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  • hughjwade

FIGHT THE MONOPOLYALWAYS HAVE MORE THAN ONE OPTION!

Until you willingly choose to select the “best” one.

 

“Market Enterprise and Monopoly: In a market system, free enterprise is the art of creating one’s own monopoly, at least for the moment, in the mind of the customer for partial protection against price competition and the necessity of sharing a limited market.”

 

(Professor James A. Graaskamp, 1933 – 1988, of the University of Wisconsin, published in his article “Identification and Delineation of Real Estate Market Research” in the magazine Real Estate Issues, Spring/Sumer 1985.  The magazine is published by the organization CRE Counselors of Real Estate. I am not a subscriber or reader of the magazine, which I suspect is high quality, or a member of CRE. I am a hero-worshipper of Mr. Graaskamp, although I am not even a casual scholar of his work by any means. He’s worth looking up. The University of Wisconsin Center for Real Estate was named after him in 2007.)

 

Ok, here’s the deal: the whole world, trying to sell you things and services, does their best to convince you that their product is the absolute best, and that you must buy what they are offering as opposed to competing products and sellers. 

 

God Bless ‘Em. Because they are motivated to sell, we have the opportunity to buy, and a lot of choices. 

 

If a person wants to buy the best apple, out of countless apple choices, “best” is subjective, having to do with not only taste, but attractiveness, convenience, price, availability, season, and more. And, we choose in the end, an apple. Some people collect and consider more information, and some people decide quickly with very limited information. The decision can be faster, or slower, and it sometimes changes with the day or mood, the context of the moment. One person making a decision one day might make a different decision another day.

 

The more substantial the decision and the item being bought, the process takes longer. It’s more complicated, and there’s more at stake. 

 

Some people have more trouble making decisions than others, and some people make decisions promptly but without considering as much as they should.  Making a choice creates stress, and some people handle the stress by delaying, and some people rush to a decision in an attempt to alleviate the stress.  

 

When push comes to shove, a final choice is a monopoly, as Mr. Graaskamp so wisely pointed out.

 

In terms of negotiating to buy or sell anything, we build the platform of having a positional advantage (also called leverage) by having more than one option.  

 

As brokers, on the sell side, our landlord clients are selling their building or they are leasing out spaces in their building. Or, on the buy side, we represent people trying to buy a building (to occupy and/or as an investor) or to rent space in a building as a tenant. 

 

Either way, from any side, it’s key to have more than one option, until really the contract to sell or lease is executed, and money and keys are exchanged. 

 

Sellers of a building inherently have the two options: to sell, or to not sell at all. Or, if they are selling space, it’s good to have more than one tenant prospect. Building owners have choices, and those choices keep the other side honest and bolsters the price they will pay as well.

 

For buyers, if you give the impression that you have to have one particular building and only that one particular building, you have no leverage, as you have only one option, self-imposed. Or, say you are a tenant, and it’s time for renewal, and you really just want to stay. Well, if you aren’t willing to seriously consider leaving and drumming up good options, then your position with the Landlord just won’t be that good.

 

So, it’s all about having options, and/or giving the impression of having options and the willingness or commitment to use all options. And, of course, the other side is reading your position as well as their own, usually better than you think they are.  Afterall, these negotiations go on for more than a moment, and what people say, and what their behavior is saying, usually becomes an accurate tell, to some degree, to the other side.

 

We, as commercial real estate brokers, help our clients meet their real estate objectives.  It involves giving frank, sometimes unwanted, advice. It’s transactional, both in terms of the actual real estate transaction and also the transaction of our engagement with them for our services. It’s also a relationship, if just for the one transaction, or over years and many transactions and a true long-standing relationship. 

 

A large part of our job is making sure that our clients have more than one option, to preserve their leverage and get a good deal. Having more than one option applies to when several options and negotiations are being rounded up simultaneously, and also when under contract for just one building or space, until the finish line is crossed. Sometimes, people forget about this principal, and we have to remind them of a couple of concepts, 1.) Always have more than one option, and 2.) you always have more than one option anyway, which is to buy or sell, or to do nothing at all and/or walk away. If you forget these principals, or can’t commit to either option, you end up cornering yourself. And part of our job is to convey to the other side that our clients have these options and are willing to exercize them, even if the position in their minds and hearts doesn’t align with the message we need to send in order to maximize their financial interests. 


-Hugh

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