, because you can.
Donnie Redhead:You kept laughing it's a funny story don, of course, has heard that fired up just entertains me.
Donnie Redhead:Okay, you're getting, you're getting hot. That's just always. Do I amuse you? Am I funny like a clown sometimes? Yeah, no, that that was. That is a good story, because it's. It's so true, because a lot of times you're, you get into these things and it's it's. I mean there's so many things in life that are in negotiation, not just this Right that, that so many times I just go in and I mean I hate to say it cause it sounds super rude. I'm probably not listening to 75% of what somebody's saying.
Michael Carro:Nicely done, but but um, hey, by the way, that's good to know.
Donnie Redhead:Yes, yes, donnie, donnie up here, yes, yes, but it's, it's like you're, you're, you're really trying to see what they're actually saying, cause a lot of times they're not saying anything.
Michael Carro:Well, I think what you're. If I'm going to parse what you're saying, you're listening to what the real issue is, not how they're describing. You know what they believe the perceived problem is.
Donnie Redhead:Correct. Yeah, I'm trying to get to the meat of the subject. I don't care about the noise, right, and a lot of times people just they feel like they need to fill, you know, the environment with so much noise. That isn't bottom line, bottom line.
Michael Carro:Yeah, bottom line, bottom line, all right. So just know this Everything is negotiable. It doesn't mean you're going to come to terms, but everything's negotiable. And so you know your deal as an investor is made on the buy, not on the sell. The sell is important, but if you don't buy correctly, I don't really care what you do. Your holding costs might be too much If you misread the room or misread, in this case, the market, and you overpay for something that you really can't get a return on.
Michael Carro:You know, there are some rare occasions and actually I'm involved in two right now that I'm looking to buy properties that don't fit my model, but I'm so in love with the area and the growth that I see it happening over the next five to 10 years that I'm willing to forego short-term cashflow when I say short-term three to five years in favor of a really great long-term win. That's not been my strategy and, by the way, if you're buying the first commercial property, I don't recommend that be your strategy. But we have enough properties that I can suffer some losses so I can look at things that, hey, this is such a great area, a great position, that I will go against my ROI return on investment model in favor of great prime assets in an area that I think is over time is going to really meet our financial objectives. So, short term, I don't think it's going to work to meet my objective. But when I forecast out a little bit farther than five years because you know I use a five year model I buy day one and I model it to sell day one of year six. Okay, I use a five-year model, I buy day one and I model it to sell day one of year six. I use a discounted cash flow analysis using an internal rate of return, which is the CCIM model. So that's the model I use On the property that I have under contract and the property that I'm looking to put under contract. It's not going to work for five years. I really need a 10-year model and I'm okay with that and because I think that I'm going to achieve great success with these assets long-term and that's a little bit different than my typical short-term model. So, but anyways, getting back, so it's all in the buy number one If you don't buy it correctly, then it really doesn't matter.
Michael Carro:So you have to buy it correctly and stay disciplined, based on the market that you're in, know your market, know what the lease rates are, know what the vacancy rates are, know how long you believe it really should take to lease up and then build in a fudge factor. I don't think you can be too conservative Now. You can be too conservative to talk yourself out of deals. So you have to have a balance. Being conservative Like if you believe the market is $20 a square foot and you can make it work at 16, you're probably in really good shape, you know, but I like to model it at 16.
Michael Carro:I'm still going to ask 20, but you know, hey, if the market doesn't respond, maybe I misjudged the area, um, and it takes longer to lease up, so I'll drop to 19, 18, 17, 16, you know, whatever. But if it works at 16, then you should be really good. So, but remember, um, when you are negotiating, price is what most people focus on, but there's also terms, maybe terms or bank terms that are really favorable. Maybe there's seller financing that is really really interesting as an inducement. You buy it, but they will give you a credit for a roof or new air conditioning, things like that. So maybe the price is still here, but you're really paying a lower price because they're going to credit you for some.
Donnie Redhead:There's a lot of different factors that go into a negotiation, yeah, and I think you know knowing the numbers obviously is is probably the most important part of that, because if, if they're not going to work right, there's no reason to do the deal, there's no reason to to go through this whole thing of of buying, managing, leasing, dealing, all these these extra, you know, spending time if it's not going to work.
