How do you execute a successful real estate transaction?

Simple: To execute a real estate transaction you must have "information & knowledge about the one you negotiating with and his or her influencers" and "skills to build trust, credibility, patience and agility to strike timely closure".

A successful real estate transaction in the corporate leasing world is one where both parties are happy with the transaction. By tapping into how the goals of each party differ, it is often possible to be creative and find solutions to ensure both a happy tenant and a happy landlord. For example, the landlord may be most concerned with property valuation and the start date of rental payments, while the tenant may be more interested in overall rental costs, fit-out works and flexibility.

One cannot simply throw mud at the wall and see what sticks. Every transaction needs both a short term and long term goal, and a solid strategy to reach them. This is one of my guiding principles when buying. The other? Have an exit strategy prior to buying. In other words, know when is the optimum time to get out of the investment and have KPIs to benchmark.

In my personal opinion, along with all that is mentioned above, it’s important 1. To Differentiate between the “Need” and “Want” 2. To know what your decision makers and Decision influencers are aligned to. 3. To look at each transaction from a “Future Ready” perspective

I agree that for a successful real estate transaction is important to begin by defining your goals. However, I would add that within this goal definition phase is key to consider market information to set realistic expectations, which in turn, will need to be flexible (within a certain range) to later negotiate effectively and have a better chance of reaching a win-win agreement.

Having full funding ready / visibility of commercial closure is of paramount importance. Clear exit strategies with potential development plans as per local DCR norms also significantly constitutes as factors in evaluation.

In my Personal Opinion, Along with the usual due diligence activities mentioned, since many organisations are moving towards the Net Zero pledge, it’s important to understand how the Sustainability goals / Objectives will be met if we chose a specific property/Office space. Involving the right people to understand this is important.

As part of due diligence, a very important factor, and one that’s often overlooked, is setting “time” expectations right, doing your due diligence to make sure that you are not fooling yourself with timelines is key to a smooth and successful transactions, and this entails timelines down to the smallest details, such as, what’s the timeline for a environmental report to come back etc. being honest with yourself about timelines can be a deal saver.

Once the target property is found, negotiating a clear purchase agreement is crucial. Different jurisdictions may have different approaches. Usually a due diligence encompassing legal, environmental and land use / zoning aspects is carried. Such due diligence may be a condition precedent for the acquisition of the real estate. The assistance of a good local lawyer, specialized in real estate is fundamental. Rural and urban real estate usually have different requirements. In many jurisdictions, acquisition of rural real estate by foreigners or companies controlled by foreigners is restricted or requires specific government clearance.

This should be done by team such as me (real estate advisor), cfo, investing officer (strong in modeling), auditors and local lawyer. Then provide design maker(s) with Report based on Business Plan. In most cases then we have a new and more accurate version of BP.

Verhandeln kann und muss geübt und getestet werden. Niemand kommt als Verhandlungsprofi zur Welt. Die Erfahrung sagt allerdings: Ehrlichkeit währt am Längsten. Tricksereien und den VerhandlungsPARTNER über den Tisch ziehen sind immer nur kurzfristige Erfolge. Wer bestehen will, baut sich ein Image auf, das belastbar ist. Eine gutes Verhandlungsergebnis ist dann erreicht, wenn beide zufrieden sind.

Some think that negotiation is a business skill. It is actually a life skill applied to business. Many misunderstand the concept of Win-Win in a negotiation, don't understand the three types of leverage that can be used as well as tools such as framing and anchoring. I teach these. For more information contact me at pdmorris@greensteadcg.com

It is important to properly address all issues identified by the due diligence in the definitive documents. Wording of the document is very important. Many jurisdictions favor content of the document over its title, therefore, clear language is very important. Have a clear objective issues list to be addressed in the agreement.

As for me it is most interesting phase. It most dynamic and interactive phase. Most surprising phase. It is time of communication, collaboration, finding solutions and compromise. After this stage you become very close to the deal.

Negotiation is a purchaser’s right. It is more like purchaser proposes, vendor disposes. It is important to ascertain one’s budget and get a pre-approval on the finance. This sets clear expectations when negotiating and would save time for both parties.

Understand you capital stack and have a clear understanding of your hold period. Before you acquire the asset, what are the strategic capital or R&M investments or operational adjustments that can be made to improve NOI post acquisition.

Lawyers play a key role in making sure the contract accurately defines the terms. They also advise you on due diligence items that should never be waived. While lenders may review your contract, they don’t sign it nor do your tenants or contractors. However, tenants will provide an estoppel letter stating the rent is current and any claims against the landlord. I believe the final step in the transaction is insuring a smooth transition of the property to the new owner, including the transfer of utilities and service contracts. Don’t forget the elevator’s phone line. Our landlord recently sold the office building, and the elevator has been beeping a communication error ever since. It’s taking weeks for the new landlord to resolve this.

It time to formalize and finalize all data (due diligence, agreement draft, business plan (if necessary). Lawyer becomes major person on this stage. Then review and sign. Ask accountant provide your bill and call to the next client or partner.

Remember that several jurisdictions require certain registrations for the effectiveness of real estate title transfer, not just the execution of a deed. In such cases it is very important to make sure the deed being executed meets all registration requirements. Also be aware of applicable transfer taxes. They must be considered in your business plan and you need to be watchful of its payment deadlines, to avoid undesired penalties. A good local lawyer must be engaged and assist you in this process.

If the due diligence has been properly conducted then the closing documents will outline the steps required to transfer the title. The seller has to give clear title and must provide discharges and/or consent to assignment agreements from governing parties. Some jurisdictions have privacy laws which will only provide relevant information to sellers and not a buyer. So make sure you get the information you need before closing so there are no surprises.

In order to execute real estate transactions with consistent material success (whether commercial or residential), you MUST establish a competent and dynamic team. Hire to play on strengths and to support deficiencies. In my time as a hiring manager, I’d follow the wisdom of one of my most influential mentors: Never hire an individual that you wouldn’t want to report to. This is, hands down, the best advice I’ve ever received for building teams that have exceeded all expectations. Once you’ve established and educated your team, successful transactions will be commonplace.

Ultimately, it is all about finding the right fit. Is the property a right fit for me? For a new build, is the builder/developer a right fit? No one wants to associate with someone or something that may not align with one’s interests and vision.

Be ready and able to strategically adapt and problem solve. No deal, I repeat, no deal, will ever go according to plan. Being prepared for variables that pop up at inopportune times will keep you and your team ahead of the curve and able to execute and deliver in times of change.

A lot of great comments and you do make your money when you buy or struggle until you find the next greater fool. However, when negotiating a deal try not to get emotionally involve (nearly impossible). I subscribe to the Herb Cohen rule of negotiation "Care, but not that much".

Leverage is a significant factor, most of times decisive one! Experience and/or an experienced manager or professional should involve in earlier stage to avoid unrealistic goals!