Donnie Redhead:And I think something, too, that always is kind of interesting to me is having those numbers together and doing your due diligence is a tool as part of that negotiation that can be used when people know that, when you're going to them asking for discounts or asking for this, that when you're going to them asking for discounts or asking for this, and you have a story and a reason behind it because you did all this research, it removes this emotion a lot of times for people where they're this guy just wants the discount of $100,000 for no reason, he just wants it because of this. And if you go, hey, listen, I've worked the numbers, this is what it does, this is what I can do and this works for me.
Michael Carro:But in order for it to actually work, I need I need this reduction over here and this is why and you bring up a great point, don, because I don't mind sharing my model, even with the seller, especially to Don's point, if it's not penciling. I'd rather say, hey, listen, here's, here's how I modeled this out. And do you see, this is, this is not a return that's acceptable to an investor. Okay. And now he then has the opportunity to say, well, I think your numbers, your your release rates, are off it, you know. But I can say, well, your current leases are these numbers. And what are they going to say? Oh, yeah, but I could definitely get higher, but you didn't.
Michael Carro:That's another thing. That's my favorite one, you know. Oh, the next buyer can do so much better than me, because you know I'm charging $15 and the market's $20. Well, if the market is what you're getting, you know, and if you believed you could get 20, you would be getting it. Or maybe the market is 20 if I invest $500,000 into your ugly building, right, and so there may be, the market may be 20, but not for this particular asset. So there's a lot of things that go into that discussion.
Donnie Redhead:Yeah, and to that point you're talking about being an open book. I mean, I remember it was last year. We went and looked at that one property that was they were going to convert and we could make the numbers work, no matter what. It was that car wash, retail type building, right, and we just went there and met with the seller saying, hey, we're not going to buy this, just so we all know. But this is the plan. You may be able to make it work. Yeah, she was a property. She was super nice.
Michael Carro:Such a great lady and she had reached out. She had representation. I didn't know that when she reached out to me directly. So I went over there and Donnie and I went in advance because I had some ideas that I thought could be really cool for the building. And, to be more specific, it was a car wash, those old style car washes with the bays, and you grab the wand and you walk around your car yourself. So imagine that and I thought well, don, this, the structure itself is really good. What if we put glass door fronts on each of these and you know, and a normal back on the building and you had these really small bays. It would make a great, um, uh, hair salon, you know, maybe one or two person, you know nail salon, little edward jones type financial office it just just great, had a good flow to where we were going to add a drive-thru on the one side.
Michael Carro:Yeah, we could add a little drive through coffee shop. I mean really came up with some great ideas. It just wasn't going to pencil for me. But for her I said hey, listen, here's what I would do if I were you. She loved the idea, but she's at a point in her life where she doesn't really want to invest and oddly enough, she has reached out more times. But I can't pencil. It will not pencil for me, you know. And so it works for her because she has no debt. It just works. But I can't go in and buy the property and then do all this because there's not enough square footage to get enough rent to cover all that debt service. So, even though I love the idea, but I'm willing to give it to her, I'm willing to give it to clients. Listen, we have so many opportunities, we don't have to be greedy. Somebody will come to me and say, hey, listen, I want your deal, you can have it. I don't care, because if you're my client, you can have anything I have. You know, and because I'm in it every day, there's always something around the corner that I can go after again. So pretty interesting stuff.
Michael Carro:So another tactic when you're negotiating is is sometimes silence. Um, you know, if you're kind of getting at a little bit of impasse, slow it down a little bit. You know, um, let the other side really think whether or not they truly want to sell. And if you, if you're dealing with one side or the other, it just you know it's, it's grinding out. You went fast but now you just you're not making the progress. Let, if there's true demand for this property, you either are making a bad decision or or the other party is making a bad decision. I don't care if you're buying or selling, it doesn't really matter, um, but just let some time pass. Let, let let the other side know that you know you're not in desperate need of the property. If they really want to do a deal, that it has to be a deal that works for both of you and, and especially if you, if you're realistic on the buy or the sell side, right and so. So sometimes patience and time and silence can be a good negotiating, you know, tactic.
Donnie Redhead:Yeah, I love silence. It's one of my favorite. Just be quiet, let somebody. Let somebody negotiate against you.
Michael Carro:Right, right. But if you're my client, I won't, I won't let you use, I won't let that tactic beat you.
Donnie Redhead:So you know so, and a lot of times someone will make a statement and you don't even say anything, and then they'll either realize it or they'll want to fill the void. So they'll negotiate against themselves, right?
Michael Carro:right.
Michael Carro:Listen, here's something else that I do not like about real estate agents and, by the way, I am one. Okay, if somebody makes an offer on one of my listings whether I own it or not, I don't care, but one of my listings I feel like I have this obligation to get my client to respond, even if my client doesn't want to respond. They're like they're so insulted, but the part that's not, the part that I don't like. I don't like when the agent gets insulted. Okay, it's not their property. You know what I mean. And they scoff and they brush you off.
Michael Carro:Listen, I'm going to tell you I have been surprised by how low sellers will come off of a price and how high buyers will go up on a price. I just want the conversation to get started and my obligation is to get my client, whether I represent the buyer or the seller to respond and I tell them don't be insulted. Put yourself in their shoes. Do you want the best deal if you're the buyer? Do you want the best deal if you're the seller? Then don't be insulted by stuff. Let's just respond. They may not like your response and that's okay, but then they have the opportunity to respond. But what I will not do is once we respond. If the other side says we're not responding because it's too low, it's my job as the agent to go to the other agent and say listen, just please get your client to respond, even if they respond at full price. Now at least you've truly let us know with your counter that that's your bottom. But not responding is not a response. All right, and so be a good agent and work with your clients to respond to every situation, even if hey, listen, my last response. I really appreciate your offer. We're too far apart. But my last response I really appreciate your offer. We're too far apart, but my last response is still valid. I will sell it to you or buy it from you at that price and so that way you can complete a negotiation and not ghost. All right, because if you're going to be in this game, you're going to run into a lot of these same people over and over.
Michael Carro:Be that person that follows up, follows through and completes a transaction and then, even if the deal doesn't go through, go ahead and reach out to the other broker and thank them for their time. Build solid relationships with the brokerage community. These people are not your competitors. I feel so blessed that we are surrounded by such great commercial real estate agents in my world, and I consider them great friends. I get on boards with them, I break bread with them, I invite entire companies over to my office for happy hours and I want to do more deals with them, and so and, by the way, we share our commissions 50-50. And so and I encourage them to do the same thing we want to be a very fair brokerage house, and so you know, it's listen, we all got to make money, you know. And so just a couple of little. I know I went off on a tangent more on the brokerage side, but that's part of the negotiation.
Donnie Redhead:I think just as true on the lease side too, because there's so many times that we're dealing with some of these agents that you know I play a different role, you know, as kind of managing the property for some of these owners and they'll have agents, agents showing the space, going through this stuff and they a lot of times they make assumptions where I think they shouldn't. They assume that that you know, no, they don't want this, no, they don't want this, they, they start drawing these conclusions, like you're saying the low ball. For I want to see every single one, because they don't know they don't know how much money I have in reserves that maybe I want to make the improvements to this space and I'll take it. They don't know what the landlord is thinking and maybe there's a different strategy at work here. So if you have a space and you have agents out there showing it, make sure that they're bringing every single one writing every single we call it LY letter of intent, right?
Michael Carro:Well, let's go through the process because some listeners may not. So, when you're making an offer, so on a purchase, there is a purchase and sale agreement which is the legal binding document once it's signed by the buyer and seller, the lease, of course there's a lease. The lease itself is the binding document that once signed by the tenant and landlord, it becomes your governing document. But prior to the purchase and sale agreement or the lease agreement, many times we'll use what's called a letter of intent. Now, this is typically a non-binding document that I call it a conversation in writing, that I call it a conversation in writing. Mine are super simple, one page. I have seen, yeah, most of the time, mine are one page, triple spaced. I mean I don't need a lot on it. Now, a lot of these big corporations they might have a five page letter of intent which is really almost like a mini lease. But I don't like those. I mean it's fine, it does, it gets a lot more granular and that's fine. But and it certainly makes going to lease a little bit easier because there's more terms within the letter of intent, that of course gets converted to the lease. But the letter of intent, my letters of intent, are one simple page has the buyer, buyer, seller or landlord, tenant at the top, obviously, the property address, the space, whether it's a building or a space, you know lease or you know whatever it's going to have. Let's say it's a lease, just to start off, cause that's what Donnie wanted to talk about. So it might have the following terms the length of the lease. The following terms the length of the lease it might be a five-year lease with one option to renew for another five years. Well, that's an important term, right? So now the tenant if they have a successful lease negotiation, they control that property for 10 years. They're obligated for five, but the tenant has the option for another five. Okay, so that would have. That's the term of the lease. Then you have the lease rate and it you can offer a dollar amount. It could be a price per square foot or it could be a flat rate.
Michael Carro:And then there are the types of leases. Certain buildings would be a full service lease. If you're in a 10-story office building, in all likelihood it's a full service lease. If you are in a strip center, it's likely going to be a triple net lease. Most commercial properties that we deal with are triple net leases. But if we had those larger office buildings then they are typically full service leases. What's the difference? A triple net lease has a base rent plus triple net, three N's N, n, n, which is the first N? Oh, that's me. The first N is property taxes. Second N, property insurance. Thirdend, cam, common area maintenance. So it's going to have the lease rate plus the triple net or the type of lease.
Michael Carro:If it's in a certain building, it might be full service. Full service would be it's inclusive of all those things, including utilities, maybe janitorial things like that. Okay, so it's going to have possession date. I might want to take possession now but, based on what needs to be done to the property, I might not start my rent for 60 days. So you have again, you're taking possession on day one, but your lease isn't starting until day 61, as an example.
Michael Carro:And it says who's the tenant, whether it's an individual, a company, what type of use is it going to be. So it might have the type of business and again, a real, real simple document If I come to term. And then what you do is I present that letter of intent to the other side, the landlord or tenant, and what they're going to do is they're going to take a pen and say, okay, I can agree with this. Oh, I want to change this a little bit. Oh, you offered me $5,000. Well, you know, I'm going to counter at 5,500 and and you know they can, they're going to go through. Oh, oh, you want 60 days free rent. Um, I think you'll. I'm going to give you 30 days. So you go back and forth and then my client will then look at this and say, all right, okay, I can accept that lease rate. Um, no, I really need the 60 days. But here's why I'm going to do x, y and z to the building. And so it goes.
Michael Carro:This document goes back and forth, it has a lot of chicken scratches on it or simply a red line, which is what we typically do. And then, once that is done, now we and it's signed by both the landlord and tenant. We still do not have a legal document, but we now have a framework for the lease that we're now going to prepare. So then we take this one pager and we go to our lease term, our lease document, and then we go simply go through, and we simply change those parts of the lease to coincide with the lease terms. Now the lease has a lot of legal language. We don't mess with that we're not attorneys but we go.
Michael Carro:We were allowed to go ahead and simply change the terms of the lease and then, once that document is done, then we give it. Typically it's the landlord's lease. If you're a big national client with a hundred locations, a thousand locations, you typically have your lease form. But most landlords will have their lease and then we send that off for review and then the tenant will get with their attorney or their team. They'll review the lease and they'll redline that and then we'll go back and forth on the lease negotiation. Once both sides are happy with the terms, then they sign it. Now we have an official document that's legally binding between the landlord and tenant and then the lease begins.
Donnie Redhead:So yeah, I think the biggest thing is just getting the conversation started. Like you said, it's a conversation in writing, and just getting people to write it down, start conversating, going back and forth is something that is just. It's incredibly important to the process and shouldn't be overlooked.
Michael Carro:Right, yeah. And then there's little. There's little value adds on the lease that you can get creative on. It could be signage. If there's a big prime sign, you might want a specific sign that you see that's vacant. On the prime sign, you might ask for parking spaces because you have, you know, a type of business that you know 15 minute parking where they can simply run in, get what they need and run out. A lot of little details that can get negotiated to add value to your lease. So there's every little thing you can think of can be even a part of the negotiation. Yeah, you're really limited.
Donnie Redhead:Yeah, and I've said this before. You're especially in commercial. You're really limited to your own creativity. If you can, if you can come up with solutions. You know in this to get both parties to agree, there's usually a deal there and it's really limited to to how creative you can be to solve the problems Absolutely.
Michael Carro:And you know, listen more than you talk. Let the other person, don, mentioned it. A lot of times people will negotiate against themselves or they'll run on so long that they'll give you information that really shows what's important to them and really maybe what's not important to them. To you, well, that would. They could maybe just give in on that. So let really understand the other side. You know, and if you're that's if you're dealing directly with the, with the decision maker if you're not dealing with the decision maker, have your broker deal in such a way that they understand what the true needs of their clients are. So that can be very helpful. And also, you got to know when to walk away. Sometimes it's just better to say, hey, you know. Thank you so much. This is not going to work for us. I'm just going to move on.
Donnie Redhead:Yeah, that's what I have in your numbers. If you have the numbers, if you know what is going to work and what's not going to work, otherwise you're going to feel needs that needs to happen and and you'll make a bad deal one of the things that, um, that I find interesting is a lot of times people feel like they have to when they're negotiating price, that they have to go in certain even numbers.
Michael Carro:Um, here's 700, 000. Okay, I'm gonna counter at 750 and I'm gonna counter at 7 75. Slow it down, you know, once you get to a certain striking distance you don't have to make big leaps. You know, if you're at 750, you know you might go to 754. You know, sometimes I'll throw out something really stupid like $754,373,. You know is the maximum I can pay for this property.
Donnie Redhead:And it leaves the other side saying God, this guy must have really thought through these numbers.
Michael Carro:He must have really crunched them and, by the way, I likely did, you know and 38 cents. But again, you don't have to go in blocks. Slow it down. You know, even your responses can begin to slow down. Now don't slow down too much if you really want the property. Time kills deals. Remember those three words. I do not like slowing a deal down for no reason. You slow a deal down if you have a plan. But if you're just trying to negotiate, get the deal done, get it inked and get it onto a lease or a purchase and sale agreement. Don't slow it down because you're being lazy. Don't slow it down because you're busy. Don't slow it down for any other reason other than you're purposely doing it to negotiate purposely doing it to negotiate.
Donnie Redhead:Yeah yeah, time kills all deals. Yep, you're just adding too many variables in there that are constantly evolving. It's unbelievably true, right.
Michael Carro:So, and you know, don't overplay your hand, don't make an offer that you're really not planning to go forward with. I think that's a reputation killer. You do that to me once. I really just don't want to play in that sandbox.
Michael Carro:I got an offer from this one group a couple of years ago. They have made so many other offers, not on my property, but my clients, and I'm going to present them. But guess what I'm telling my client? Okay, I did a deal with this group before. Here's exactly what they did. And the day before closing you know they did, the day before due diligence expired, they pulled the plug. Here's why. Here's where they misled me. You know I'm not saying that they're doing it here, but I'm going to make sure that my client knows exactly my experience with that particular group and I'm going to tell you what. All of my clients have listened to me and didn't go down that road, and I'm okay with it because I need to deal with people who I know have a likelihood of close. I'm not saying that you have to close on a deal, especially if you find yourself in a difficult position for one reason or another, or the property just didn't meet the expectations. That's not what I'm talking about, but always deal in good faith. So don't overplay your hand and don't lie about a deal like this group did.
Michael Carro:Yeah, and to me, let me just. I'm going to say one last thing. What they did was they put a property under contract, stating that they had a client in hand because they had a longer due diligence, which you typically didn't want to do. Um, we agreed to it. The following week, I got a marketing brochure and a mass email showing the property that they got under contract. Got this property for lease, um, and I'm like what do you mean? You got a prefer lease, Don't? You said you had a client. Oh well, we're just shopping it anyways. Well, that told me exactly who they were, and so I'm not going to get burned twice and and and. So I share that story with my clients and none of them have cause. I get a lot of those types of properties and my clients would not put that under contract with them again. So just deal in good faith, always try to work for win-win scenarios, and that's going to really help your negotiation.
Donnie Redhead:Yeah, button it up.
Michael Carro:Button it up. Hey, listen like subscribe. We really would appreciate that. That wraps up another episode of the blue dirt podcast. Or? Even idiots like Don and me can make a killing in commercial real estate. That's a wrap for this episode of Blue Dirt. We're here to help you build smarter, invest wiser and create long-term value in commercial real estate one solid foundation at a time. If you found today's insights useful, be sure to subscribe so you never miss an episode. And if you know somebody who could benefit from these discussions, share Blue Dirt with them. Got questions or topics you'd like us to cover? Reach out. We'd love to hear from you. Until next time, keep digging deep, stay sharp and remember real value is built from the ground up. See you on the next episode.
